AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1,30, 2001
REGISTRATION NO. 333- ,333-72646,
NO. 333- -01333-72646-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT
NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
INDEPENDENT BANK CORP. INDEPENDENT CAPITAL TRUST III
(Exact Name of Co-Registrants as Specified in their Charters)
MASSACHUSETTS DELAWARE
(State or Other Jurisdiction of Incorporation or (State or Other Jurisdiction of Incorporation or
Organization) Organization)
6022 6719
(Primary Standard Industrial Classification Code Number) (Primary Standard Industrial Classification Code Number)
04-2870273 13-7307281
(IRS Employer Identification Number) (IRS Employer Identification Number)
288 UNION STREET C/O THE BANK OF NEW YORK
ROCKLAND, MASSACHUSETTS 02370 101 BARCLAY STREET
(781) 878-6100 NEW YORK, NEW YORK 10286
(212) 896-7298
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
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EDWARD H. SEKSAY EDWARD H. SEKSAY
GENERAL COUNSEL ADMINISTRATIVE TRUSTEE
288 UNION STREET C/O THE BANK OF NEW YORK
ROCKLAND, MASSACHUSETTS 02370 101 BARCLAY STREET
(781) 878-6100 NEW YORK, NEW YORK 10286
(212) 896-7298
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service for Co-Registrants)
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COPIES TO:
NORMAN B. ANTIN, ESQ. RICHARD A. SCHABERG, ESQ.
JEFFREY D. HAAS, ESQ. THACHER PROFFITT & WOOD
KELLEY DRYE & WARREN LLP 1700 PENNSYLVANIA AVENUE, N.W.
8000 TOWERS CRESCENT DRIVE, SUITE 1200 SUITE 800
VIENNA, VIRGINIA 22182 WASHINGTON, D.C. 20006
(703) 918-2300 (202) 347-8400
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462 under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE (2)
Cumulative Trust Preferred Securities of 1,000,000 $25 $25,000,000 $5,999.08 (1) (3)
Independent Capital Trust III...........
Junior Subordinated Debentures of $25,000,000 100% $25,000,000 (2) N/A
Independent Bank Corp. (2)..............
Independent Bank Corp. Guarantee with N/A N/A N/A N/A
respect to the Preferred Securities
(4).....................................
Total..................................... -- 100% $25,000,000 $5,999.08
(1) Such amount represents the liquidation amount of the Independent Capital
Trust III Preferred Securities (the "Preferred Securities")preferred securities and the principal amount of Junior Subordinated Debentures (the "Debentures")debentures that
may be distributed to holders of such Preferred Securitiespreferred securities upon a
liquidation of Independent Capital Trust III.
(2) No separate consideration will be received for the Debenturesdebentures of Independent
Bank Corp. which may be distributed upon a liquidation of Independent
Capital Trust III.
(3) The total amount of the registration fee is $6,250.$6,250.00. The Company is applying
theapplied a
$250.92 pending balance in its account with the Commission from excess fees
previously paid towards this registration fee.
(4) No separate consideration will be received for the Independent Bank Corp.
Guarantee.guarantee. The guarantee, when taken together with Independent Bank Corp.'s
obligations under the trust agreement, the indenture and the debentures,
each as described herein, will provide a full and unconditional guarantee,
on a subordinated basis, of payment of distributions on the preferred
securities.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED NOVEMBER 1,30, 2001
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WEINDEPENDENT BANK CORP. AND THE TRUST MAY NOT SELL THESE SECURITIES UNTIL THE
SECURITIES AND EXCHANGE COMMISSION DECLARES OURTHE REGISTRATION STATEMENT
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
1,000,000 TRUST PREFERRED SECURITIES
INDEPENDENT CAPITAL TRUST III
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED ON A SUBORDINATED BASIS, AS
DESCRIBED IN THIS PROSPECTUS, BY
INDEPENDENT BANK CORP.
[LOGO]
---------------------------------------------
Independent Capital Trust III is offering 1,000,000 preferred securities at
$25 per security. The preferred securities represent an indirect interest in
ourIndependent Bank Corp.'s % subordinated debentures. The subordinated debentures
have the same payment terms as the preferred securities and will be purchased by
the trust using the proceeds received from its offering of the preferred
securities.
The trust preferred securities are expected to behave been approved for quotation on the
Nasdaq National Market under the symbol "INDBN." Trading is expected to commence
on or prior to delivery of the preferred securities.
--------------------------------------------------
INVESTING IN THE TRUST PREFERRED SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 10.
--------------------------------------------------
THE TRUST PREFERRED SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OBLIGATIONS OF ANY BANK AND ARE NOT INSURED BY THE BANK INSURANCE FUND OF THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
PER PREFERRED SECURITY TOTAL
---------------------- -----------
Public offering price........................price................................ $25.00 $25,000,000
Proceeds to the trust........................trust................................ $25.00 $25,000,000
This is a firm commitment underwriting. WeIndependent Bank Corp. will pay
underwriting commissions of $ per preferred security, or a total of $ ,
to the underwriter for arranging the investment in ourits subordinated debentures.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Legg Mason Wood Walker
Incorporated
The date of this prospectus is , 2001
[INSIDE FRONT COVER]
[MAP]
- YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
WE
HAVEINDEPENDENT HAS NOT, AND OURITS UNDERWRITER HAS NOT, AUTHORIZED ANY PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT.
- WE AREINDEPENDENT IS NOT, AND OURITS UNDERWRITER IS NOT, MAKING AN OFFER TO SELL
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
- YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS IS
ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS ONLY.
- THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES.
TABLE OF CONTENTS
PAGE
--------
Summary..................................................... 1
Selected Consolidated Financial and Other Data.............. 8
Risk Factors................................................ 10
Special Note Regarding Forward-Looking Statements........... 1615
Use of Proceeds............................................. 1615
Capitalization.............................................. 1716
Accounting and Regulatory Treatment......................... 1817
Description of The Trust.................................... 1918
Description of The Preferred Securities..................... 2019
Description of The Debentures............................... 3332
Book-Entry Issuance......................................... 41
Description of The Guarantee................................ 43
Relationship Among the Preferred Securities, The Debentures
and The Guarantee......................................... 45
CertainMaterial Federal Income Tax Consequences.....................Consequences.................... 47
ERISA Considerations........................................ 50
Underwriting................................................ 5251
Legal Matters............................................... 5352
Experts..................................................... 5352
Where You Can Get More Information.......................... 5352
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN, OR INCORPORATED
BY REFERENCE INTO, THIS PROSPECTUS. BECAUSE THIS IS A SUMMARY, IT MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THEREFORE, YOU SHOULD
ALSO READ THE MORE DETAILED INFORMATION SET FORTH IN THIS PROSPECTUS,
OURINDEPENDENT'S FINANCIAL STATEMENTS AND THE OTHER INFORMATION THAT IS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE MAKING A DECISION TO INVEST
IN THE PREFERRED SECURITIES.
THE WORDS "WE," "OUR" AND "US" REFER TO INDEPENDENT BANK CORP. AND
OUR WHOLLY-OWNED MASSACHUSETTS TRUST COMPANY, ROCKLAND TRUST COMPANY, UNLESS WE
INDICATE OTHERWISE.
INDEPENDENT BANK CORP. AND
ROCKLAND TRUST COMPANY, ITS WHOLLY-OWNED SUBSIDIARY
We areIndependent Bank Corp. is a state chartered, federally registeredstate-chartered, federally-registered bank
holding company organized under Massachusetts law and the sole stockholder of
Rockland Trust Company (the "Bank"). The BankCompany. Rockland Trust was founded in 1907 almost 100 years ago. The
Bankand currently offers
its business and individual customers a full range of commercial, retail
banking, and investment management services through its 51 branches, 9nine
commercial lending centers, and 3three investment management and trust service
offices. The phrase, "PEOPLE DO BUSINESS WITH PEOPLE, NOT INSTITUTIONS", which
the BankRockland Trust has adopted as its motto, underscores the high degree of
personalized attention and service which the BankRockland Trust strives to consistently
deliver to its customers, a characteristic which management believes
distinguishes the BankRockland Trust from its competitors.
During 2000, the BankRockland Trust acquired 16 bank branches, including associated
deposits and loans. The branch acquisition increased the Bank'sRockland Trust's branch
network by 50%. The branch acquisition also expanded the Bank'sRockland Trust's geographic
presence on Cape Cod, where 14 of the acquired branches are located, and
solidified the
Bank'sRockland Trust's already strong presence in Brockton, Massachusetts,
the location of the other 2two acquired branches and the city with the largest
population in the Bank'sRockland Trust's market area. As a consequence of the branch
acquisition and the Bank'sRockland Trust's other efforts over the last decade to expand
its geographic reach, the Bank'sRockland Trust's primary market area currently encompasses
southeastern Massachusetts and Cape Cod,
spanning Plymouth, Barnstable, Norfolk, and Bristol
counties.
The Bank currently hasRockland Trust at September 30, 2001 had $2.1 billion in assets, comprised
primarily of a $1.3 billion loan portfolio. Management believes that the Bank'sRockland
Trust's loan portfolio is diversified and well balanced with a composition, on a
percentage basis as of such date, of 46.1% in commercial and commercial real
estate loans, 32.2% in consumer loans, 17.3% in residential real estate loans,
and 4.4% in commercial and residential construction loans. Management believes
that the credit quality of its loan portfolio distinguishes the BankRockland Trust from
other financial institutions. As ofAt September 30, 2001, nonperforming loans
currently comprised only 0.15% of the
Bank'sRockland Trust's total assets.
Significant growth in core deposits over the past year has increased
the
Bank'sRockland Trust's net interest margin to 4.94% for the quarter ended
September 30, 2001. The BankRockland Trust is a commercial bank which is, due to its
Massachusetts trust company charter, also authorized to offer investment advice
and trust services to its customers. The Bank'sRockland Trust's investment management
division, which currently has approximately $460.0 million dollars of customer money
under management, provides a steady source of fee income.
The key components of the Bank'sRockland Trust's current business strategy include:
INCREASING THE BANK'SROCKLAND TRUST'S MARKET SHARE OF DEPOSITS--At June 30, 2000 (the
most recent date for deposit market share information), the BankRockland Trust held
17.7% of the total deposits in Plymouth County, the largest deposit market share
of any financial institution in Plymouth County. As of such date, the acquired
Cape Cod branches held a 6.7% deposit market share in Barnstable County, and the
total amount of the Bank'sRockland Trust's Cape Cod deposits has increased by 12.4%
through September 30, 2001. The ongoing consolidation of other Massachusetts
based financial institutions and the increasing consumer 1
dissatisfaction with
larger banks continues to create opportunities for the BankRockland Trust to grow
1
its deposit market share through continuing to provide the superior personal
service for which the BankRockland Trust is well known. The BankRockland Trust trains employees
in its retail branches, in its commercial and residential lending areas, and in
the investment management area to cultivate and sustain long-term customer
relationships and, when appropriate, to cross-sell other financial services
offered by the BankRockland Trust to its customers. The BankRockland Trust recently created and
filled new business development officer positions to contact businesses and
individuals which are not currently BankRockland Trust customers to seek out new
business deposits and sell other Bank services.
CONTINUING AROCKLAND TRUST'S SMALL BUSINESS LENDING FOCUS--Management
believes it has had great success in originating small business loans throughout
its primary market areas. Typical commercial loans range in size from $25,000 to
$2.0 million. The
Bank,Rockland Trust, however, also has an in-house lending limit of
$26.1 million dollars, which enables the BankRockland Trust to satisfy the needs of
larger borrowers. The BankRockland Trust has, within the last year, established a
division to manage small business loans under $50,000. The Bank'sRockland Trust's
commercial lenders will continue to seek out new business and larger lending
relationships.
MAINTAINING STRONG ASSET QUALITY--The BankQUALITY--Rockland Trust stresses asset quality
through its emphasis on lending in its local markets where management is most
qualified to make educated underwriting decisions and apply generally
conservative underwriting criteria. The fact that, at September 30, 2001,
nonperforming assets represented only 0.15% of total assets reflect the Bank'sRockland
Trust's success in maintaining credit quality.
TAKING ADVANTAGE OF FAVORABLE MARKET DEMOGRAPHICS--Plymouth County, which
has historically been the Bank'sRockland Trust's primary market area, has grown rapidly in
recent years due to the availability of undeveloped land and recent
transportation improvements. The United States Census for 2000 confirmed
favorable market demographics for both Plymouth County and Cape Cod. The census
data showed that Cape Cod exceeded the Massachusetts average for population
growth and that Plymouth County exceeded the Massachusetts averages for both
population growth and median household income. Management believes that future
population increases in Plymouth County and on Cape Cod will provide significant
opportunities for the BankRockland Trust that can fuel growth.
TAKINGPURSUING AN OPPORTUNISTIC APPROACH TO NEW BUSINESS OPPORTUNITIES AND
GEOGRAPHIC EXPANSION--The BankEXPANSION--Rockland Trust continues to explore potential new lines of
business and opportunities for continued geographic expansion. The BankRockland Trust
offers a wide range of investment management and trust services to its
customers. Because the BankRockland Trust believes that there is a significant demand
for these types of services within the Bank'sRockland Trust's market, the BankRockland Trust
intends to heavily promote its investment management services with a goal of
increasing the $460.0 million in assets currently under management. The BankRockland
Trust analyzes its options for generating new types of revenue and its
opportunities for geographic expansion on an ongoing basis. The BankRockland Trust
intends to expand its product lines and branch network when and as circumstances
warrant.
OurIndependent's primary executive offices as well as those of the BankRockland Trust
are located at 288 Union Street, Rockland, Massachusetts. The Bank'sRockland Trust's
headquarters are located in historic Plymouth County, Massachusetts. Both
weIndependent and the BankRockland Trust may be reached by calling (781) 878-6100.
INDEPENDENT CAPITAL TRUST III
Independent Capital Trust III (the "trust" or "Trust III") is a statutory business trust created under
Delaware law. WeIndependent created the trust to offer the preferred securities
and to purchase the debentures. The trust has a term of 30 years, but may be
dissolved earlier as provided in the trust agreement. Upon issuance of the
preferred securities offered by this prospectus, the purchasers in this offering
will own
2
all of the issued and outstanding preferred securities of the trust. In exchange
for ourIndependent's capital contribution to the trust, weIndependent will own all of
the common securities of the trust.
In May 1997, weIndependent established Independent Capital Trust I which
issued $28.75 million of 9.28% cumulative trust preferred securities of Independent Capital Trust I ("Trust I"), which are scheduled
to mature in 2027. Trust IThat trust invested the
2
proceeds of the sale of these
securities in $29.64 million of 9.28% junior subordinated debentures issued by
us.Independent. The trust preferred securities of Trust Ithat trust can be prepaid in
whole or in part on or after May 19, 2002 at a redemption price equal to $25 per
security plus accumulated but unpaid distributions thereon to the date of
redemption. The trust preferred securities of Independent Capital Trust I are
quoted on the Nasdaq National Market under the symbol "INDBP."
In January 2000, weIndependent established Independent Capital Trust II which
issued $25.00 million of 11.00% cumulative trust preferred securities of Independent Capital Trust II ("Trust II"), which are
scheduled
to mature in 2030. Trust IIThat trust invested the proceeds of the sale of these
securities in $25.8 million of 11.00% junior subordinated debentures issued by
us.Independent. The trust preferred securities of Trust IIthat trust can be prepaid in
whole or in part on or after January 31, 2002 at a redemption price equal to $25
per security plus accumulated but unpaid distributions thereon to the date of
the redemption. The trust preferred securities of Independent Capital Trust II
are quoted on the Nasdaq National Market under the symbol "INDBO." We anticipateIndependent
currently anticipates redeeming these junior subordinated debentures on or after
January 31, 2002, subject to2002. Independent has sought and received the approval of the Board
of Governors of the Federal Reserve System.System to redeem such debentures. In
connection with such redemption, Trust IIthat trust would redeem the outstanding
preferred securities issued thereunder. See "--Use"Use of Proceeds" on page 16.15.
The trust's principal offices are located at c/o The Bank of New York, 101
Barclay Street, New York, New York 10286, telephone number (212) 896-7298.
3
THE OFFERING
The issuer................................ Independent Capital Trust III
Securities being offered.................. 1,000,000 preferred securities, which represent
preferred undivided beneficial interests in the assets
of the trust. Those assets will consist solely of the
debentures and payments received on the debentures.
The trust will sell the preferred securities to the
public for cash. The trust will use that cash to buy the
debentures from us.Independent.
Offering price............................ $25 per preferred security.
When distributions will be paid to you.... If you purchase the preferred securities, you are
entitled to receive cumulative cash distributions at a
% annual rate. Distributions will accumulate from the
date the trust issues the preferred securities and are
to be paid quarterly on March 31, June 30, September 30
and December 31 of each year, beginning DecemberMarch 31, 2001.2002.
As long as the preferred securities are represented by a
global security, the record date for distributions on
the preferred securities will be the business day prior
to the distribution date. WeIndependent may defer the
payment of cash distributions, as described below.
When the preferred securities must be
redeemed.................................. The debentures will mature and the preferred securities
must be redeemed on , 2031. We haveIndependent has
the option, however, to redeem the preferred securities
at any time on or after , 2006. WeIndependent
will not redeem the preferred securities prior to
, 2031 unless we haveit has received the prior approval
of the Board of Governors of the Federal Reserve System.
Redemption of the preferred securities
before , 2031 is possible....... The trust must redeem the preferred securities when the
debentures are paid at maturity or upon any earlier
redemption of the debentures. WeIndependent may redeem all
or part of the debentures at any time on or after
, 2031. In addition, weIndependent may redeem, at
any time, all of the debentures if:
- there is a change in existing laws or regulations, or
new official administrative or judicial interpretation
or application of these laws and regulations, that
causes the interest we payIndependent pays on the debentures
to no longer be deductible by usit for federal tax
purposes; or the trust becomes subject to federal
income tax; or the trust becomes or will become
subject to other taxes or governmental charges;
4
- there is a change in existing laws or regulations that
requires the trust to register as an investment
company; or
- there is a change in the capital adequacy guidelines
of the Federal Reserve that results in the preferred
securities not being counted as Tier 1 capital.
WeIndependent may also redeem debentures at any time, and
from time to time, in an amount equal to the liquidation
amount of any preferred securities we purchase,it purchases, plus a
proportionate amount of common securities, but only in
exchange for a like amount of the preferred securities
and common securities then owned by us.Independent.
Redemption of the debentures prior to maturity will be
subject to the prior approval of the Federal Reserve, if
approval is then required. If your preferred securities
are redeemed by the trust, you will receive the
liquidation amount of $25 per preferred security, plus
any accrued and unpaid distributions to the date of
redemption.
We haveIndependent has the option to extend the
interest payment period............................period................... The trust will rely solely on payments made by
usIndependent under the debentures to pay distributions on
the preferred securities. As long as we areIndependent is not
in default under the indenture relating to the
debentures, weIndependent may, at one or more times, defer
interest payments on the debentures for up to 20
consecutive quarters, but not beyond , 2031.
If we deferIndependent defers interest payments on the
debentures:
- the trust will also defer distributions on the
preferred securities;
- the distributions you are entitled to will accumulate;
and
- these accumulated distributions will earn interest at
an annual rate of %, compounded quarterly, until
paid.
At the end of any deferral period, weIndependent will pay
to the trust all accrued and unpaid interest under the
debentures. The trust will then pay all accumulated and
unpaid distributions to you.
You will still be taxed if distributions
on the preferred securities are
deferred.................................. If a deferral of payment occurs, you will still be
required to recognize the deferred amounts as income for
federal income tax purposes in advance of receiving
these amounts, even if you are a cash-basis taxpayer.
OurIndependent's full and unconditional
guarantee of payment................................... Ourpayment...................... Independent's obligations described in this prospectus,
in the aggregate, constitute a full, irrevocable and
unconditional guarantee by usit on a subordinated basis,
of the obligations of the trust under the preferred
securities. We haveIndependent has
5
entered into a guarantee agreement whereby we haveit has
guaranteed that the trust will use its assets to pay the
distributions on the preferred securities and the
liquidation amount upon
5
liquidation of the trust.
However, the guarantee does not apply when the trust
does not have sufficient funds to make the payments. If
we doIndependent does not make payments on the debentures,
the trust will not have sufficient funds to make
payments on the preferred securities. In this event,
your remedy is to institute a legal proceeding directly
against usIndependent for enforcement of payments under
the debentures.
WeIndependent may distribute the debentures
directly to you.................................... Weyou........................... Independent may, at any time after , 2031,
dissolve the trust and distribute the debentures to you,
subject to the prior approval of the Federal Reserve, if
required. If we distributeIndependent distributes the debentures,
weIndependent will use ourits best efforts to list them on a
national securities exchange or comparable automated
quotation system.
How the securities will rank in right of
payment................................... OurIndependent's obligations under the preferred
securities, debentures and guarantee are unsecured and
will rank as follows with regard to right of payment:
- the preferred securities will rank equally with the
common securities of the trust. The trust will pay
distributions on the preferred securities and the
common securities pro rata. However, if we defaultIndependent
defaults with respect to the debentures, then no
distributions on the common securities of the trust or
ourIndependent's common stock will be paid until all
accumulated and unpaid distributions on the preferred
securities have been paid;
- ourIndependent's obligations under the debentures and the
guarantee are unsecured and generally will rank junior
in priority to ourIndependent's existing and future
senior and subordinated indebtedness. WeIndependent had
no senior and subordinated indebtedness outstanding at
September 30, 2001. OurIndependent's obligations under
the debentures will rank equal to other debentures
issued by usIndependent to similar trusts, including the
debentures previously sold to Trust I
and Trust II.the trusts Independent
previously established.
- because we areIndependent is a holding company, the
debentures and the guarantee will effectively be
subordinated to all depositors' claims, as well as
existing and future liabilities of ourIndependent's
subsidiaries.
Voting rights of the preferred
securities................................ Except in limited circumstances, holders of the
preferred securities will have no voting rights.
Proposed Nasdaq National Market symbol....symbol............. INDBN.
6
You will not receive certificates......... The preferred securities will be represented by a global
security that will be deposited with and registered in
the name of The Depository Trust Company, New York, New
York, or its nominee. This means that you will not
receive a certificate
6
for the preferred securities, and
your beneficial ownership interests will be recorded
through the DTC book-entry system.
How the proceeds of this offering will be
used...................................... The trust will invest all of the proceeds from the sale
of the preferred securities in the debentures.
We
estimateIndependent estimates that the net proceeds to
usIndependent from the sale of the debentures to the
trust, after deducting offering expenses and
underwriting commissions, will be approximately $23.9
million. Subject to then existing
market conditions, we expectIndependent currently expects to use the
estimated net proceeds from the sale of the debentures
to redeem in full on or after January 31, 2002 the
11.0%11.00% junior subordinated debentures sold by
usIndependent to Trust IIthe trust it established in January 2000.
In connection with such redemption, of
Trust II, Trust IIthat trust would
redeem its outstanding preferred securities. If material changes in market
conditionsan
unexpected acquisition opportunity were to arise after
the sale of the preferred securities offered by this
prospectus, should cause usIndependent might decide not to redeem such
debentures, wedebentures. Under such circumstances, Independent would
use the proceeds for general corporate purposes, including capital contributions to
the Bank to support its growth strategy and for working
capital.purposes.
Initially, the net proceeds may be used to make
short-term marketable investment grade investments.
Independent is not presently engaged in any acquisition
discussions.
Before purchasing the preferred securities, you should carefully consider
the "--Risk"Risk Factors" beginning on page 10.
7
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table summarizes ourIndependent's selected consolidated financial
information and other financial data. The summary balance sheet data and summary
operations data insofar as they relate to, as of, or for the five years ended
December 31, 2000 are derived from ourIndependent's audited consolidated financial
statements. The summary balance sheet data and summary operations data as of or
for the nine-month periods ended September 30, 2001 and 2000 are derived from
ourIndependent's unaudited consolidated financial statements. In ourIndependent's
opinion, all adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of results as of or for the nine-month periods
ended September 30, 2001 and 2000 have been included. This information should be
read together with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and ourIndependent's consolidated financial statements
and the related notes incorporated by reference into this prospectus from
ourIndependent's Annual Report on Form 10-K for the year ended December 31, 2000
and ourIndependent's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001. Results for past periods
are not necessarily indicative of results that may be expected for any future
period, and results for the nine-month period ended September 30, 2001 are not
necessarily indicative of results that may be expected for the full year ending
December 31, 2001.
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- --------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Total assets........................... $2,144,319 $1,870,713 $1,949,976 $1,590,056 $1,575,069 $1,370,007 $1,092,793
Total loans............................ 1,288,642 1,170,873 1,184,764 1,028,510 941,112 828,132 695,406
Securities held to maturity............ 121,647 203,286 195,416 229,043 284,944 308,112 290,894
Securities available for sale.......... 547,208 287,677 387,476 201,614 195,199 131,842 26,449
Total deposits......................... 1,568,127 1,485,352 1,489,222 1,081,806 1,043,317 988,148 918,572
FHLB borrowings........................ 284,919 116,224 191,224 256,224 313,724 206,724 78,000
Stockholders' equity................... 135,198 107,227 114,712 98,129 95,848 92,493 81,110
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA:
Interest income........................ $ 108,350 $ 92,243 $ 127,566 $ 112,006 $ 108,712 $ 93,820 $ 77,424
Interest expense....................... 42,790 40,205 55,419 50,178 49,569 41,578 32,354
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income.................... 65,560 52,038 72,147 61,828 59,143 52,242 45,070
Provision for possible loan losses..... 2,787 1,618 2,268 3,927 3,960 2,260 1,750
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision for
loan losses.......................... 62,773 50,420 69,879 57,901 55,183 49,982 43,320
Non-interest income.................... 15,826(1) 12,064 16,418 14,793 13,125 11,742 11,381
Non-interest expenses.................. 51,349 43,786 59,374 45,450 41,697 38,595 36,951
Minority interest expense.............. 4,157 3,929 5,319 2,668 2,668 1,645 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes............. 23,093 14,769 21,604 24,576 23,943 21,484 17,750
Income taxes........................... 7,330 4,412 6,414 7,545 7,804 7,326 6,153
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................. $ 15,763 $ 10,357 $ 15,190 $ 17,031 $ 16,139 $ 14,158 $ 11,597
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Net income:
Basic................................ $1.10 $0.73 $1.07 $1.20 $1.10 $0.97 $0.80
Diluted.............................. 1.09 0.72 1.06 1.19 1.08 0.95 0.79
Cash dividends......................... 0.33 0.30 0.40 0.40 0.40 0.34 0.25
Book value, end of period.............. 9.45 7.52 8.05 6.92 6.63 6.25 5.55
8
AT OR FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
SELECTED FINANCIAL RATIOS(2):
Return on average assets............... 1.04% 0.83% 0.88% 1.09% 1.12% 1.15% 1.13%
Return on average equity............... 17.11 13.47 14.58 17.57 16.71 16.45 15.20
Net interest margin.................... 4.77 4.56 4.59 4.30 4.36 4.52 4.72
Operating expenses as a percent of
average assets....................... 3.37 3.50 3.43 2.90 2.88 3.14 3.60
Nonperforming loans as a percent of
gross loans.......................... 0.25 0.39 0.37 0.35 0.56 0.69 0.63
Nonperforming assets as a percent of
total assets at end of period........ 0.15 0.24 0.23 0.23 0.34 0.43 0.43
Reserve for possible loan losses as a
percent of loans..................... 1.31 1.32 1.31 1.45 1.46 1.53 1.76
Reserve for possible loan losses as a
percent of nonperforming loans at end
of period............................ 534.80 340.62 351.00 409.36 255.69 215.14 273.89
Dividend payout ratio.................. 33.11 36.66 37.53 33.50 37.03 35.78 31.64
Capital ratios at end of period:
Tier 1 leverage...................... 6.15 6.07 5.86 8.15 7.91 8.64 7.35
Tier 1 risk-based.................... 8.98 8.24 8.50 11.14 11.38 13.52 10.89
Total risk-based..................... 11.07 10.82 10.97 12.39 12.63 14.78 12.15
Ratio of earnings to fixed charges(3):
Including interest on deposits....... 1.53x 1.36x 1.39x 1.48x 1.48x 1.51x 1.54x
Excluding interest on deposits....... 2.83x 2.01x 2.19x 2.23x 2.27x 3.02x 4.26x
- ------------------------------
(1) WeIndependent reported net securities gains as a separate line item in ourits
Form 10-Q for the quarter and period ended September 30, 2001.
(2) With the exception of end-of-period ratios, all ratios are based on average
daily balances during the indicated period.
(3) For purposes of computing the ratios of earnings to fixed charges, earnings
represent income before extraordinary items and cumulative effect of changes
in accounting principles plus applicable income taxes and fixed charges.
Fixed charges includes gross interest expense (exclusive of interest on
deposits in one case and inclusive of such interest in the other) and
one-third of rent expenses which approximates the interest expense of such
charges.
9
RISK FACTORS
INVESTING IN THE PREFERRED SECURITIES INVOLVES A NUMBER OF RISKS.
WE URGEINDEPENDENT URGES YOU TO READ ALL OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS. IN ADDITION, WE
URGEINDEPENDENT URGES YOU TO CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN EVALUATING AN INVESTMENT IN THE TRUST BEFORE YOU PURCHASE
THE PREFERRED SECURITIES.
BECAUSE THE TRUST WILL RELY ON THE PAYMENTS IT RECEIVES ON THE DEBENTURES TO
FUND ALL PAYMENTS ON THE PREFERRED SECURITIES, AND BECAUSE THE TRUST MAY
DISTRIBUTE THE DEBENTURES IN EXCHANGE FOR THE PREFERRED SECURITIES, PURCHASERS
OF THE PREFERRED SECURITIES ARE MAKING AN INVESTMENT DECISION THAT RELATES TO
THE DEBENTURES BEING ISSUED BY USINDEPENDENT AS WELL AS THE PREFERRED SECURITIES.
PURCHASERS SHOULD CAREFULLY REVIEW THE INFORMATION IN THIS PROSPECTUS ABOUT THE
PREFERRED SECURITIES, THE DEBENTURES AND THE GUARANTEE.
RELATED TO AN INVESTMENT IN THE PREFERRED SECURITIES
IF WE DO NOTTHE TRUST'S ABILITY TO MAKE INTEREST PAYMENTS UNDERTO YOU ON THE DEBENTURES,PREFERRED
SECURITIES IS DEPENDENT UPON INDEPENDENT'S ABILITY TO MAKE PAYMENTS TO THE TRUST
WILL BE
UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS.ON THE GUARANTEE WILL NOT
APPLY BECAUSE THE GUARANTEE COVERS PAYMENTS ONLY IF THE TRUST HAS FUNDS
AVAILABLE.DEBENTURES.
The trust will depend solely on ourIndependent's payments on the debentures to
pay amounts due to you on the preferred securities. If we defaultIndependent defaults on
ourits obligation to pay the principal or interest on the debentures, the trust
will not have sufficient funds to pay distributions or the liquidation amount on
the preferred securities. In that case, you will not be able to rely on the
guarantee for payment of these amounts because the guarantee only applies if the
trust has sufficient funds to make distributions on or to pay the liquidation
amount of the preferred securities. Instead, you or the property trustee will
have to institute a direct action against usIndependent to enforce the property
trustee's rights under the indenture relating to the debentures.
OURINDEPENDENT'S ABILITY TO MAKE INTEREST PAYMENTS ON THE DEBENTURES TO THE
TRUST MAY BE RESTRICTED.
We areIndependent is a holding company and substantially all of ourits assets are
held by our
subsidiaries. Ourits subsidiaries, primarily Rockland Trust. Independent's ability to
make payments on the debentures when due will depend primarily on ourits available
cash resources and dividends from ourits subsidiaries. Dividend payments or
extensions of credit from the BankRockland Trust are subject to regulatory limitations,
generally based on capital levels and current and retained earnings, imposed by
the various regulatory agencies with authority over the Bank.Rockland Trust. The ability
of our bankRockland Trust to pay dividends is also subject to its profitability,
financial condition, capital expenditures and other cash flow requirements. WeAs
of September 30, 2001, Independent could receive $10.2 million in dividend
payments from Rockland Trust without the need for prior regulatory approval and
still be considered well capitalized. Independent cannot assure you that ourits
subsidiaries will be able to pay dividends in the future.
WeIndependent could also be precluded from making interest payments on the
debentures by ourits regulators if in the future they were to perceive deficiencies
in ourits liquidity or regulatory capital levels. If this were to occur,
weIndependent may be required to obtain the consent of ourits regulators prior to
paying dividends on ourits common stock or interest on the debentures. If consent
became required and ourits regulators were to withhold their consent, weIndependent
would likely exercise ourits right to defer interest payments on the debentures,
and the trust would not have funds available to make distributions on the
preferred securities during such period. As of September 30, 2001, Independent's
Tier 1 leverage capital was $38.6 million in excess of its minimum regulatory
requirements.
IN THE DEBENTURESEVENT OF INDEPENDENT'S LIQUIDATION OR REORGANIZATION, YOU WILL NEED
TO LOOK TO INDEPENDENT'S ASSETS FOR PAYMENTS ON THE PREFERRED SECURITIES AND
THE GUARANTEE RANK LOWER THAN MOST OF OUR OTHER
INDEBTEDNESS AND OUR HOLDING COMPANY STRUCTURE EFFECTIVELY SUBORDINATES ANY
CLAIMS AGAINST US TO THOSE OF OUR SUBSIDIARIES' CREDITORS.
OurDEBENTURES.
Independent's obligations under the debentures and the guarantee are
unsecured and will rank junior in priority of payment to our existing andits future senior and
subordinated indebtedness. As of September 30, 2001, weIndependent had no senior
and subordinated indebtedness outstanding. OurIndependent's obligations under the
debentures will rank equal to other debentures issued by usit to similar trusts,
including the
10
debentures previously sold to Trust Ithe trusts it established in 1997 and Trust II.2000. Except
in certain circumstances, ourIndependent's ability to incur additional indebtedness
is not limited.
Because we areIndependent is a bank holding company, the creditors of ourits
subsidiaries, including depositors, also will have priority over you in any
distribution of ourits subsidiaries' assets in liquidation, reorganization or
otherwise. Accordingly, the debentures and the guarantee will be effectively
subordinated to all existing and future liabilities of ourIndependent's
subsidiaries, and you should look only to ourIndependent's assets for payments on
the preferred securities and the debentures.
WE HAVE THE OPTION TOTRUST CAN DEFER INTEREST PAYMENTS ON THE DEBENTURESPREFERRED SECURITIES FOR SUBSTANTIAL PERIODS.
WeUP TO
FIVE YEARS.
Independent may, at one or more times, defer interest payments on the
debentures for up to 20 consecutive quarters. If we deferIndependent defers interest
payments on the debentures, the trust will defer distributions on the preferred
securities during any deferral period. During a deferral period, you will be
required to recognize as income for federal income tax purposes the amount
approximately equal to the interest that accrues on your proportionate share of
the debentures held by the trust in the tax year in which that interest accrues,
even though you will not receive these amounts until a later date.
You will also not receive the cash related to any accrued and unpaid
interest from the trust if you sell the preferred securities before the end of
any deferral period. During a deferral period, accrued but unpaid distributions
will increase your tax basis in the preferred securities. If you sell the
preferred securities during a deferral period, your increased tax basis will
decrease the amount of any capital gain or increase the amount of any capital
loss that you may have otherwise realized on the sale.
A capital loss, except in
certain limited circumstances, cannot be applied to offset ordinary income. As a
result, deferral of distributions could result in ordinary income, and a related
tax liability for the holder, and a capital loss that may only be used to offset
a capital gain.
In the event that we exercise ourIf Independent exercises its right to defer interest payments on the
debentures, we will be prohibited from paying dividends on our common stock
during the deferral period. We do not currently intend to exercise our right to
defer interest payments on the debentures. However, if we exercise our right in
the future, the market price of the preferred securities would likely be
adversely affected. The preferred securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest on the debentures. If you
sell the preferred securities during a deferral period, you may not receive the
same return on investment as someone who continues to hold the preferred
securities. Due to ourIndependent's right to defer interest payments, the market
price of the preferred securities may be more volatile than the market prices of
other securities without the deferral feature.
WE HAVE MADE ONLY LIMITED COVENANTSNEITHER THE INDENTURE NOR THE TRUST AGREEMENT PROVIDE INVESTORS WITH
PROTECTIONS BY RESTRICTING HOW INDEPENDENT OR ROCKLAND TRUST MAY CONDUCT
BUSINESS IN THE INDENTURE AND THE TRUST
AGREEMENT.FUTURE.
The indenture governing the debentures and the trust agreement governing the
trust do not require usIndependent to maintain any financial ratios or specified
levels of net worth, revenues, income, cash flow or liquidity, and therefore do
not protect holders of the debentures or the preferred securities in the event
we
experienceIndependent experiences significant adverse changes in ourits financial condition
or results of operations. Neither the indenture nor the trust agreement limits
ourIndependent's ability or the ability of any of ourits subsidiaries to incur other
additional indebtedness that is senior in right of payment to the debentures.
Therefore, you should not consider the provisions of these governing instruments
as a significant factor in evaluating whether weIndependent will be able to comply
with ourits obligations under the debentures or the guarantee.
WEINDEPENDENT MAY REDEEMTAKE ACTIONS WHICH COULD RESULT IN AN EARLY REDEMPTION OF
THE DEBENTURES BEFORE , 2031.PREFERRED SECURITIES.
Under the following circumstances, weIndependent may redeem the debentures
before their stated maturity:
- In whole or in part, at any time on or after , 2006;
11
- In whole, but not in part, within 180 days after certain specified
occurrences at any time during the life of the trust. These occurrences
may include adverse tax, investment company or bank regulatory
developments; or
11
- At any time, and from time to time, to the extent of any preferred
securities we purchase,it purchases, plus a proportionate amount of the common
securities we hold.
You should assume that an early redemption may be attractive to us if we are
able to obtain capital at a lower cost than we must pay on the debentures or if
it is otherwise in our interest to redeem the debentures.holds.
If the debentures are redeemed, the trust must redeem preferred securities
having an aggregate liquidation amount equal to the aggregate principal amount
of debentures redeemed, and you may be required to reinvest your principal at a
time when you may not be able to earn a return that is as high as you were
earning on the preferred securities.
The debentures issued by us to Trust II may be redeemed on
or after January 31, 2002. We presently intend to use the proceeds from this
offering to fund such redemption. See "--Use of Proceeds" on page 16.
WEINDEPENDENT CAN DISTRIBUTE THE DEBENTURES TO YOU, WHICH MAY HAVE ADVERSE TAX
CONSEQUENCES FOR YOU AND WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
PREFERRED SECURITIES.
The trust may be dissolved at any time before maturity of the debentures on
, 2031. As a result, and subject to the terms of the trust
agreement, the trustees may distribute the debentures to you. If this occurs,
weIndependent will use ourits best efforts to list the debentures on the Nasdaq
National Market or other national securities exchange or national quotation
system. However, weIndependent cannot predict the market prices for the debentures
that may be distributed in exchange for preferred securities upon liquidation of
the trust. The preferred securities, or the debentures that you may receive if
the trust is liquidated, may trade at a discount to the price that you paid to
purchase the preferred securities. Because you may receive debentures, your
investment decision with regard to the preferred securities will also be an
investment decision with regard to the debentures. You should carefully review
all of the information contained in this prospectus regarding the debentures.
Under current interpretations of United States federal income tax laws
supporting classification of the trust as a grantor trust for tax purposes, a
distribution of the debentures to you upon the dissolution of the trust would
not be a taxable event to you. Nevertheless, if the trust is classified for
United States federal income tax purposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the debentures
would be a taxable event to you. In addition, if there is a change in law, a
distribution of debentures upon the dissolution of the trust could be a taxable
event to you.
THERE IS NO CURRENT PUBLIC MARKET FOR THE PREFERRED SECURITIES AND THEIR
MARKET PRICE MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
There is currently no public market for the preferred securities.
ApplicationIndependent has been madeapplied for and received approval to have the preferred
securities quoted on the Nasdaq National Market. However, weIndependent cannot
assure you that our application will be
approved or that an active or liquid trading market will develop for the
preferred securities. If an active trading market does not develop, the market
price and liquidity of the preferred securities will be adversely affected. Even
if an active public market does develop, there is no guarantee that the market
price for the preferred securities will equal or exceed the price you pay for
the preferred securities. Our 9.28% cumulative trust preferred securities issued
by Trust I in May 1997 are quoted on the Nasdaq National Market under the symbol
"INDBP" and our 11.0% cumulative trust preferred securities issued by Trust II
in January 2000 are quoted on the Nasdaq National Market under the symbol
"INDBO."
Future trading prices of the preferred securities may
be subject to significant fluctuations in response to prevailing interest rates,
ourIndependent's future operating results and financial condition, the market for
similar securities and general economic and market conditions. The initial public offering price of the
12
Independent's
9.28% cumulative trust preferred securities has been set atissued in May 1997 are quoted on the
liquidation amount ofNasdaq National Market under the symbol "INDBP" and Independent's 11.00%
cumulative trust preferred securities and may be greater or less than the initial public offering price
following the offering.
The market price for the preferred securities, or the debentures that you
may receiveissued in a distribution, is also likely to decline during any period that
weJanuary 2000 are deferring interest paymentsquoted on the
debentures.Nasdaq National Market under the symbol "INDBO."
YOU MUST RELY ON THE PROPERTY TRUSTEE TO ENFORCE YOUR RIGHTS IF THERE IS AN
EVENT OF DEFAULT UNDER THE INDENTURE.
You may not be able to directly enforce your rights against usIndependent if
an event of default under the indenture occurs. If an event of default under the
indenture occurs and is continuing, this event will also be an event of default
under the trust agreement. In that case, you must rely on the enforcement by the
property trustee of its rights as holder of the debentures against us.Independent.
The holders of a majority in liquidation amount of the preferred securities will
have the right to direct the property trustee to enforce its rights. If the
property trustee does not enforce its rights following an event of default and a
request by the record holders of a majority in liquidation amount of the
12
preferred securities to do so, any record holder may, to the extent permitted by
applicable law, take action directly against usIndependent to enforce the property
trustee's rights. If an event of default occurs under the trust agreement that
is attributable to ourIndependent's failure to pay interest or principal on the
debentures, or if we defaultIndependent defaults under the guarantee, you may proceed
directly against us.Independent. You will not be able to exercise directly any
other remedies available to the holders of the debentures unless the property
trustee fails to do so.
AS A HOLDER OF PREFERRED SECURITIES, YOU HAVE LIMITED VOTING RIGHTS.
Holders of preferred securities have limited voting rights. Your voting
rights pertain primarily to amendments to the trust agreement. In general, only
weIndependent, as holder of the trust common securities, can replace or remove any
of the trustees. However, if an event of default under the trust agreement
occurs and is continuing, the holders of at least a majority in aggregate
liquidation amount of the preferred securities may replace the property trustee
and the Delaware trustee.
RISKS RELATING TO AN INVESTMENT IN THE COMPANY
OURINDEPENDENT
INDEPENDENT'S LEVEL OF CREDIT RISK IS INCREASING DUE TO THE EXPANSION OF OURITS
COMMERCIAL LENDING AND OURITS CONCENTRATION ON SMALL BUSINESSES AND MIDDLE MARKET
CUSTOMERS WITH HEIGHTENED VULNERABILITY TO ECONOMIC CONDITIONS.
OurIndependent's commercial real estate loans and commercial business loans
have increased significantly from $260.6 million and $119.7 million,
respectively, at December 31, 1998, to $444.9 million and $150.0 million,
respectively, at September 30, 2001. OurIndependent's level of credit risk has
increased as a result of the growth in ourits loan portfolio. Commercial real
estate loans generally are considered riskier than single-family residential
loans because they have larger balances to a single borrower or group of related
borrowers. Commercial business loans involve risks because the borrower's
ability to repay the loan typically depends primarily on the successful
operation of the business or the property securing the loan. Most of ourits
commercial business loans are made to small businesses and middle market
customers who may have a heightened vulnerability to economic conditions.
CHANGES IN INTEREST RATES COULD ADVERSELY IMPACT OURINDEPENDENT'S FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
OurIndependent's ability to make a profit, like that of most financial
institutions, substantially depends upon ourits net interest income, which is the
difference between the interest income we earnearned on our interest-earning assets, such
as loans and investment securities, and the interest expense we paypaid on our
interest-bearinginterest-
bearing liabilities, such as deposits and borrowings. Certain assets and
liabilities, however, may react in different degrees to changes in market
interest rates. Further, interest rates on some types of assets and liabilities
may fluctuate prior to changes in broader market interest rates, while rates on
other types of 13
assets may lag behind. Additionally, some of our assets, such as
adjustable-rate mortgages, have features, including payment and rate caps, which
restrict changes in their interest rates.
Factors such as inflation, recession, unemployment, money supply, global
disorder such as that experienced as a result of the terrorist activity on
September 11, 2001, instability in domestic and foreign financial markets, and
other factors beyond ourIndependent's control, may affect interest rates. Changes
in market interest rates will also affect the level of voluntary prepayments on
our loans and the receipt of payments on our mortgage-backed securities, resulting in
the receipt of proceeds that we may have to reinvestbe reinvested at a lower rate than the
loan or mortgage-backed security being prepaid. Although we pursueIndependent pursues an
asset-liability management strategy designed to control ourits risk from changes in
market interest rates, changes in interest rates can still have a material
adverse effect on ourIndependent's profitability.
13
IF WE HAVEINDEPENDENT HAS HIGHER LOAN LOSSES THAN WEIT ALLOWED FOR, OURITS EARNINGS
COULD DECREASE AND WEIT MAY NOT BE ABLE TO MAKE PAYMENTS ON THE DEBENTURES.
OurIndependent's loan customers may not repay their loans according to the
terms of these loans, and the collateral securing the payment of these loans may
be insufficient to assure repayment. WeIndependent may experience significant
credit losses which could have a material adverse effect on ourits operating
results. We makeIndependent makes various assumptions and judgments about the
collectibility of ourits loan portfolio, including the creditworthiness of ourits
borrowers and the value of the real estate and other assets serving as
collateral for the repayment of many of ourits loans. In determining the size of
the allowance for loan losses, we relyIndependent relies on ourits experience and ourits
evaluation of economic conditions. If ourits assumptions prove to be incorrect, ourits
current allowance for loan losses may not be sufficient to cover losses inherent
in ourits loan portfolio and adjustments may be necessary to allow for different
economic conditions or adverse developments in ourits loan portfolio. Consequently,
a problem with one or more loans could require that weIndependent to significantly
increase the level of ourits provision for loan losses. In addition, federal and
state regulators periodically review ourIndependent's allowance for loan losses and
may require usit to increase ourits provision for loan losses or recognize further
loan charge-offs. Material additions to ourthe allowance would materially decrease
ourIndependent's net income and, if we experienceit experiences defaults in ourits loan portfolio
to a greater extent than we anticipated, weIndependent may not be able to pay
interest on the debentures and, as a result, the trust would not be able to make
distributions on the preferred securities.
A SIGNIFICANT AMOUNT OF OURINDEPENDENT'S LOANS ARE CONCENTRATED IN
MASSACHUSETTS, AND ADVERSE CONDITIONS IN THESE AREAS COULD NEGATIVELY IMPACT OURITS
OPERATIONS.
Substantially all of the loans we originateIndependent originates are secured by
properties located in or are made to businesses which operate in Massachusetts.
Because of the current concentration of ourIndependent's loan origination
activities in Massachusetts, in the event of adverse economic, political or
business developments or natural hazards that may affect Massachusetts and the
ability of property owners and businesses in Massachusetts to make payments of
principal and interest on the underlying loans, weIndependent would likely
experience higher rates of loss and delinquency on ourits loans than if ourits loans
were made more geographically diversified, which could have an adverse effect on
ourits results of operations or financial condition.
COMPETITION WITH OTHER FINANCIAL INSTITUTIONS COULD ADVERSELY AFFECT OUR
PROFITABILITY.
We face substantial competition in originating loans and in attracting
deposits. This competition in originating loans comes principally from other
banks, savings institutions, mortgage banking companies, consumer finance
companies, insurance companies and other institutional lenders and purchasers of
loans. In attracting deposits, we compete with insured depository institutions
such as savings institutions, credit unions and banks, as well as institutions
offering uninsured investment alternatives including money market funds. These
competitors may offer higher interest rates than we do, which could result in
either our attracting fewer deposits or in our being required to increase our
rates in order to attract deposits. Increased deposit competition could increase
our cost of funds and adversely
14
affect our ability to generate the funds necessary for our lending operations,
thereby adversely affecting our results of operations. A number of institutions
with which we compete have significantly greater assets, capital and other
resources and many of such institutions have made investments in technology
which are difficult for us to match. In addition, many of our competitors are
not subject to the same extensive federal regulation that governs our business.
As a result, many of our competitors have advantages over us in conducting
certain businesses and providing certain services.
CHANGES IN STATUTES AND REGULATIONS COULD ADVERSELY AFFECT US.
We are subject to extensive federal and state legislation, regulation,
examination and supervision. Recently enacted, proposed and future legislation
and regulations have had, will continue to have, or may have, a material adverse
effect on our business and operations. Our success depends on our continued
ability to maintain compliance with these regulations. Some of these regulations
may increase our costs and thus place other financial institutions in stronger,
more favorable competitive positions. We cannot predict what restrictions may be
imposed upon us with future legislation.
15
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We makeIndependent makes certain forward-looking statements in this prospectus and
in the information incorporated by reference herein that are based upon ourits
current expectations and projections about current events. We intendIndependent intends
these forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and we areIndependent is including this statement for purposes of these
safe harbor provisions. You can identify these statements from ourIndependent's use
of the words "estimate," "project," "believe," "intend," "anticipate," "expect"
and similar expressions. These forward-looking statements include:
- statements of ourIndependent's goals, intentions and expectations;
- statements regarding ourIndependent's business plans and growth strategies;
- statements regarding the asset quality of ourIndependent's loan and
investment portfolios; and
- estimates of ourIndependent's risks and future costs and benefits.
These forward-looking statements are subject to significant risks,
assumptions and uncertainties, including, among other things, the following
important factors which could affect the actual outcome of future events:
- fluctuations in market rates of interest and loan and deposit pricing,
which could negatively affect ourIndependent's net interest margin, asset
valuations and expense expectations;
- adverse changes in the Massachusetts economy, which might affect
ourIndependent's business prospects and could cause credit-related losses and
expenses;
- adverse developments in ourIndependent's loan and investment portfolios;
- competitive factors in the banking industry, such as the trend towards
consolidation in ourIndependent's market; and
- changes in banking legislation or the regulatory requirements of federal
and state agencies applicable to bank holding companies and banks like
ours.Rockland Trust.
Because of these and other uncertainties, ourIndependent's actual future
results may be materially different from the results indicated by these
forward-looking statements. In addition, ourIndependent's past results of
operations do not necessarily indicate ourits future results.
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of the preferred
securities in the debentures. We anticipateIndependent anticipates that the net proceeds from
the sale of the debentures will be approximately $23.9 million after deduction
of offering expenses estimated to be $275,000 and underwriting commissions.
Subject to then existing market conditions, we expectCurrently, Independent expects to use the estimated net proceeds from the
sale of the debentures to redeem in full on or after January 31, 2002, the
11.0%11.00% junior subordinated debentures sold by usIndependent to Trust
IIthe trust it
established in January 2000. In connection with such redemption, Trust IIthat trust
would redeem its outstanding preferred securities. If material changes in market conditionsan unexpected acquisition
opportunity were to arise after the sale of the preferred securities offered by
this prospectus, should
cause usIndependent might decide not to redeem such debentures, wedebentures. Under
such circumstances, Independent would use the proceeds for general corporate
purposes, including capital contributions to the Bank to support its
growth strategy and for working capital.purposes. Initially, the net proceeds may be used to make short-term marketable
investment grade investments. 16Independent is not presently engaged in any
acquisition discussions.
15
CAPITALIZATION
The following table sets forth ourIndependent's unaudited consolidated
capitalization as of September 30, 2001 on a historical basis and as adjusted
for the offering and the application of the estimated net proceeds from the
corresponding sale of the debentures as if such sale had been consummated on
September 30, 2001. This data should be read in connection with ourIndependent's
consolidated financial statements and the related notes incorporated by
reference into this prospectus from ourIndependent's Annual Report on Form 10-K for
the year ended December 31, 2000 and ourIndependent's Quarterly Report on
Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and
September 30, 2001.
SEPTEMBER 30, 2001
--------------------------------------
AS ADJUSTED
FOR
ACTUAL AS ADJUSTED REDEMPTION
---------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
MINORITY INTEREST IN SUBSIDIARIES:
Corporation-obligated mandatorily redeemable 9.28% trust
preferred securities of Trust I due May 19, 2027(1)....2027 (1)... $ 28,750 $ 28,750 $ 28,750
Corporation-obligated mandatorily redeemable 11.00% trust
preferred securities of Trust II due January 31, 2030(1)................................................2030
(1).................................................... 25,000 25,000 --
Corporation-obligated mandatorily redeemable % trust
preferred securities of Trust III (2).................. -- 25,000 25,000
---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01par$0.01 par value, 1,000,000 shares
authorized; none issued.............................. -- -- --
Common stock, par value $0.01; 30,000,000 shares
authorized; 14,863,821 shares issued and 14,311,009
shares outstanding................................... 149 149 149
Surplus................................................ 43,595 43,595 42,875 (3)
Retained earnings...................................... 88,076 88,076 88,076
Treasury stock, 552,812 shares......................... (8,627) (8,627) (8,627)
Accumulated other comprehensive income, net of tax..... 12,005 12,005 12,005
---------- ---------- ----------
Total stockholders' equity........................... $ 135,198 $ 135,198 $ 134,478
========== ========== ==========
Total liabilities, minority interest in subsidiaries
and stockholders' equity........................... $2,144,319 $2,169,319 $2,143,599
========== ========== ==========
CAPITAL RATIOS(4)RATIOS (4)
Tier 1 leverage........................................ 6.15% 6.08% 6.10%
Tier 1 risk-based...................................... 8.98% 8.98% 8.91%
Total risk-based....................................... 11.07% 12.83% 11.01%
- ------------------------
(1) Information in ourIndependent's consolidated financial statements is presented
net of issuance costs.
(2) Reflects the preferred securities at their issue price. As described herein,
the only assets of the trust, which is ourIndependent's subsidiary, will be
approximately $25.8 million in aggregate principal amount of debentures,
including the amount attributable to the issuance of the common securities
of the trust, which will mature on , 2031. WeIndependent will own
all of the common securities issued by the trust.
16
(3) Reflects the impact of the Company recording a charge to paid-in-capital
(net of tax) for the early redemption of Trust IIthe securities issued by the trust
established by Independent in 2000 in the amount of $720,000.
17
(4) The preferred securities have been structured to qualify as Tier 1 capital.
However, in calculating the amount of Tier 1 qualifying capital, the
preferred securities, together with any other of Independent's trust
preferred securities or cumulative preferred stock of us that may be outstanding
in the future, can only be included up to an amount constituting 25% of
total Tier 1 core capital elements (including the preferred securities).
None of the proceeds from the sale of the perferred securities will be
initially included in Tier 1 capital. As adjusted for this offering and the
subsequent redemption of the preferred securities from Trust II, an
aggregate of $12.1 million of the proceeds will be eligible for inclusion in
the calculation of Tier 1 capital.
ACCOUNTING AND REGULATORY TREATMENT
The trust will be treated, for financial reporting purposes, as oura subsidiary
and, accordingly, the accounts of the trust will be included in ourIndependent's
consolidated financial statements. The preferred securities will be presented as
a separate line item in ourIndependent's consolidated statement of financial
condition under the caption "Corporation-obligated mandatorily redeemable trust
preferred securities of subsidiary trust, holding solely junior subordinated
debentures of the Corporation" or other similar caption. In addition,
appropriate disclosures about the preferred securities, the guarantee and the
debentures will be included in the Notes to ourIndependent's Consolidated Financial
Statements. For financial reporting purposes, weIndependent will record
distributions payable on the preferred securities in ourits Consolidated Statements
of Operations as minority interest expense.
OurIndependent's future reports filed under the Securities Exchange Act of 1934
will include a footnote to the audited Consolidated Financial Statements stating
that:
- the trust is wholly owned;
- the sole assets of the trust are the debentures, specifying the
debentures' outstanding principal amount, interest rate and maturity date;
and
- ourIndependent's obligations described in this prospectus, in the aggregate,
constitute a full, irrevocable and unconditional guarantee on a
subordinated basis by usit of the obligations of the trust under the
preferred securities.
Under accounting rules of the Securities and Exchange Commission,
we areIndependent is not required to include separate financial statements of the
trust in this prospectus because weit will own all of the trust's voting
securities, the trust has no independent operations and we guaranteeIndependent guarantees
the payments on the preferred securities to the extent described in this
prospectus.
1817
DESCRIPTION OF THE TRUST
The trust is a statutory business trust formed pursuant to the Delaware
Business Trust Act under a declaration of trust executed by us,Independent, as
sponsor for the trust, and the trustees. We haveIndependent has filed a certificate of
trust with the Delaware Secretary of State. The declaration of trust will be
amended and restated in its entirely in the form filed as an exhibit to the
registration statement of which this prospectus is a part, as of the date the
preferred securities are initially issued and shall be referred to as the trust
agreement in this prospectus. The trust agreement will be qualified under the
Trust Indenture Act of 1939. Independent has formed the trust and is causing it
to issue the preferred securities because it believes that it is less expensive
than traditional preferred stock (the interest payments made on the debentures
issued to the trust are deductible for federal tax purposes) and is not dilutive
to its stockholders. Independent currently expects to use the estimated net
proceeds from the sale of the debentures to redeem in full on or after January
31, 2002 the 11.00% junior subordinated debentures sold by Independent to the
trust it established in January 2000. In connection with such redemption, that
trust would redeem its outstanding preferred securities. See "Use of Proceeds"
on page 15.
The holders of the preferred securities issued pursuant to the offering
described in this prospectus will own all of the issued and outstanding
preferred securities of the trust which have certain prior rights over the other
securities of the trust. WeIndependent will not initially own any of the preferred
securities. WeIndependent will acquire common securities in an amount equal to at
least 3% of the total capital of the trust and will initially own, directly or
indirectly, all of the issued and outstanding common securities. The common
securities, together with the preferred securities, are called the trust
securities.
The trust exists exclusively for the purposes of:
- issuing the preferred securities to the public for cash;
- issuing its common securities to usIndependent in exchange for ourits
capitalization of the trust;
- investing the proceeds from the sale of the trust securities in an
equivalent amount of debentures; and
- engaging in other activities that are incidental to those listed above,
such as receiving payments on the debentures and making distributions to
security holders, furnishing notices and other administrative tasks.
The rights of the holders of the trust securities are as set forth in the
trust agreement, the Delaware Business Trust Act and the Trust Indenture Act.
The trust agreement does not permit the trust to borrow money or make any
investment other than in the debentures. Other than with respect to the trust
securities, we haveIndependent has agreed to pay for all debts and obligations and all
costs and expenses of the trust, including the fees and expenses of the trustees
and any income taxes, duties and other governmental charges, and all costs and
expenses related to these charges, to which the trust may become subject, except
for United Statesfederal withholding taxes that are properly withheld.
The number of trustees of the trust will initially be five. Three of the
trustees will be persons who are employees or officers of, or who are affiliated
with, us.Independent. They are the administrative trustees. The fourth trustee will
be an entity that maintains its principal place of business in the State of
Delaware. It is the Delaware trustee. Initially, The Bank of New York
(Delaware), will act as Delaware trustee. The fifth trustee, called the property
trustee, will also initially be The Bank of New York. The property trustee is
the institutional trustee under the trust agreement and acts as the indenture
trustee called for under the applicable provisions of the Trust Indenture Act.
Also for purposes of compliance with the Trust Indenture Act, The Bank of New
York will act as guarantee trustee and indenture trustee under the guarantee
agreement and the indenture. We,Independent, as holder of all of the common
securities, will have the right to appoint or remove any trustee unless an event
of default under the indenture has occurred and is continuing, in which case
only the holders of
18
the preferred securities may remove the Delaware trustee or the property
trustee. The trust has a term of approximately 30 years but may terminate
earlier as provided in the trust agreement.
The property trustee will hold the debentures for the benefit of the holders
of the trust securities and will have the power to exercise all rights, powers
and privileges under the indenture as the holder of the debentures. In addition,
the property trustee will maintain exclusive control of a segregated
noninterest-bearing "payment account" established with The Bank of New York to
hold all payments
19
made on the debentures for the benefit of the holders of the
trust securities. The property trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the trust
securities out of funds from the payment account. The guarantee trustee will
hold the guarantee for the benefit of the holders of the preferred securities.
DESCRIPTION OF THE PREFERRED SECURITIES
THE PREFERRED SECURITIES WILL BE ISSUED PURSUANT TO THE TRUST AGREEMENT. FOR
MORE INFORMATION ABOUT THE TRUST AGREEMENT, SEE "DESCRIPTION OF THE TRUST" ON
PAGE 19. THE BANK OF NEW YORK WILL ACT AS PROPERTY TRUSTEE FOR THE PREFERRED
SECURITIES UNDER THE TRUST AGREEMENT FOR PURPOSES OF COMPLYING WITH THE
PROVISIONS OF THE TRUST INDENTURE ACT. THE TERMS OF THE PREFERRED SECURITIES
WILL INCLUDE THOSE STATED IN THE TRUST AGREEMENT AND THOSE MADE PART OF THE
TRUST AGREEMENT BY THE TRUST INDENTURE ACT.
THE FOLLOWING DISCUSSION CONTAINS A DESCRIPTION OF THE MATERIAL PROVISIONS
OF THE PREFERRED SECURITIES AND IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO, THE TRUST AGREEMENT AND THE TRUST INDENTURE ACT. WE URGEINDEPENDENT
URGES YOU TO READ THE FORM OF AMENDED AND RESTATED AGREEMENT, WHICH IS FILED AS
AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS FORMS A PART.
GENERAL
The trust agreement authorizes the administrative trustees, on behalf of the
trust, acting singly or jointly, to issue the trust securities, which are
comprised of the preferred securities to be sold to the public and the common
securities. WeIndependent will own all of the common securities issued by the
trust. The trust is not permitted to issue any securities other than the trust
securities or incur any other indebtedness.
The preferred securities will represent preferred undivided beneficial
interests in the assets of the trust, and the holders of the preferred
securities will be entitled to a preference over the common securities upon an
event of default with respect to distributions and amounts payable on redemption
or liquidation. The preferred securities will rank equally, and payments on the
preferred securities will be made proportionally, with the common securities,
except as described under "--Subordination of Common Securities" on page 24.
The property trustee will hold legal title to the debentures in trust for
the benefit of the holders of the trust securities. WeIndependent will guarantee
the payment of distributions out of money held by the trust, and payments upon
redemption of the preferred securities or liquidation of the trust, to the
extent described under "--Description of the Guarantee" on page 43. The
guarantee does not cover the payment of any distribution or the liquidation
amount when the trust does not have sufficient funds available to make these
payments.
DISTRIBUTIONS
SOURCE OF DISTRIBUTIONS. The funds of the trust available for distribution
to holders of the preferred securities will be limited to payments made under
the debentures, which the trust will purchase with the proceeds from the sale of
the trust securities. Distributions will be paid through the property trustee,
which will hold the amounts received from ourIndependent's interest payments on the
debentures in the payment account for the benefit of the holders of the trust
securities. If we doIndependent does not make interest payments on the debentures,
the property trustee will not have funds available to pay distributions on the
preferred securities.
19
PAYMENT OF DISTRIBUTIONS. Distributions on the preferred securities will be
payable at the annual rate of % of the $25 stated liquidation amount, payable
quarterly on March 31, June 30, September 30 and December 31 of each year, to
the holders of the preferred securities on the relevant record dates. So long as
the preferred securities are represented by a global security, as described
20
below, the record date will be the business day immediately preceding the
relevant distribution date. The first distribution date for the preferred
securities will be DecemberMarch 31, 2001.2002.
Distributions will accumulate from the date of issuance, will be cumulative
and will be computed on the basis of a 360-day year of twelve 30-day months. If
the distribution date is not a business day, then payment of the distributions
will be made on the next day that is a business day, without any additional
interest or other payment for the delay. However, if the next business day is in
the next calendar year, payment of the distribution will be made on the business
day immediately preceding the scheduled distribution date. When we use theThe term "business
day," we meanday" means any day other than a Saturday, a Sunday, a day on which banking
institutions in Massachusetts and New York, are authorized or required by law,
regulation or executive order to remain closed or a day on which the corporate
trust office of the property trustee or the indenture trustee is closed for
business.
EXTENSION PERIOD. As long as no event of default under the indenture has
occurred and is continuing, we haveIndependent has the right to defer the payment of
interest on the debentures at any time for a period not exceeding 20 consecutive
quarters. We refer to thisThis period of deferral is referred to as an "extension period." No
extension period may extend beyond , 2031 or end on a date other than
an interest payment date, which dates are the same as the distribution dates. If
we deferIndependent defers the payment of interest, quarterly distributions on the
preferred securities will also be deferred during any such extension period. Any
deferred distributions under the preferred securities will accumulate additional
amounts at the annual rate of %, compounded quarterly from the relevant
distribution date. The term "distributions" as used in this prospectus includes
those accumulated amounts.
During an extension period, weIndependent may not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of ourits capital
stock (other than stock dividends, non-cash dividends in connection with
the implementation of a shareholder rights plan, purchases of common stock
in connection with employee benefit plans or in connection with the
reclassification of any class of ourits capital stock into another class of
capital stock);
- make any payment of principal, interest or premium on or repay, repurchase
or redeem any debt securities that rank equally with, or junior in
interest to, the debentures;
- make any guarantee payments with respect to any other guarantee by usit of
any other debt securities of any of ourits subsidiaries if the guarantee
ranks equally with or junior to the debentures (other than payments under
the guarantee); or
- redeem, purchase or acquire less than all of the debentures or any of the
preferred securities.
After the termination of any extension period and the payment of all amounts
due, weIndependent may elect to begin a new extension period, subject to the above
requirements.
We doIndependent does not currently intend to exercise ourits right to defer
distributions on the preferred securities by deferring the payment of interest
on the debentures.
REDEMPTION OR EXCHANGE
GENERAL. Subject to the prior approval of the Federal Reserve, if required,
weIndependent will have the right to redeem the debentures:
- in whole at any time, or in part from time to time, on or after
, 2006;
20
- at any time, in whole but not in part, within 180 days following the
occurrence of a Tax Event, an Investment Company Event or a Capital
Treatment Event, which terms we defineIndependent defined below; or
21
- at any time, and from time to time, to the extent of any preferred
securities we purchase,purchased by Independent, plus a proportionate amount of the
common securities we hold.it holds.
MANDATORY REDEMPTION. Upon ourIndependent's repayment or redemption, in whole
or in part, of any debentures, whether on , 2031, or earlier, the
property trustee will apply the proceeds to redeem the same amount of the trust
securities, upon not less than 30 days nor more than 60 days notice, at the
redemption price. The redemption price will equal 100% of the aggregate
liquidation amount of the trust securities plus accumulated but unpaid
distributions to the date of redemption. If less than all of the debentures are
to be repaid or redeemed on a date of redemption, then the proceeds from such
repayment or redemption will be allocated to redemption of preferred securities
and common securities proportionately.
DISTRIBUTION OF DEBENTURES IN EXCHANGE FOR PREFERRED SECURITIES. Upon prior
approval of the Federal Reserve, if required, weIndependent will have the right at
any time to dissolve the trust and, after satisfaction of the liabilities of
creditors of the trust as provided by applicable law, including, without
limitation, amounts due and owing the trustees of the trust, cause the
debentures to be distributed directly to the holders of trust securities in
liquidation of the trust. See "--Liquidation Distribution Upon Dissolution" on
page 25.24.
After the liquidation date fixed for any distribution of debentures in
exchange for preferred securities:
- those trust securities will no longer be deemed to be outstanding;
- a registered global certificate representing debentures in a principal
amount equal to the liquidation amount of those preferred securities will
be issued to DTC or its nominee in exchange for the preferred securities;
- weIndependent will use ourits best efforts to list the debentures on the Nasdaq
National Market or a national securities exchange;
- any certificates representing trust securities not held by DTC or its
nominee that are not surrendered for exchange will be deemed to represent
debentures with a principal amount equal to the liquidation amount of
those preferred securities, accruing interest at the rate provided for in
the debentures from the last distribution date on the preferred
securities; and
- all rights of the trust security holders other than the right to receive
debentures upon surrender of a certificate representing trust securities
will terminate.
WeIndependent cannot assure you that the market prices for the preferred
securities or the debentures that may be distributed if a dissolution and
liquidation of the trust were to occur would be favorable. The preferred
securities that an investor may purchase, or the debentures that an investor may
receive on dissolution and liquidation of the trust, may trade at a discount to
the price that the investor paid to purchase the preferred securities.
REDEMPTION UPON A TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT
EVENT. If a Tax Event, an Investment Company Event or a Capital Treatment Event
occurs, weIndependent will have the right to redeem the debentures in whole, but
not in part, and thereby cause a mandatory redemption of all of the trust
securities at the redemption price. If one of these events occurs and
we doIndependent does not elect to redeem the debentures, or to dissolve the trust
and cause the debentures to be distributed to holders of the trust securities,
then the preferred securities will remain outstanding and additional interest
may be payable on the debentures.
21
"Tax Event" means the receipt by the trust and usIndependent of an opinion of
independent tax counsel experienced in such matters stating that, as a result of
any change or prospective change in the laws or regulations of the United States
or any political subdivision or taxing authority of the United States, or 22
as a
result of any official administrative pronouncement or judicial decision
interpreting or applying the tax laws or regulations, there is more than an
insubstantial risk that:
- interest payable by usIndependent on the debentures is not, or within
90 days of the date of the opinion will not be, deductible by us,Independent,
in whole or in part, for federal income tax purposes;
- the trust is, or will be within 90 days after the date of the opinion,
subject to federal income tax with respect to income received or accrued
on the debentures; or
- the trust is, or will be within 90 days after the date of the opinion,
subject to more than an immaterial amount of other taxes, duties,
assessments or other governmental charges.
"Investment Company Event" means the receipt by the trust and usIndependent of
an opinion of independent securities counsel experienced in such matters to the
effect that the trust is or will be, within 90 days after the date of the
opinion, considered an "investment company" that is required to be registered
under the Investment Company Act, as a result of a change in law or regulation
or a change in interpretation or application of law or regulation.
"Capital Treatment Event" means the receipt by the trust and usIndependent of
an opinion of independent banking counsel experienced in such matters to the
effect that there is more than an insubstantial risk of impairment, within
90 days after the date of the opinion, of ourIndependent's ability to treat the
preferred securities as Tier 1 capital for purposes of the current capital
adequacy guidelines of the Federal Reserve, as a result of any amendment to any
laws or any regulations.
For all of the events described above, weIndependent or the trust must request
and receive an opinion with regard to the event within a reasonable period of
time after we becomeIndependent becomes aware of the possible occurrence of an event of
this kind.
REDEMPTION OF DEBENTURES IN EXCHANGE FOR PREFERRED SECURITIES
WE
PURCHASE.PURCHASED. Upon prior approval of the Federal Reserve, if required, weIndependent
will also have the right at any time, and from time to time, to redeem
debentures in exchange for any preferred securities weit may have purchased in the
market. If we
electIndependent elects to surrender any preferred securities beneficially
owned by usit in exchange for redemption of a like amount of debentures,
weIndependent will also surrender a proportionate amount of common securities in
exchange for debentures. Preferred securities owned by other holders will not be
called for redemption at any time when we electIndependent elects to exchange trust
securities we ownit owns to redeem debentures.
The common securities we surrenderIndependent surrenders will be in the same proportion
to the preferred securities we surrenderit surrenders as is the ratio of common securities
purchased by usIndependent to the preferred securities issued by the trust. In
exchange for the trust securities surrendered by us,Independent, the property
trustee will cause to be released to usIndependent for cancellation debentures
with a principal amount equal to the liquidation amount of the trust securities,
plus any accumulated but unpaid distributions, if any, then held by the property
trustee allocable to those trust securities. After the date of redemption
involving an exchange by us,Independent, the trust securities we surrenderIndependent
surrenders will no longer be deemed outstanding and the debentures redeemed in
exchange will be cancelled.
REDEMPTION PROCEDURES
Preferred securities will be redeemed at the redemption price with the
applicable proceeds from ourIndependent's contemporaneous redemption of the
debentures. Redemptions of the preferred securities will be made, and the
redemption price will be payable, on each redemption date only to the extent
that the trust has funds available for the payment of the redemption price.
22
Notice of any redemption will be mailed at least 30 days, but not more than
60 days, before the date of redemption to each holder of trust securities to be
redeemed at its registered address. Unless we defaultIndependent defaults in payment of
the redemption price on the debentures, interest will cease to accumulate on the
debentures called for redemption on and after the date of redemption.
23
If the trust gives notice of redemption of its trust securities, then the
property trustee, to the extent funds are available, will irrevocably deposit
with the depositary for the trust securities funds sufficient to pay the
aggregate redemption price and will give the depositary for the trust securities
irrevocable instructions and authority to pay the redemption price to the
holders of the trust securities. If the preferred securities are no longer in
book-entry only form, the property trustee, to the extent funds are available,
will deposit with the designated paying agent for such preferred securities
funds sufficient to pay the aggregate redemption price and will give the paying
agent irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the preferred
securities. Distributions payable on or prior to the date of redemption for any
trust securities called for redemption will be payable to the holders of the
trust securities on the relevant record dates for the related distribution
dates.
If notice of redemption has been given and we haveIndependent has deposited funds
as required, then on the date of the deposit all rights of the holders of the
trust securities called for redemption will cease, except the right to receive
the redemption price, but without interest on such redemption price after the
date of redemption. The trust securities will also cease to be outstanding on
the date of the deposit. If any date fixed for redemption of trust securities is
not a business day, then payment of the redemption price payable on that date
will be made on the next day that is a business day without any additional
interest or other payment in respect of the delay. However, if the next business
day is in the next succeeding calendar year, payment will be made on the
immediately preceding business day.
If payment of the redemption price in respect of trust securities called for
redemption is improperly withheld or refused and not paid by the trust, or by
usIndependent pursuant to the guarantee, distributions on the trust securities
will continue to accumulate at the applicable rate from the date of redemption
originally established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
redemption price.
Payment of the redemption price on the preferred securities and any
distribution of debentures to holders of preferred securities will be made to
the applicable recordholders as they appear on the register for the preferred
securities on the relevant record date. As long as the preferred securities are
represented by a global security, the record date will be the business day
immediately preceding the date of redemption or liquidation date, as applicable.
If less than all of the trust securities are to be redeemed, then the
aggregate liquidation amount of the trust securities to be redeemed will be
allocated proportionately to those trust securities based upon the relative
liquidation amounts. The particular preferred securities to be redeemed will be
selected by the property trustee from the outstanding preferred securities not
previously called for redemption by a method the property trustee deems fair and
appropriate. This method may provide for the redemption of portions equal to $25
or an integral multiple of $25 of the liquidation amount of the preferred
securities. The property trustee will promptly notify the registrar for the
preferred securities in writing of the preferred securities selected for
redemption and, in the case of any preferred securities selected for partial
redemption, the liquidation amount to be redeemed. If the redemption relates
only to preferred securities purchased by usIndependent and being exchanged for a
like amount of debentures, then ourIndependent's preferred securities will be the
ones selected for redemption.
Subject to applicable law, and if we areIndependent is not exercising ourits right to
defer interest payments on the debentures, weIndependent may, at any time,
purchase outstanding preferred securities.
23
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the preferred
securities and common securities will be made based on the liquidation amount of
these securities. However, if an event of default under the indenture has
occurred and is continuing, no distributions on or redemption of the
24
common
securities may be made unless payment in full in cash of all accumulated and
unpaid distributions on all of the outstanding preferred securities for all
distribution periods terminating on or before that time, or in the case of
payment of the redemption price, payment of the full amount of the redemption
price on all of the outstanding preferred securities then called for redemption,
has been made or provided for. All funds available to the property trustee will
first be applied to the payment in full in cash of all distributions on, or the
redemption price of, the preferred securities then due and payable.
In the case of the occurrence and continuance of any event of default under
the trust agreement resulting from an event of default under the indenture,
we,Independent, as holder of the common securities, will be deemed to have waived
any right to act with respect to that event of default under the trust agreement
until the effect of the event of default with respect to the preferred
securities has been cured, waived or otherwise eliminated. Until the event of
default under the trust agreement has been so cured, waived or otherwise
eliminated, the property trustee will act solely on behalf of the holders of the
preferred securities and not on ourIndependent's behalf, and only the holders of
the preferred securities will have the right to direct the property trustee to
act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
WeIndependent will have the right at any time to dissolve the trust and cause
the debentures to be distributed to the holders of the preferred securities.
This right is subject, however, to usIndependent receiving approval of the Federal
Reserve, if required.
In addition, the trust will automatically dissolve upon expiration of its
term and will dissolve earlier on the first to occur of:
- ourIndependent's bankruptcy, dissolution or liquidation;
- the distribution of a like amount of the debentures to the holders of
trust securities, if we haveIndependent has given written direction to the
property trustee to terminate the trust;
- redemption of all of the preferred securities as described on page 2221
under "--Redemption or Exchange--Mandatory Redemption"; or
- the entry of a court order for the dissolution of the trust.
With the exception of a redemption as described on page 2221 under
"--Redemption or Exchange--Mandatory Redemption," if an early dissolution of the
trust occurs, the trust will be liquidated by the administrative trustees as
expeditiously as they determine to be possible. After satisfaction of
liabilities to creditors of the trust as provided by applicable law, the
trustees will distribute to the holders of trust securities, debentures:
- in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of the trust securities;
- with an interest rate identical to the distribution rate on the trust
securities; and
- with accrued and unpaid interest equal to accumulated and unpaid
distributions on the trust securities.
However, if the property trustee determines that the distribution is not
practical, then the holders of trust securities will be entitled to receive,
instead of debentures, a proportionate amount of the liquidation distribution.
The liquidation distribution will be the amount equal to the aggregate of the
liquidation amount plus accumulated and unpaid distributions to the date of
payment. If the liquidation
24
distribution can be paid only in part because the trust has insufficient assets
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by the trust on the trust securities will be paid on a
proportional basis, based on liquidation amounts, to us,Independent, as the holder
of the common
25
securities, and to the holders of the preferred securities.
However, if an event of default under the indenture has occurred and is
continuing, the preferred securities will have a priority over the common
securities. See "--Subordination of Common Securities" on page 24.
Under current federal income tax law and interpretations and assuming that
the trust is treated as a grantor trust, as is expected, a distribution of the
debentures should not be a taxable event to holders of the preferred securities.
Should there be a change in law, a change in legal interpretation, a Tax Event
or another circumstance, however, the distribution could be a taxable event to
holders of the preferred securities. See "--Certain"Material Federal Income Tax
Consequences--Receipt of Debentures or Cash Upon Liquidation of the Trust" on
page 4947 for more information regarding a taxable distribution.
If we doIndependent does not elect to redeem the debentures prior to maturity or
to liquidate the trust and distribute the debentures to holders of the preferred
securities, the preferred securities will remain outstanding until the repayment
of the debentures. If we electIndependent elects to dissolve the trust and thus cause
the debentures to be distributed to holders of the preferred securities in
liquidation of the trust, weIndependent will continue to have the right to shorten
the maturity of the debentures.
LIQUIDATION VALUE
The amount of the liquidation distribution payable on the preferred
securities in the event of any liquidation of the trust is $25 per preferred
security plus accumulated and unpaid distributions to the date of payment, which
may be in the form of a distribution of debentures having a liquidation value
and accrued interest of an equal amount.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under the
trust agreement with respect to the preferred securities:
- the occurrence of an event of default under the indenture;
- a default by the trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30 days;
- a default by the trust in the payment of the redemption price of any of
the trust securities when it becomes due and payable;
- a default in the performance, or breach, in any material respect, of any
covenant or warranty of the trustees in the trust agreement, other than
those defaults covered in the previous two points, and continuation of the
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the trustee(s) by the holders of at least
25% in aggregate liquidation amount of the outstanding preferred
securities, a written notice specifying the default or breach and
requiring it to be remedied and stating that the notice is a "Notice of
Default" under the trust agreement; or
- the occurrence of events of bankruptcy or insolvency with respect to the
property trustee and ourIndependent's failure to appoint a successor property
trustee within 60 days.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to the holders of the preferred securities, the
administrative trustees and to us,Independent, unless the event of default has been
cured or waived. WeIndependent and the administrative trustees are required to
file annually with the property trustee a certificate as to whether or not
weIndependent and they are in compliance with all the conditions and covenants
applicable to each of usparty under the trust agreement.
2625
If an event of default under the indenture has occurred and is continuing,
the preferred securities will have preference over the common securities upon
dissolution of the trust. The existence of an event of default under the trust
agreement does not entitle the holders of preferred securities to accelerate the
maturity of the debentures, and thus cause a redemption of the preferred
securities, unless the event of default is caused by the occurrence of an event
of default under the indenture and both the indenture trustee and holders of at
least 25% in principal amount of the debentures fail to accelerate the maturity
of the debentures.
REMOVAL OF THE TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, weIndependent may remove any trustee at any time. If an event of
default under the indenture has occurred and is continuing, only the holders of
a majority in liquidation amount of the outstanding preferred securities may
remove the property trustee or the Delaware trustee. The holders of the
preferred securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with usIndependent as
the holder of the common securities. No resignation or removal of a trustee and
no appointment of a successor trustee will be effective until the successor
trustee accepts the appointment in accordance with the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default under the indenture has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property may
at the time be located, weIndependent will have the power to appoint at any time
or times, and upon written request of the property trustee will appoint, one or
more persons or entities either (1) to act as a co-trustee, jointly with the
property trustee, of all or any part of the trust property, or (2) to act as
separate trustee of any trust property. In either case, these trustees will have
the powers that may be provided in the instrument of appointment, and will have
vested in them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In case an event of
default under the indenture has occurred and is continuing, the property trustee
alone will have power to make the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees may be a successor
trustee to any of the trustees, including a successor resulting from a merger or
consolidation. However, any successor trustee must meet all of the
qualifications and eligibility standards to act as a trustee.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below or as described in "--Liquidation Distribution Upon Dissolution"
on page 25.24. For these purposes, if we consolidateIndependent consolidates or mergemerges with
another entity, or transfertransfers or sellsells substantially all of ourits assets to another
entity, in some cases that transaction may be considered to involve a
replacement of the trust, and the conditions set forth below would apply to such
transaction. The trust may, at ourIndependent's request, with the consent of the
administrative trustees and without the consent of the holders of the preferred
securities, the property trustee or the Delaware trustee, undertake a
transaction listed above if the following conditions are met:
- the successor entity either (a) expressly assumes all of the obligations
of the trust with respect to the preferred securities, or (b) substitutes
for the preferred securities other securities having substantially the
same terms as the preferred securities (referred to as "successor
securities") so
2726
long as the successor securities rank the same in priority as the
preferred securities with respect to distributions and payments upon
liquidation, redemption and otherwise;
- we appointIndependent appoints a trustee of the successor entity possessing
substantially the same powers and duties as the property trustee in its
capacity as the holder of the debentures;
- the successor securities are listed or traded or will be listed or traded
on any national securities exchange or other organization on which the
preferred securities are then listed, if any;
- the merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges
of the holders of the preferred securities (including any successor
securities) in any material respect;
- the successor entity has a purpose substantially identical to that of the
trust;
- prior to the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, we haveIndependent has received an opinion from independent
counsel that (a) any transaction of this kind does not adversely affect
the rights, preferences and privileges of the holders of the preferred
securities (including any successor securities) in any material respect,
and (b) following the transaction, neither the trust nor the successor
entity will be required to register as an "investment company" under the
Investment Company Act; and
- we ownIndependent owns all of the common securities of the successor entity and
guarantee the obligations of the successor entity under the successor
securities at least to the extent provided by the guarantee, the
debentures and the trust agreement.
Notwithstanding the foregoing, the trust may not, except with the consent of
every holder of the preferred securities, enter into any transaction of this
kind if the transaction would cause the trust or the successor entity not to be
classified as a grantor trust for federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as described below and under "--Description"Description of the
Guarantee--Amendments" on page 44 and as otherwise required by the Trust
Indenture Act and the trust agreement, the holders of the preferred securities
will have no voting rights. The trust agreement may be amended from time to time
by usIndependent and the administrative trustees, without the consent of the
holders of the preferred securities, in the following circumstances:
- with respect to acceptance of appointment by a successor trustee;
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under
the trust agreement, as long as the amendment is not inconsistent with the
other provisions of the trust agreement and does not have a material
adverse effect on the interests of any holder of trust securities; and
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the trust will be classified for federal income
tax purposes as a grantor trust at all times that any trust securities are
outstanding or to ensure that the trust will not be required to register
as an "investment company" under the Investment Company Act.
With the consent of the holders of a majority of the aggregate liquidation
amount of the outstanding trust securities, weIndependent and the administrative
trustees may amend the trust agreement if the trustees receive an opinion of
independent tax counsel experienced in such matters to the effect that the
amendment or the exercise of any power granted to the trustees in accordance
with the amendment will not affect the trust's status as a grantor trust for
federal income tax purposes or the trust's exemption from status as an
"investment company" under the Investment Company Act.
27
However,
28
without the consent of each holder of trust securities, the trust
agreement may not be amended to (a) change the amount or timing of any
distribution on the trust securities or otherwise adversely affect the amount of
any distribution required to be made in respect of the trust securities as of a
specified date, or (b) restrict the right of a holder of trust securities to
institute suit for the enforcement of the payment on or after that date.
As long as the property trustee holds any debentures, the trustees will not,
without obtaining the prior approval of the holders of a majority in aggregate
liquidation amount of all outstanding preferred securities:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or executing any trust or power
conferred on the property trustee with respect to the debentures;
- waive any past default that is waivable under the indenture;
- exercise any right to rescind or annul a declaration that the principal of
all the debentures will be due and payable; or
- consent to any amendment or termination of the indenture or the
debentures, where the property trustee's consent is required. However,
where a consent under the indenture requires the consent of each holder of
the affected debentures, no consent will be given by the property trustee
without the prior consent of each holder of the preferred securities.
The trustees may not revoke any action previously authorized or approved by
a vote of the holders of the preferred securities except by subsequent vote of
the holders of the preferred securities. The property trustee will notify each
holder of preferred securities of any notice of default with respect to the
debentures. In addition to obtaining the foregoing approvals of the holders of
the preferred securities, prior to taking any of the foregoing actions, the
trustees must obtain an opinion of counsel experienced in these matters to the
effect that the trust will not be classified as an association taxable as a
corporation for federal income tax purposes on account of the action.
Any required approval of holders of trust securities may be given at a
meeting or by written consent. The property trustee will cause a notice of any
meeting at which holders of the trust securities are entitled to vote, or of any
matter upon which action by written consent of the holders is to be taken, to be
given to each holder of record of trust securities.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel its preferred securities in accordance with
the trust agreement.
Notwithstanding the fact that holders of preferred securities are entitled
to vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by us,Independent, the trustees or any
affiliate of usIndependent or any trustee, will, for purposes of the vote or
consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The preferred securities will be represented by one or more global preferred
securities registered in the name of The Depository Trust Company, New York, New
York, referred to below as DTC, or its nominee. A global preferred security is a
security representing interests of more than one beneficial holder. Ownership of
beneficial interests in the global preferred securities will be reflected in DTC
participant account records through DTC's book-entry transfer and registration
system. Participants are brokers, dealers, or others having accounts with DTC.
Indirect beneficial interests of other persons investing in the preferred
securities will be shown on, and transfers will be effected only through,
records maintained by DTC participants. Except as described below, preferred
securities in definitive form will not be issued in exchange for the global
preferred securities.
2928
No global preferred security may be exchanged for preferred securities
registered in the names of persons other than DTC or its nominee unless:
- DTC notifies the indenture trustee that it is unwilling or unable to
continue as a depositary for the global preferred security and we areIndependent
is unable to locate a qualified successor depositary;
- we executeIndependent executes and deliverdelivers to the indenture trustee a written order
stating that we electIndependent elects to terminate the book-entry system through
DTC; or
- there shall have occurred and be continuing an event of default under the
indenture.
Any global preferred security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in the
names as DTC shall direct. It is expected that the instructions will be based
upon directions received by DTC with respect to ownership of beneficial
interests in the global preferred security. If preferred securities are issued
in definitive form, the preferred securities will be in denominations of $25 and
integral multiples of $25 and may be transferred or exchanged at the offices
described below.
Unless and until it is exchanged in whole or in part for the individual
preferred securities represented thereby, a global preferred security may not be
transferred except as a whole by DTC to a nominee of DTC, by a nominee of DTC to
DTC or another nominee of DTC or by DTC or any nominee to a successor depositary
or any nominee of the successor.
Payments on global preferred securities will be made to DTC, as the
depositary for the global preferred securities. If the preferred securities are
issued in definitive form, distributions will be payable by check mailed to the
address of record of the persons entitled to the distribution, and the transfer
of the preferred securities will be registrable, and preferred securities will
be exchangeable for preferred securities of other denominations of a like
aggregate liquidation amount, at the corporate office of the property trustee,
or at the offices of any paying agent or transfer agent appointed by the
administrative trustees. In addition, if the preferred securities are issued in
definitive form, the record dates for payment of distributions will be the 15th
day of the month in which the relevant distribution date occurs. For a
description of the terms of DTC arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "--Book-Entry"Book-Entry
Issuance" on page .41.
Upon the issuance of one or more global preferred securities, and the
deposit of the global preferred security with or on behalf of DTC or its
nominee, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate liquidation amounts of the individual
preferred securities represented by the global preferred security to the
designated accounts of persons that participate in the DTC system. These
participant accounts will be designated by the dealers, underwriters or agents
selling the preferred securities. Ownership of beneficial interests in a global
preferred security will be limited to persons or entities having an account with
DTC or who may hold interests through participants. With respect to interests of
any person or entity that is a DTC participant, ownership of beneficial
interests in a global preferred security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by DTC or its
nominee. With respect to persons or entities who hold interests in a global
preferred security through a participant, the interest and any transfer of the
interest will be shown only on the participant's records. The laws of some
states require that certain purchasers of securities take physical delivery of
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a global preferred security.
So long as DTC or another depositary, or its nominee, is the registered
owner of the global preferred security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the preferred
securities represented by the global preferred security for all purposes under
the trust agreement. Except as described in this prospectus, owners of
beneficial interests in a global
29
preferred security will not be entitled to have any of the individual preferred
securities represented by
30
the global preferred security registered in their
names, will not receive or be entitled to receive physical delivery of any the
preferred securities in definitive form and will not be considered the owners or
holders of the preferred securities under the trust agreement.
None of us,Independent, the property trustee, any paying agent or the
securities registrar for the preferred securities will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the global preferred security
representing the preferred securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
We expectIndependent expects that DTC or its nominee, upon receipt of any payment of
the liquidation amount or distributions in respect of a global preferred
security, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the aggregate
liquidation amount of the global preferred security as shown on the records of
DTC or its nominee. WeIndependent also expectexpects that payments by participants to
owners of beneficial interests in the global preferred security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
the participants.
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities will be made to DTC, which
will credit the relevant accounts of participants on the applicable distribution
dates, or, if any of the preferred securities are not held by DTC, the payments
will be made by check mailed to the address of the holder as listed on the
register of holders of the preferred securities. The paying agent for the
preferred securities will initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to usIndependent and the
administrative trustees. The paying agent for the preferred securities may
resign as paying agent upon 30 days written notice to the administrative
trustees, the property trustee and us.Independent. If the property trustee no
longer is the paying agent for the preferred securities, the administrative
trustees will appoint a successor to act as paying agent. The successor must be
a bank or trust company acceptable to usIndependent and the property trustee.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as the registrar and the transfer agent for
the preferred securities. Registration of transfers of preferred securities will
be effected without charge by or on behalf of the trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The trust and its registrar and transfer agent will not be
required to register or cause to be registered the transfer of preferred
securities after they have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties set forth in the
trust agreement. After the occurrence of an event of default that is continuing,
the property trustee must exercise the same degree of care and skill as a
prudent person exercises or uses in the conduct of its own affairs. The property
trustee is under no obligation to exercise any of the powers vested in it by the
trust agreement at the request of any holder of preferred securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred. If no event of default under the trust agreement has occurred
and is continuing and the property trustee is required to decide between
alternative causes of action, construe ambiguous or inconsistent provisions in
the trust agreement or is unsure of the application of any provision of the
trust agreement, and the matter is not one on which holders of
30
preferred securities are entitled to vote upon, then the property trustee will
take the action directed in 31
writing by us.Independent. If the property trustee is
not so directed, then it will take the action it deems advisable and in the best
interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
- the trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act;
- the trust will not be classified as an association taxable as a
corporation for federal income tax purposes; and
- the debentures will be treated as ourIndependent's indebtedness for federal
income tax purposes.
In this regard, weIndependent and the administrative trustees are authorized
to take any action not inconsistent with applicable law, the certificate of
trust or the trust agreement, that weIndependent and the administrative trustees
determine to be necessary or desirable for these purposes.
The administrative trustees may assist in listing the preferred securities
on the Nasdaq National Market or a national securities exchange.
Holders of the preferred securities have no preemptive or similar rights.
The trust agreement and the trust securities will be governed by Delaware law.
3231
DESCRIPTION OF THE DEBENTURES
CONCURRENTLY WITH THE ISSUANCE OF THE PREFERRED SECURITIES, THE TRUST WILL
INVEST THE PROCEEDS FROM THE SALE OF THE TRUST SECURITIES IN THE DEBENTURES
ISSUED BY US.INDEPENDENT. THE DEBENTURES WILL BE ISSUED AS UNSECURED DEBT UNDER THE
INDENTURE BETWEEN USINDEPENDENT AND THE BANK OF NEW YORK, AS INDENTURE TRUSTEE.
THE INDENTURE WILL BE QUALIFIED UNDER THE TRUST INDENTURE ACT.
THE FOLLOWING DISCUSSION CONTAINS A DESCRIPTION OF THE MATERIAL PROVISIONS
OF THE DEBENTURES AND IS SUBJECT TO, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO, THE INDENTURE AND TO THE TRUST INDENTURE ACT. WE URGEINDEPENDENT URGES
PROSPECTIVE INVESTORS TO READ THE FORM OF THE INDENTURE, WHICH IS FILED AS AN
EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS FORMS A PART.
GENERAL
The debentures will be limited in aggregate principal amount to $25,773,200.
This amount represents the sum of the aggregate stated liquidation amounts of
the trust securities. The debentures will bear interest at the annual rate of
% of the principal amount. The interest will be payable quarterly on
March 31, June 30, September 30 and December 31 of each year, beginning
DecemberMarch 31, 2001,2002, to the person in whose name each debenture is registered at the
close of business on the 15th day of the last month of the calendar quarter. It
is anticipated that, until the liquidation, if any, of the trust, the debentures
will be held in the name of the property trustee in trust for the benefit of the
holders of the trust securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. If any date on which interest is
payable on the debentures is not a business day, then payment of interest will
be made on the next day that is a business day without any additional interest
or other payment in respect of the delay. However, if the next business day is
in the next calendar year, payment of interest will be made on the immediately
preceding business day. Accrued interest that is not paid on the applicable
interest payment date will bear additional interest on the amount due at the
annual rate of %, compounded quarterly.
The debentures will mature on , 2031, the stated maturity date.
WeIndependent may shorten this date at any time to any date not earlier than
, 2006, subject to the prior approval of the Federal Reserve, if
required. WeIndependent will give notice to the indenture trustee and the holders
of the debentures, no more than 180 days and no less than 30 days prior to the
effectiveness of any change in the stated maturity date. WeIndependent will not
have the right to redeem the debentures from the trust until after ,
2006, except if (a) a Tax Event, an Investment Company Event or a Capital
Treatment Event, which terms are defined on pages and ,page 22, has occurred, or
(b) we repurchaseIndependent repurchases preferred securities in the market, in which case
weIndependent can elect to redeem debentures specifically in exchange for a like
amount of preferred securities owned by usit plus a proportionate amount of common
securities.
The debentures will be unsecured and will rank junior to all of
ourIndependent's senior and subordinated debt, including indebtedness weit may incur
in the future. Because we areIndependent is a holding company, ourits right to
participate in any distribution of assets of any of ourits subsidiaries, upon any
subsidiary's liquidation or reorganization or otherwise, and thus the ability of
holders of the debentures to benefit indirectly from any distribution by a
subsidiary, is subject to the prior claim of creditors of the subsidiary, except
to the extent that weIndependent may be recognized as a creditor of the
subsidiary. The debentures will, therefore, be effectively subordinated to all
existing and future liabilities of ourIndependent's subsidiaries, and holders of
debentures should look only to ourIndependent's assets for payment. The indenture
does not limit ourIndependent's ability to incur or issue secured or unsecured
senior and junior debt.
32
Except in limited circumstances, the indenture does not contain provisions
that afford holders of the debentures protection in the event of a highly
leveraged transaction or other similar transaction involving us,Independent, nor does it
require usis
Independent required to maintain or achieve any financial performance levels or
to obtain or maintain any credit rating on the debentures.
33
OPTION TO EXTEND INTEREST PAYMENT PERIOD
As long as no event of default under the indenture has occurred and is
continuing, we haveIndependent has the right under the indenture to defer the payment
of interest on the debentures at any time for a period not exceeding 20
consecutive quarters. However, no extension period may extend beyond the stated
maturity of the debentures or end on a date other than a date interest is
normally due. At the end of an extension period, weIndependent must pay all
interest then accrued and unpaid, together with interest thereon at the annual
rate of %, compounded quarterly. During an extension period, interest will
continue to accrue and holders of debentures, or the holders of preferred
securities if they are then outstanding, will be required to accrue and
recognize as income for federal income tax purposes the accrued but unpaid
interest amounts in the year in which such amounts accrued. See "--Certain"Material
Federal Income Tax Consequences--Interest Payment Period and Original Issue
Discount" on page 48.47.
Prior to the termination of any extension period, so long as no event of
default under the indenture is continuing, weIndependent may further defer the
payment of interest subject to the above stated requirements. Upon the
termination of any extension period and the payment of all amounts then due,
weIndependent may elect to begin a new extension period at any time. We doIndependent
does not currently intend to exercise ourits right to defer payments of interest on
the debentures.
WeIndependent must give the property trustee, the administrative trustees and
the indenture trustee notice of ourits election of an extension period at least two
business days prior to the earlier of (a) the next date on which distributions
on the trust securities would have been payable except for the election to begin
an extension period, or (b) the date we areIndependent is required to give notice of
the record date, or the date the distributions are payable, to the Nasdaq
National Market, or other applicable self-regulatory organization, or to holders
of the preferred securities, but in any event at least one business day prior to
the record date. If the property trustee is not the only registered holder of
the debentures, then the notice must also be given to the other holders of the
debentures.
Other than as described above, there is no limitation on the number of times
that weIndependent may elect to begin an extension period.
RESTRICTIONS ON PAYMENTS
We areIndependent is restricted from making certain payments (as described below)
if we
haveit has chosen to defer payment of interest on the debentures, if an event of
default has occurred and is continuing under the indenture, or if we areIndependent is
in default with respect to ourits obligations under the guarantee.
If any of these events occur, weIndependent will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of ourits capital
stock (other than stock dividends, non-cash dividends in connection with
the implementation of a shareholder rights plan, purchases of common stock
in connection with employee benefit plans or in connection with the
reclassification of any class of ourits capital stock into another class of
capital stock) or allow any of ourits subsidiaries to do the same with
respect to their capital stock (other than payment of dividends or
distributions to us)itself);
- make or allow any of ourits subsidiaries to make any payment of principal,
interest or premium on, or repay or repurchase or redeem any of ourits debt
securities that rank equally with or junior to the debentures;
33
- make or allow any of ourits subsidiaries to make any guarantee payments with
respect to any guarantee by usit of the debt securities of any of ourits
subsidiaries if the guarantee ranks equally with or junior to the
debentures (other than payments under the guarantee relating to the
preferred securities); or
34
- redeem, purchase or acquire less than all of the debentures or any of the
preferred securities.
ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES
If the trust or the property trustee is required to pay any additional
taxes, duties, assessments or other governmental charges as a result of the
occurrence of a Tax Event, weIndependent will pay as additional interest on the
debentures any amounts which may be required so that the net amounts received
and retained by the trust after paying any additional taxes, duties, assessments
or other governmental charges will not be less than the amounts the trust and
the property trustee would have received had the additional taxes, duties,
assessments or other governmental charges not been imposed.
REDEMPTION
Subject to prior approval of the Federal Reserve, if required, weIndependent
may redeem the debentures prior to maturity:
- on or after , 2006, in whole at any time or in part from time
to time; or
- in whole but not in part at any time within 180 days following the
occurrence of a Tax Event, an Investment Company Event or a Capital
Treatment Event; or
- at any time, so long as a partial redemption would not cause the preferred
securities to be delisted from the Nasdaq National Market, and from time
to time, to the extent of any preferred securities we purchase,purchased by
Independent, plus a proportionate amount of the common securities we hold.held by
Independent.
With respect to the first two circumstances listed above, weIndependent will
pay a redemption price equal to the accrued and unpaid interest on the
debentures so redeemed to the date fixed for redemption, plus 100% of the
principal amount of the redeemed debentures. With respect to the third
circumstance listed above, the redemption price shall be the principal amount
equal to (i) the liquidation amount of the preferred securities owned by
us,Independent, plus (ii) the liquidation amount of a proportionate amount of the
trusts' common securities owned by usIndependent with respect to the preferred
securities so redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of debentures to be redeemed
at its registered address. Redemption of less than all outstanding debentures
must be effected proportionately, by lot or in any other manner deemed to be
fair and appropriate by the indenture trustee. Unless we defaultIndependent defaults in
payment of the redemption price for the debentures, on and after the redemption
date, interest will no longer accrue on the debentures or the portions of the
debentures called for redemption. The debentures will not be subject to any
sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "--Description"Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution" on page 25,24, under certain circumstances and with
the Federal Reserve's approval, the debentures may be distributed to the holders
of the preferred securities in liquidation of the trust after satisfaction of
liabilities to creditors of the trust. If this occurs, weIndependent will use ourits
best efforts to list the debentures on the Nasdaq National Market or other
national securities exchange or national quotation system on which the preferred
securities are then listed, if any. WeIndependent cannot assure
34
you as to the market price of any debentures that may be distributed to the
holders of preferred securities.
SUBORDINATION
The debentures are subordinated and junior in right of payment to all of
ourIndependent's senior and subordinated debt, as defined below. Upon any payment
or distribution of assets to creditors upon any of ourIndependent's liquidation,
dissolution, winding up or reorganization, whether voluntary or involuntary in
35
bankruptcy, insolvency, receivership or other proceedings in connection with any
insolvency or bankruptcy proceedings, the holders of ourIndependent's senior and
subordinated debt will first be entitled to receive payment in full of principal
and interest before the holders of debentures will be entitled to receive or
retain any payment in respect of the debentures.
If the maturity of any debentures is accelerated because of ourIndependent's
default under the indenture, the holders of all of ourIndependent's senior and
subordinated debt outstanding at the time of the acceleration will also be
entitled to first receive payment in full of all amounts due to them, including
any amounts due upon acceleration, if any, before the holders of the debentures
will be entitled to receive or retain any principal or interest payments on the
debentures.
No payments of principal or interest on the debentures may be made if there
has occurred and is continuing a default in any payment with respect to any of
ourIndependent's senior or subordinated debt or an event of default with respect to
any of ourIndependent's senior or subordinated debt resulting in the acceleration
of the maturity of the senior or subordinated debt, or if any judicial
proceeding is pending with respect to any default.
The term "debt" means, with respect to any person, whether recourse is to
all or a portion of the assets of the person and whether or not contingent:
- every obligation of the person for money borrowed;
- every obligation of the person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses;
- every reimbursement obligation of the person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account
of the person;
- every obligation of the person issued or assumed as the deferred purchase
price of property or services, excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business;
- every capital lease obligation of the person; and
- every obligation of the type referred to in the first five points of
another person and all dividends of another person the payment of which,
in either case, the first person has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise.
The term "senior debt" means the principal of, and premium and interest,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to the company, on, debt, whether incurred on or
prior to the date of the indenture or incurred after the date. However, senior
debt will not be deemed to include:
- any debt where it is provided in the instrument creating the debt that the
obligations are not superior in right of payment to the debentures or to
other debt which is equal with, or subordinated to, the debentures;
35
- any of ourIndependent's debt that when incurred and without regard to any
election under the federal bankruptcy laws, was without recourse to
us;Independent;
- any debt to any of ourIndependent's employees;
- any debt that by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of the
debentures as a result of the subordination provisions of the indenture
would be greater than they otherwise would have been as a result of any
obligation of the holders to pay amounts over to the obligees on the trade
accounts payable or accrued liabilities
36
arising in the ordinary course of
business as a result of subordination provisions to which the debt is
subject; and
- debt which constitutes subordinated debt.
The term "subordinated debt" means the principal of, and premium and
interest, including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the company, on, debt. Subordinated
debt includes debt incurred on or prior to the date of the indenture or
thereafter incurred, which is by its terms expressly provided to be junior and
subordinate to other debt of ours,Independent, other than the debentures. However,
subordinated debt will not be deemed to include:
- any of ourIndependent's debt which when incurred and without regard to any
election under the federal bankruptcy laws was without recourse to
us;Independent;
- any debt to any of ourIndependent's employees;
- any debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of the
debentures as a result of the subordination provisions of the indenture
would be greater than they otherwise would have been as a result of any
obligation of the holders to pay amounts over to the obligees on the trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which the debt is
subject;
- debt which constitutes senior debt; and
- any debt of oursIndependent's under debt securities (and guarantees in respect
of these debt securities) initially issued to any trust, or a trustee of a
trust, partnership or other entity affiliated with usIndependent that is,
directly or indirectly, oura financing subsidiary in connection with the
issuance by that entity of preferred securities or other securities which
are intended to qualify for "Tier 1" capital treatment.
WeIndependent may from time to time to incur senior or subordinated debt and
there is no limitation under the indenture on the amount of indebtedness
weIndependent may incur. WeIndependent had no consolidated senior and subordinated
debt outstanding at September 30, 2001. OurIndependent's obligations under the
debentures issued by usit to Trust I and Trust IIeach of the previously established trusts will rank
equal to the debentures issued to Trust III.this trust.
PAYMENT AND PAYING AGENTS
Generally, payment of principal of and interest on the debentures will be
made at the office of the indenture trustee. However, we haveIndependent has the option
to make payment of any interest by (a) check mailed to the address of the person
entitled to payment at the address listed in the register of holders of the
debentures, or (b) wire transfer to an account maintained by the person entitled
thereto as specified in the register of holders of the debentures, provided that
proper transfer instructions have
36
been received by the applicable record date. Payment of any interest on
debentures will be made to the person in whose name the debenture is registered
at the close of business on the regular record date for the interest payment,
except in the case of defaulted interest.
Any moneys deposited with the indenture trustee or any paying agent for the
debentures, or then held by usIndependent in trust, for the payment of the
principal of or interest on the debentures and remaining unclaimed for two years
after the principal or interest has become due and payable, will be repaid to
usIndependent on December 31 of each year. If we holdIndependent holds any of this money
in trust, then it will be discharged from the trust to usIndependent and the
holder of the debenture will thereafter look, as a general unsecured creditor,
only to usIndependent for payment.
37
REGISTRAR AND TRANSFER AGENT
The indenture trustee will act as the registrar and the transfer agent for
the debentures. Debentures may be presented for registration of transfer, with
the form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed, at the office of the registrar. WeIndependent may at any
time designate additional transfer agents with respect to the debentures.
If we redeemIndependent redeems any of the debentures, neither weIndependent nor the
indenture trustee will be required to (a) issue, register the transfer of or
exchange any debentures during a period beginning at the opening of business
15 days before the day of the mailing of and ending at the close of business on
the day of the mailing of the relevant notice of redemption, or (b) transfer or
exchange any debentures so selected for redemption, except, in the case of any
debentures being redeemed in part, any portion not to be redeemed.
MODIFICATION OF INDENTURE
WeIndependent and the indenture trustee may, from time to time without the
consent of the holders of the debentures, amend, waive ourits rights under, or
supplement, the indenture for purposes which do not materially adversely affect
the rights of the holders of the debentures. Other changes may be made by
usIndependent and the indenture trustee with the consent of the holders of a
majority in principal amount of the outstanding debentures. However, without the
consent of the holder of each outstanding debenture affected by the proposed
modification, no modification may:
- extend the maturity date of the debentures;
- reduce the principal amount or the rate or extend the time of payment of
interest; or
- reduce the percentage of principal amount of debentures required to amend
the indenture.
As long as any of the preferred securities remain outstanding, no
modification of the indenture may be made that requires the consent of the
holders of the debentures, no termination of the indenture may occur, and no
waiver of any event of default under the indenture may be effective, without the
prior consent of the holders of a majority of the aggregate liquidation amount
of the preferred securities.
DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following events with
respect to the debentures that has occurred and is continuing constitutes an
event of default under the indenture:
- ourIndependent's failure to pay any interest on the debentures for 30 days
after the due date, except where we haveit has properly deferred the interest
payment;
- ourIndependent's failure to pay any principal on the debentures when due
whether at maturity, upon redemption or otherwise;
37
- ourIndependent's failure to observe or perform in any material respect any
other covenants or agreements contained in the indenture for 90 days after
written notice to usit from the indenture trustee or the holders of at least
25% in aggregate outstanding principal amount of the debentures; or
- ourIndependent's bankruptcy, insolvency or similar state creditor remedy or
dissolution of the trust other than in connection with a distribution of
the debentures in connection with such dissolution, redemption of the
trust securities, or certain transactions permitted under the trust
agreement.
The holders of a majority of the aggregate outstanding principal amount of
the debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the indenture trustee. The indenture
trustee, or the holders of at least 25% in aggregate outstanding principal
amount of the debentures, may declare the principal due and payable immediately
upon an
38
event of default under the indenture. The holders of a majority of the
outstanding principal amount of the debentures may rescind and annul the
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the indenture trustee so
long as the holders of a majority in liquidation amount of the trust securities
have consented to the waiver of default. The holders may not annul the
declaration and waive a default if the default is the non-payment of the
principal of the debentures which has become due solely by the acceleration. So
long as the property trustee is the holder of the debentures, if an event of
default under the indenture has occurred and is continuing, the property trustee
will have the right to declare the principal of and the interest on the
debentures, and any other amounts payable under the indenture, to be immediately
due and payable and to enforce its other rights as a creditor with respect to
the debentures.
We areIndependent is required to file annually with the indenture trustee a
certificate as to whether or not we areit is in compliance with all of the conditions
and covenants applicable to usit under the indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If an event of default under the indenture has occurred and is continuing
and the event is attributable to the failure by usIndependent to pay interest on
or principal of the debentures on the date on which the payment is due and
payable, then a holder of preferred securities may institute a direct action
against usIndependent to compel usit to make the payment. WeIndependent may not amend
the indenture to remove the foregoing right to bring a direct action without the
prior written consent of all of the holders of the preferred securities. If the
right to bring a direct action is removed, the trust may become subject to the
reporting obligations under the Securities Exchange Act of 1934.
The holders of the preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the debentures unless there has been an event of
default under the trust agreement.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
WeIndependent may not consolidate with or merge into any other entity or
convey or transfer ourits properties and assets substantially as an entirety to any
entity, and no entity may be consolidated with or merged into usIndependent or
sell, convey, transfer or otherwise dispose of its properties and assets
substantially as an entirety to us,Independent , unless:
- we consolidateIndependent consolidates with or mergemerges into another entity or conveyconveys or
transfer ourtransfers its properties and assets substantially as an entirety to any
entity, the successor entity is organized under the laws of the United
States or any state or the District of Columbia, and the successor entity
expressly assumes by supplemental indenture ourIndependent's obligations on
the debentures;
38
- the ultimate parent entity of the successor entity expressly assumes
ourIndependent's obligations under the guarantee, to the extent the preferred
securities are then outstanding;
- immediately after the transaction, no event of default under the
indenture, and no event which, after notice or lapse of time, or both,
would become an event of default under the indenture, has occurred and is
continuing; and
- other conditions as prescribed in the indenture are met.
Under certain circumstances, if we consolidateIndependent consolidates or mergemerges with
another entity, or transfertransfers or sellsells substantially all of ourits assets to another
entity, such transaction may be considered to involve a replacement of the
trust, and the provisions of the trust agreement relating to a replacement of
the trust would apply to such transaction. See "--Description"Description of the Preferred
Securities--Mergers, Consolidations, Amalgamations or Replacements of the Trust"
on page 27.
39
26.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect and weIndependent will be
deemed to have satisfied and discharged ourits obligations under the indenture when
all debentures not previously delivered to the indenture trustee for
cancellation:
- have become due and payable; or
- will become due and payable at their stated maturity within one year or
are to be called for redemption within one year, and we depositIndependent deposits
or causecauses to be deposited with the indenture trustee funds, in trust, for
the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the debentures not previously delivered to the indenture
trustee for cancellation, for the principal and interest due to the date
of the deposit or to the stated maturity or redemption date, as the case
may be.
WeIndependent may still be required to provide officers' certificates and
opinions of counsel and pay fees and expenses due after these events occur.
GOVERNING LAW
The indenture and the debentures will be governed by and construed in
accordance with New York law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to these provisions, the indenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of debentures, unless offered reasonable security or indemnity by the
holder against the costs, expenses and liabilities which might be incurred. The
indenture trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
indenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
39
MISCELLANEOUS
We haveIndependent has agreed, pursuant to the indenture, for so long as preferred
securities remain outstanding:
- to maintain directly or indirectly 100% ownership of the common securities
of the trust, except that certain successors that are permitted pursuant
to the indenture may succeed to ourIndependent's ownership of the common
securities;
- not to voluntarily dissolve the trust without prior approval of the
Federal Reserve, if required;
- to use ourits reasonable efforts to cause the trust (a) to remain a business
trust (and to avoid involuntary dissolution), except in connection with a
distribution of debentures, the redemption of all of the trust securities
of the trust or mergers, consolidations or amalgamations, each as
permitted by the trust agreement; and (b) to otherwise continue not to be
treated as an association taxable as a corporation or partnership for
federal income tax purposes;
- to use ourits reasonable efforts to cause each holder of trust securities to
be treated as owning an individual beneficial interest in the debentures;
and
- to use ourits best efforts to maintain the eligibility of the preferred
securities for inclusion, quotation or listing in the Nasdaq National
Market or on any national securities exchange or other organization for as
long as the preferred securities are outstanding.
40
BOOK-ENTRY ISSUANCE
GENERAL
DTC will act as securities depositary for the preferred securities and may
act as securities depositary for all of the debentures in the event of the
distribution of the debentures to the holders of preferred securities. Except as
described below, the preferred securities will be issued only as registered
securities in the name of Cede & Co. (DTC's nominee). One or more global
preferred securities will be issued for the preferred securities and will be
deposited with DTC.
DTC is a limited purpose trust company organized under New York banking law,
a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its direct participants and by
the New York Stock Exchange, the American Stock Exchange and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to indirect participants, such as securities brokers and dealers,
banks and trust companies that clear through or maintain custodial relationships
with direct participants, either directly or indirectly. The rules applicable to
DTC and its participants are on file with the Securities and Exchange
Commission.
Purchases of preferred securities within the DTC system must be made by or
through direct participants, which will receive a credit for the preferred
securities on DTC's records. The ownership interest of each actual purchaser of
each preferred security, referred to below as a "beneficial owner," is in turn
to be recorded on the direct and indirect participants' records. Beneficial
owners will not receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the direct or indirect participants through which the beneficial owners
purchased preferred securities. Transfers of ownership interests in the
preferred securities are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners will not
receive certificates representing their ownership interest in preferred
securities, except if use of the book-entry-only system for the preferred
securities is discontinued.
DTC will have no knowledge of the actual beneficial owners of the preferred
securities; DTC's records reflect only the identity of the direct participants
to whose accounts the preferred securities are credited, which mayormay or may not be
the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers. The information in this
section concerning DTC and DTC's book-entry system has been obtained from
sources that we believeIndependent believes to be accurate, but weIndependent and the trust
assume no responsibility for the accuracy thereof. Neither weIndependent nor the
trust have any responsibility for the performance by DTC or its participants of
their respective obligations as described in this prospectus or under the rules
and procedures governing their respective operations.
NOTICES AND VOTING
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
41
Redemption notices will be sent to Cede & Co. as the registered holder of
the preferred securities. If less than all of the preferred securities are being
redeemed, the amount to be redeemed will be determined in accordance with the
trust agreement.
Although voting with respect to the preferred securities is limited to the
holders of record of the preferred securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to preferred securities. Under its usual procedures, DTC would mail an
omnibus proxy to the property trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the preferred securities are credited on
the record date.
DISTRIBUTION OF FUNDS
The property trustee will make distribution payments on the preferred
securities to DTC. DTC's practice is to credit direct participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the payment date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices and will be the
responsibility of the participant and not of DTC, the property trustee, the
trust or us,Independent, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of distributions to DTC is the
responsibility of the property trustee, disbursement of the payments to direct
participants is the responsibility of DTC, and disbursements of the payments to
the beneficial owners is the responsibility of direct and indirect participants.
SUCCESSOR DEPOSITARIES AND TERMINATION OF BOOK-ENTRY SYSTEM
DTC may discontinue providing its services with respect to any of the
preferred securities at any time by giving reasonable notice to the property
trustee or us.Independent. If no successor securities depositary is obtained,
definitive certificates representing the preferred securities are required to be
printed and delivered. WeIndependent also havehas the option to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After an
event of default under the indenture, the holders of a majority in liquidation
amount of preferred securities may determine to discontinue the system of
book-entry transfers through DTC. In these events, definitive certificates for
the preferred securities will be printed and delivered.
42
DESCRIPTION OF THE GUARANTEE
THE PREFERRED SECURITIES GUARANTEE AGREEMENT WILL BE EXECUTED AND DELIVERED
BY USINDEPENDENT CONCURRENTLY WITH THE ISSUANCE OF THE PREFERRED SECURITIES FOR
THE BENEFIT OF THE HOLDERS OF THE PREFERRED SECURITIES. THE GUARANTEE AGREEMENT
WILL BE QUALIFIED AS AN INDENTURE UNDER THE TRUST INDENTURE ACT. THE BANK OF NEW
YORK, THE GUARANTEE TRUSTEE, WILL ACT AS TRUSTEE FOR PURPOSES OF COMPLYING WITH
THE PROVISIONS OF THE TRUST INDENTURE ACT, AND WILL ALSO HOLD THE GUARANTEE FOR
THE BENEFIT OF THE HOLDERS OF THE PREFERRED SECURITIES. PROSPECTIVE INVESTORS
ARE URGED TO READ THE FORM OF THE GUARANTEE AGREEMENT, WHICH HAS BEEN FILED AS
AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS FORMS A PART.
GENERAL
We agreeIndependent agrees to pay in full on a subordinated basis, to the extent
described in the guarantee agreement, the guarantee payments (as defined below)
to the holders of the preferred securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the trust may have or assert
other than the defense of payment.
The following payments with respect to the preferred securities are called
the "guarantee payments" and, to the extent not paid or made by the trust and to
the extent that the trust has funds available for those distributions, will be
subject to the guarantee:
- any accumulated and unpaid distributions required to be paid on the
preferred securities;
- with respect to any preferred securities called for redemption, the
redemption price; and
- upon a voluntary or involuntary dissolution of the trust (other than in
connection with the distribution of debentures to the holders of preferred
securities in exchange for preferred securities), the lesser of:
(a) the amount of the liquidation distribution; and
(b) the amount of assets of the trust remaining available for
distribution to holders of preferred securities in liquidation of the
trust.
WeIndependent may satisfy ourits obligations to make a guarantee payment by
making a direct payment of the required amounts to the holders of the preferred
securities or by causing the trust to pay the amounts to the holders.
The guarantee agreement is a guarantee, on a subordinated basis, of the
guarantee payments, but the guarantee only applies to the extent the trust has
funds available for those distributions. If we doIndependent does not make interest
payments on the debentures purchased by the trust, the trust will not have funds
available to make the distributions and will not pay distributions on the
preferred securities.
STATUS OF THE GUARANTEE
The guarantee constitutes ourIndependent's unsecured obligation that ranks
subordinate and junior in right of payment to all of ourits senior and subordinated
debt in the same manner as the debentures. We expectIndependent expects to incur
additional indebtedness in the future, although we haveit has no specific plans in this
regard presently, and, except under certain limited circumstances, neither the
indenture nor the trust agreement limits the amounts of senior and subordinated
debt that weIndependent may incur.
The guarantee constitutes a guarantee of payment and not of collection. If
we failIndependent fails to make guarantee payments when required, holders of preferred
securities may institute a legal proceeding directly against usIndependent to
enforce their rights under the guarantee without first instituting a legal
proceeding against any other person or entity.
43
The guarantee will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon distribution of the
debentures to the holders of the preferred securities. Because we areIndependent is a
bank holding company, ourits right to participate in any distribution of assets of
any subsidiary upon the subsidiary's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of that subsidiary, except to the
extent weIndependent may be recognized as a creditor of that subsidiary.
OurIndependent's obligations under the guarantee, therefore, will be effectively
subordinated to all existing and future liabilities of ourIndependent subsidiaries,
and claimants should look only to ourits assets for payments under the guarantee.
AMENDMENTS
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities, in which case no vote will be
required, the guarantee may be amended only with the prior approval of the
holders of a majority of the aggregate liquidation amount of the outstanding
preferred securities.
EVENTS OF DEFAULT; REMEDIES
An event of default under the guarantee agreement will occur upon
ourIndependent's failure to make any required guarantee payments or to perform any
other obligations under the guarantee. If the guarantee trustee obtains actual
knowledge that an event of default has occurred and is continuing, the guarantee
trustee must enforce the guarantee for the benefit of the holders of the
preferred securities. The holders of a majority in aggregate liquidation amount
of the preferred securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the guarantee
trustee in respect of the guarantee and may direct the exercise of any power
conferred upon the guarantee trustee under the guarantee agreement.
Any holder of preferred securities may institute and prosecute a legal
proceeding directly against usIndependent to enforce its rights under the
guarantee without first instituting a legal proceeding against the trust, the
guarantee trustee or any other person or entity.
We areIndependent is required to provide to the guarantee trustee annually a
certificate as to whether or not we areIndependent is in compliance with all of the
conditions and covenants applicable to usit under the guarantee agreement.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and effect upon:
- full payment of the redemption price of the preferred securities;
- full payment of the amounts payable upon liquidation of the trust; or
- distribution of the debentures to the holders of the preferred securities.
If at any time any holder of the preferred securities must restore payment
of any sums paid under the preferred securities or the guarantee, the guarantee
will continue to be effective or will be reinstated with respect to such
amounts.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
ourIndependent's default in performance of the guarantee, undertakes to perform
only those duties as are specifically set forth in the guarantee. When an event
of default has occurred and is continuing, the guarantee trustee must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. The guarantee trustee is under no
obligation to exercise any of the powers
44
vested in it by the guarantee at the request of any holder of any preferred
securities unless it is offered reasonable security indemnity against the costs,
expenses and liabilities that might be incurred in exercising these powers; but
this does not relieve the guarantee trustee of its obligations to exercise the
rights and powers under the guarantee in the event of a default.
GOVERNING LAW
The guarantee will be governed by New York law.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
WeIndependent irrevocably guarantee,guarantees, as and to the extent described in this
prospectus, payments of distributions and other amounts due on the preferred
securities, to the extent the trust has funds available for the payment of these
amounts. WeIndependent and the trust believe that, taken together, ourits obligations
under the debentures, the indenture, the trust agreement, and the guarantee
agreement provide, in the aggregate, a full, irrevocable and unconditional
guarantee, on a subordinated basis, of payment of distributions and other
amounts due on the preferred securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
a guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
obligations of the trust under the preferred securities.
If and to the extent that we doIndependent does not make payments on the
debentures, the trust will not pay distributions or other amounts due on the
preferred securities. The guarantee does not cover payment of distributions when
the trust does not have sufficient funds to pay the distributions. In this
event, the remedy of a holder of preferred securities is to institute a legal
proceeding directly against usIndependent for enforcement of payment of the
distributions to the holder. OurIndependent's obligations under the guarantee are
subordinated and junior in right of payment to all of ourits other indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
debentures, these payments will be sufficient to cover distributions and other
payments due on the preferred securities, primarily because:
- the aggregate principal amount of the debentures will be equal to the sum
of the aggregate stated liquidation amount of the trust securities;
- the interest rate and interest and other payment dates on the debentures
will match the distribution rate and distribution and other payment dates
for the preferred securities;
- weIndependent will pay for any and all costs, expenses and liabilities of
the trust, except the obligations of the trust to pay to holders of the
preferred securities the amounts due to the holders pursuant to the terms
of the preferred securities; and
- the trust will not engage in any activity that is not consistent with the
limited purposes of the trust.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any preferred security may institute a legal proceeding directly
against usIndependent to enforce its rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the trust or any
other person. A default or event of default under any of ourIndependent's senior or
subordinated debt would not constitute a default or event of default under the
trust agreement. In
45
the event, however, of
45
payment defaults under, or acceleration of, ourIndependent's
senior or subordinated debt, the subordination provisions of the indenture
provide that no payments may be made in respect of the debentures until the
obligations have been paid in full or any payment default has been cured or
waived. Failure to make required payments on the debentures would constitute an
event of default under the trust agreement.
LIMITED PURPOSE OF THE TRUST
The preferred securities evidence preferred undivided beneficial interests
in the assets of the trust. The trust exists for the exclusive purposes of
issuing the trust securities, investing the proceeds thereof in debentures and
engaging in only those other activities necessary, advisable or incidental
thereto. A principal difference between the rights of a holder of a preferred
security and the rights of a holder of a debenture is that a holder of a
debenture is entitled to receive from usIndependent the principal amount of and
interest accrued on debentures held, while a holder of preferred securities is
entitled to receive distributions from the trust (or from usIndependent under the
guarantee) if and to the extent the trust has funds available for the payment of
the distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the trust involving the
liquidation of the debentures, the holders of the preferred securities will be
entitled to receive, out of assets held by the trust, the liquidation
distribution in cash. See "--Description"Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution" on page 25.24. Upon ourIndependent's voluntary or
involuntary liquidation or bankruptcy, the property trustee, as holder of the
debentures, would be a subordinated creditor of ours.Independent's. Therefore, the
property trustee would be subordinated in right of payment to all of
ourIndependent's senior and subordinated debt, but is entitled to receive payment
in full of principal and interest before any of ourIndependent's shareholders
receive payments or distributions. Since we areIndependent is the guarantor under the
guarantee and havehas agreed to pay for all costs, expenses and liabilities of the
trust other than the obligations of the trust to pay to holders of the preferred
securities the amounts due to the holders pursuant to the terms of the preferred
securities, the positions of a holder of the preferred securities and a holder
of the debentures relative to ourIndependent's other creditors and to ourIndependent's
stockholders in the event of liquidation or bankruptcy are expected to be
substantially the same.
46
CERTAINMATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion of certain of the material United States federal income tax
considerations that may be relevant to the purchasers of the preferred
securities, insofar as the discussion relates to matters of law and legal
conclusions, represents the opinion of Kelley Drye & Warren LLP, special counsel
to usIndependent and the trust. An opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or the courts. The conclusions expressed herein
are based upon current provisions of the Internal Revenue Code of 1986, as
amended, regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change at any time, with possible
retroactive effect. Subsequent changes may cause tax consequences to vary
substantially from the consequences described below. Furthermore, the
authorities on which the following discussion is based are subject to various
interpretations, and it is therefore possible that the federal income tax
treatment of the purchase, ownership and disposition of preferred securities may
differ from the treatment described below. No rulings have been or are expected
to be sought from the IRS with respect to any of the transactions described
herein and no assurance can be given that the IRS will not take contrary
positions or will not challenge, successfully or otherwise, the opinions
expressed herein.
No attempt is made in the following discussion to comment on all United
States federal income tax matters affecting purchasers of the preferred
securities. Moreover, the discussion generally focuses on holders of the
preferred securities who are United States persons who acquire the preferred
securities on their original issue at their initial offering price and hold the
preferred securities as capital assets. United States persons include (i) an
individual or resident of the United States; (ii) a corporation or partnership
created or organized in or under the laws of the United States, any state
thereof including the District of Columbia or any political subdivision thereof;
(iii) an estate the income of which is includable in its gross income for United
States federal income tax purposes without regard to its source; or (iv) a trust
if a court within the United States is able to exercise primary supervision over
its administration and at least one United States person has the authority to
control all substantial decisions of the trust. The discussion does not address
all the tax consequences that may be relevant to holders who may be subject to
special tax treatment, such as, nonresident aliens, banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors or persons that will hold the
preferred securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. The following discussion also does
not address the tax consequences to persons that have a functional currency
other than the U.S. dollar or the tax consequences to shareholders, partners or
beneficiaries of a holder of the preferred securities. Further, it does not
include any description of any alternative minimum tax consequences or the tax
laws of any state or local government or of any foreign government. An investor
should consult, and should rely exclusively on, the investor's own tax advisors
in analyzing the federal, state, local and foreign tax consequences of the
purchase, ownership or disposition of the preferred securities with regard to
the particular tax consequences specific to that investor, which may vary for
investors in different tax situations, and not addressed in the following
discussion.
CLASSIFICATION OF THE DEBENTURES
Kelley Drye & Warren LLP, special counsel for usIndependent and the trust, has
rendered its opinion, based on qualifications and assumptions contained therein,
that the debentures shouldwill be classified for federal income tax purposes as
ourIndependent's indebtedness under current law, and, by acceptance of a preferred
security, you, as a holder, covenant to treat the debentures as indebtedness and
the preferred securities as evidence of an indirect beneficial ownership
interest in the debentures. NoBecause there is no definitive test which
establishes whether a particular security is indebtedness or equity for United
States federal income tax purposes, no assurance can be given however, that this position
will not be challenged by the IRS or, if challenged, that it will not be
successful. If the debentures were treated as equity for United States federal
income tax purposes, Independent would not be entitled to deduct the interest
paid or accrued on the debentures for United States federal income tax purposes,
and such treatment could constitute a Tax Event. In addition, if the interest on
the debentures is not
47
successful.deductible, it could adversely affect Independent's ability to make payments on
the debentures. The remainder of this discussion assumes that the debentures
will be classified for United States federal income tax purposes as
ourIndependent's indebtedness.
CLASSIFICATION OF THE TRUST
Kelley Drye & Warren LLP, special counsel for usIndependent and the trust, has
rendered its opinion that, under current law and assuming full compliance with
the terms of the trust agreement and indenture, the trust will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, you, as a holder of the preferred securities will be
treated as owning an undivided beneficial interest in the debentures, and you
will be required to include in your gross income any interest with respect to
the debentures at the time such interest is accrued or is received, with respect
to your pro rata share of the debentures in accordance with your method of
accounting. As discussed below, if the debentures were determined to be subject
to the original issue discount ("OID") rules, you, as a holder would instead be
required to include in your gross income any OID accrued on a daily basis with
respect to your allocable share of the debentures whether or not cash was
actually distributed to you.
INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under applicable treasury regulations, debt instruments such as the
debentures, which are issued at face value will not be considered issued with
OID, even if their issuer can defer payments of interest, if the likelihood of
any deferral is remote. Assuming the accuracy of the conclusion as set forth
below that the likelihood of exercising ourIndependent's option to defer payments
is remote, the debentures will not be treated as issued with OID. Accordingly,
except as set forth below, stated interest on the debentures generally will be
included in your income as ordinary income at the time it is paid or accrued in
accordance with your regular method of accounting.
A debt instrument will generally be treated as issued with OID if the stated
interest on the instrument does not constitute "qualified stated interest."
Qualified stated interest is generally any one of a series of stated interest
payments on an instrument that are unconditionally payable at least annually at
a single fixed rate. In determining whether stated interest on an instrument is
unconditionally payable and thus constitutes qualified stated interest, remote
contingencies as to the timely payment of stated interest are ignored. In the
case of the debentures, we haveIndependent has concluded that the likelihood of
exercising ourits option to defer payments of interest is remote. This is in part
because we payIndependent pays dividends on ourits common stock and intendintends to continue
to do so, and, if we
exercise ourit exercises its option to defer payments of interest,
weIndependent would be unable to continue paying these dividends, which could
adversely affect the market for ourits common stock if weit deferred our payments under
the debentures.
The treasury regulations referred to above have not been interpreted by any
court decisions or addressed in any ruling or other pronouncements of the IRS
referred to above, and it is possible that the IRS could take a position
contrary to the conclusions herein.
If the likelihood that weIndependent would exercise the option to defer any
payment of interest was determined not to be "remote" or if weIndependent actually
exercise ourexercises its option to defer the payment of interest, the debentures would be
treated as issued with OID at the time of issuance or at the time of such
exercise, as the case may be, and all stated interest would thereafter be
treated as OID as long as the debentures remained outstanding. In such event,
all of your taxable interest income in respect of the debentures would
constitute OID that would accrue on a daily basis and be includable in your
income before the receipt of the cash attributable to such income, regardless of
your method of tax accounting, and actual distributions of stated interest would
not be reported separately as taxable income. Consequently, you, as a holder of
the preferred securities would be required to include such OID in gross income
even though weIndependent would not make any actual cash payments during an
extension period.
48
Because income on the preferred securities will constitute interest,
corporate holders of preferred securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the preferred securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of preferred securities other than a holder who purchased the
preferred securities upon original issuance or who purchased for a price other
than the first price at which a substantial amount of the preferred securities
were sold for money other than to a bond house, broker, or other person acting
as an underwriter, placement agent or wholesaler may be considered to have
acquired their undivided interests in the debentures with "market discount" or
"acquisition premium" as these phrases are defined for federal income tax
purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
preferred securities.
RECEIPT OF DEBENTURES OR CASH UPON DISSOLUTION OF THE TRUST
Under the circumstances described in "--Description"Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution" on page 25,24, the
debentures may be distributed to holders of the preferred securities upon a
liquidation of the trust. Under current United States federal income tax law,
such a distribution would be treated as a nontaxable event to the holder and
would result in the holder having an aggregate tax basis in the debentures
received in the liquidation equal to the holder's aggregate tax basis in the
preferred securities immediately before the distribution. A holder's adjusted
tax basis in the preferred securities generally will be its initial purchase
price increased by OID, if any, previously includible in the holder's gross
income to the date of disposition and decreased by payments, if any, received on
the preferred securities in respect of OID to the date of disposition. A
holder's holding period in debentures received in liquidation of the trust would
include the period for which the holder held the preferred securities. If,
however, a Tax Event occurs resulting in the trust being treated as an
association taxable as a corporation, the distribution likely would constitute a
taxable event to holders of the preferred securities. Under circumstances
described herein, the debentures may be redeemed for cash and the proceeds of
the redemption distributed to holders in redemption of their preferred
securities. Under current law, such a redemption should constitute a taxable
disposition of the redeemed preferred securities and for United States federal
income tax purposes, and a holder should therefore recognize gain or loss as if
the holder sold the preferred securities for cash. Such holder would recognize
gain or loss in an amount equal to the difference between the cash received upon
redemption and the holders adjusted tax basis in the preferred securities.
DISPOSITION OF PREFERRED SECURITIES
A holder that sells preferred securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the preferred
securities and the holder's adjusted tax basis in the preferred securities, as
defined above. A gain or loss of this kind will generally be a capital gain or
loss and will be a long-term capital gain or loss if the preferred securities
have been held for more than one year at the time of sale.
The preferred securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
debentures. A holder that disposes of its preferred securities between record
dates for payments of distributions thereon will be required to include accrued
but unpaid interest on the debentures through the date of disposition in income
as ordinary income, and to add the amount to its adjusted tax basis in its
proportionate share of the underlying debentures deemed disposed of. Any OID
included in income will increase a holder's adjusted tax basis as discussed
above. To the extent the selling price is less than the holder's adjusted tax
basis a holder 49
will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
49
EFFECT OF POSSIBLE CHANGES IN TAX LAWS
In a case filed in the U.S. Tax Court, Enron Corp. v. Commissioner, Tax
Court Docket No. 6149-98, the IRS challenged the deductibility for federal
income tax purposes of interest paid on securities which are similar, but not
identical, to the preferred securities. The parties filed a stipulation of
settled issues, a portion of which stipulated that there shall be no adjustment
for the interest deducted by the taxpayer with respect to the securities. The
IRS may also challenge the deductibility of interest paid on the debentures,
which, if such challenge were litigated resulting in the IRS's position being
sustained, would trigger a Tax Event and possibly a redemption of the preferred
securities.
Accordingly, there can be no assurance that a Tax Event will not occur. A
Tax Event would permit us,Independent, upon approval of the Federal Reserve, if
then required, to cause a redemption of the preferred securities before, as well
as after, , 2006.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Interest paid, or, if applicable, OID accrued, on the preferred securities
held of record by individual citizens or residents of the United States, or
certain trusts, estates and partnerships, will be reported to the IRS on Forms
1099-INT, or, where applicable, Forms 1099-OID, which forms should be mailed to
the holders by January 31 following each calendar year. Payments made on, and
proceeds from the sale of, the preferred securities may be subject to a "backup"
withholding tax (currently at 30.5%) unless the holder complies with certain
identification and other backup withholding requirements. Any amounts withheld
under the backup withholding rules will be allowed as a credit against the
holder's federal income tax liability, provided the required information is
provided to the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY BE
INAPPLICABLE TO A PARTICULAR SITUATION OF A HOLDER OF THE PREFERRED SECURITIES.
HOLDERS OF PREFERRED SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE,
INDEPENDENT, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES OR OTHER TAX LAWS PARTICULARLY SINCE TAX CONSEQUENCES WILL VARY
FOR INVESTORS IN DIFFERENT TAX SITUATIONS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"), or Section 4975 of the Internal Revenue Code,
generally may purchase preferred securities, subject to the investing
fiduciary's determination that the investment in preferred securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the plan.
In any case, weIndependent and/or any of ourits affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Internal Revenue Code) with respect
to certain plans. These plans generally include plans maintained or sponsored
by, or contributed to by, any such persons with respect to which weIndependent or
any of ourits affiliates are a fiduciary or plans for which weIndependent or any of
ourits affiliates provide services. The acquisition and ownership of preferred
securities by a plan (or by an individual retirement arrangement or other plans
described in Section 4975(e)(1) of the Internal Revenue Code) with respect to
which weIndependent or any of ourits affiliates are considered a party in interest or
a disqualified person may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Internal Revenue Code, unless the preferred
securities are acquired pursuant to and in accordance with an applicable
exemption.
50
As a result, plans with respect to which we or any of our affiliatesIndependent or any of its
affiliates is a party in interest or a disqualified person should not acquire
preferred securities unless the preferred securities are acquired pursuant to
and in accordance with an applicable exemption. Any other plans or other
entities whose assets include plan assets subject to ERISA or Section 4975 of
the Internal Revenue Code proposing to acquire preferred securities should
consult with their own counsel.
5150
UNDERWRITING
Legg Mason Wood Walker, Incorporated, as underwriter, has agreed, subject to
the terms and conditions of its underwriting agreement with usIndependent and the
trust, to purchase from the trust 1,000,000 preferred securities at the initial
public offering price less the underwriting commission set forth on the cover
page of this prospectus.
The underwriting agreement provides that the obligations of the underwriter
are subject to certain conditions, and that if any of the foregoing preferred
securities are purchased by the underwriter pursuant to the underwriting
agreement, all such securities must be so purchased. The underwriter may reject
orders in whole or in part and withdraw, cancel, or modify the offer without
notice. WeIndependent and the trust have each agreed to indemnify the underwriter
and their controlling persons against certain liabilities including liabilities
under the Securities Act of 1933 or to contribute to payments the underwriter
may be required to make in respect thereof.
The underwriter may also impose a penalty bid on certain selling group
members. This means that if the underwriter purchases preferred securities in
the open market to reduce the underwriter's short position or to stabilize the
price of the preferred securities, it may reclaim the amount of the selling
concession from the selling group members who sold those preferred securities as
part of the offering.
The underwriter may create a "short position" in the preferred securities in
connection with the offering, which means that they may over-allot or sell more
shares than are set forth on the cover page of this prospectus. If the
underwriter creates a short position by such over-allotment, then the
underwriter may reduce that short position by purchasing preferred securities in
the open market. In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of security to
be higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security.
The underwriter has advised usIndependent and the trust that it proposes to
offer the preferred securities directly to the public initially at the public
offering price set forth on the cover page of this prospectus and to certain
dealers at such price less a concession not in excess of $ per preferred
security. The underwriter may allow and such dealers may reallow a concession
not in excess of $ per preferred security to certain other brokers and dealers.
After the public offering, the public offering price, concession and
reallowance, and other selling terms may be changed by the underwriter.
In view of the fact that the proceeds from the sale of the preferred
securities will be used to purchase the debentures issued by us,Independent, the
underwriting agreement provides that weIndependent will pay as compensation for
the underwriter's arranging the investment therein of such proceeds an amount of
$cash equal to $0.9375 per preferred security.security, or $937,500 in the aggregate. This
compensation paid per share to the underwriter is equal to the difference
between the public offering price and the amount paid per share by the
underwriters for such securities.
Independent estimates that it will spend approximately $275,000 for
printing, depository and trustees' fees, legal and accounting fees, and other
expenses of the offering in addition to underwriting compensation.
Both weIndependent and the trust have agreed in the underwriting agreement
that, subject to certain conditions, prior to 90 days following the date of
issuance of the preferred securities, neither of usIndependent nor the trust will,
directly or indirectly, issue, sell, offer or agree to sell, grant any option
for the sale of, or otherwise dispose of, preferred securities, any securities
convertible into, exchangeable or exercisable for preferred securities or the
debentures or any debt securities substantially similar to the debentures or any
equity security substantially similar to the preferred securities, except with
the prior written consent of the underwriter, and except for any disposal of
debentures following a liquidation of the trust.
51
Because the National Association of Securities Dealers, Inc. (the "NASD")
may view the preferred securities as interests in a direct participation
program, the offer and sale of the preferred securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
52
LEGAL MATTERS
Certain legal matters, including matters relating to federal income tax
considerations, for usIndependent and the trust will be passed upon by Kelley
Drye & Warren LLP, Vienna, Virginia, counsel to usIndependent and the trust.
Certain legal matters will be passed upon for the underwriter by Thacher
Proffitt & Wood, Washington D.C. Kelley Drye & Warren LLP and Thacher
Proffitt & Wood will rely on the opinion of Richards, Layton & Finger, P.A. as
to matters of Delaware law. As of the date of this prospectus, certain members
of Kelley Drye & Warren LLP owned in the aggregate approximately 10,000 shares
of ourIndependent's common stock.
EXPERTS
OurIndependent's consolidated financial statements as of December 31, 2000 and
for each of the three years in the period ended December 31, 2000, incorporated
by reference herein, have been audited by Arthur Andersen LLP, independent
public accountants, as stated in their report with respect thereto, and are
included therein in reliance upon the authority of said firm as experts in
giving said report.
WHERE YOU CAN GET MORE INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 filed by
usIndependent and the trust with the Securities and Exchange Commission under the
Securities Act of 1933, with respect to the preferred securities, the debentures
and the guarantee. This prospectus does not contain all the information set
forth in the registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information with respect to usIndependent and the
securities offered by this prospectus, reference is made to the registration
statement. Statements contained in this prospectus concerning the provisions of
such documents are necessarily summaries of such documents and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Securities and Exchange Commission.
We fileIndependent files periodic reports, proxy statements and other information
with the Securities and Exchange Commission. OurIndependent's filings are available
to the public over the Internet at the Securities and Exchange Commission's
website at http://www.sec.gov. You may also inspect and copy these materials a
the public reference facilities of the Securities and Exchange Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of such material
can be obtained at prescribed rates from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information.
Each holder of the trust securities will receive a copy of ourIndependent's
annual report at the same time as we furnishIndependent furnishes the annual report to the
holders of ourits common stock.
We "incorporateIndependent "incorporates by reference" into this prospectus the information
we fileit files with the Securities and Exchange Commission, which means that
weIndependent can disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus and information that we fileIndependent files subsequently with the
Securities and Exchange Commission will automatically update this prospectus.
We incorporateIndependent incorporates by reference the documents listed below and any filings
we makeIndependent makes with the Securities and Exchange Commission under Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act, after the initial filing of the
registration statement that contains this prospectus and prior to the time that
we sellIndependent sells all the securities offered by this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 2000.
52
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001.
53
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning usIndependent at the following address:
288 Union Street, Rockland, Massachusetts 02370, Attention: Corporate Clerk,
telephone (781) 878-6100.
5453
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- --------------------------------------------------------------------------------
1,000,000 TRUST PREFERRED SECURITIES
INDEPENDENT CAPITAL TRUST III
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
FULLY, IRREVOCABLY AND UNCONDITIONALLY
GUARANTEED ON A SUBORDINATED BASIS,
AS DESCRIBED IN THIS PROSPECTUS, BY
[LOGO]
INDEPENDENT BANK CORP.
------------------
PROSPECTUS
------------------
Legg Mason Wood Walker
Incorporated
, 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee........................................ 6,000
NASD fee....................................................
Nasdaq fees................................................. 5,000
Legal fees and expenses..................................... 109,000*
Trustees' fees and expenses................................. 10,000*
Accounting fees and expenses................................ 50,000*
Printing expenses........................................... 70,000*
Miscellaneous expenses...................................... *
--------
Total................................................... $275,000*
========
- ------------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of the Massachusetts Business Corporation Law ("MBCL") sets forth
certain circumstances under which directors, officers, employees and agents may
be indemnified against liability which they may incur in their capacity as such.
Section 67 of the MBCL provides as follows:
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, ETC.--Indemnification
of directors, officers, employees and other agents of a corporation and
persons who serve at its request as directors, officers, employees or other
agents of another organization or who serve at its request in any capacity
with respect to any employee benefit plan, may be provided by it to whatever
extent shall be specified in or authorized by (i) the articles of
organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote
on the election of directors. Except as the articles of organization or
by-laws otherwise require, indemnification of any persons referred to in the
preceding sentence who are not directors of the corporation may be provided
by it to the extent authorized by the directors. Such indemnification may
include payment by the corporation of expenses incurred in defending a civil
or criminal action or proceeding in advance of the final disposition of such
action or proceeding, upon receipt of an undertaking by the person
indemnified to repay such payment if he shall be adjudicated to be not
entitled to indemnification under this section which undertaking may be
accepted without reference to the financial ability of such person to make
repayment. Any such indemnification may be provided although the person to
be indemnified is no longer an officer, director, employee or agent of the
corporation or of such other organization or no longer serves with respect
to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter related to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit any
right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the
II-1
request of the corporation as a director, officer, employee or other agent of
another organization or with respect to any employee benefit plan against any
liability incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability.
Article Twelve of ourIndependent's By-laws, entitled "Indemnification of
Directors, Officers and Others," provides as follows:
The corporation shall, to the extent legally permissible, indemnify any
person serving on who has served (i) as a Director or officer of the
corporation, or (ii) at its request as a Director, trustee, officer,
employee or other agent of another organization, or (iii) at its request in
any capacity with respect to any employee benefit plan; against all
liabilities and expenses including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees
reasonably incurred by him or her in connection with the defense or
disposition of any action, suit or other proceeding, whether civil, criminal
or administrative, in which he or she may be involved or with which he or
she may be threatened, while serving or thereafter, by reason of his or her
being or having been such a Director, officer, trustee, employee or agent,
except with respect to any matter as to which he or she shall have been
adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the
corporation or to the extent that such matter relates to services with
respect to an employee benefit plan, in the best interest of the
participants or beneficiaries of such employee benefit plan; provided,
however, that as to any matter disposed of by a compromise payment by such
Director, officer, trustee, employee or agent, pursuant to a consent decree
or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless:
(a) such compromise shall be approved as having been in the best
interests of the corporation or employee benefit plan participants or
beneficiaries, as the case may be, after notice that it involves such
indemnification:
(i) by a disinterested majority of the Directors then in office; or
(ii) by the holders of a majority of the outstanding stock by the
time entitled to vote for Directors, voting as a single class, exclusive
of any stock owned by any interested Director or officer; or
(b) in the absence of action by disinterested Directors or stockholders,
there has been obtained at the request of a majority of the Directors then
in office an opinion in writing of independent legal counsel to the effect
that such Director or officer appears to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the
corporation or employee benefit plan participants or beneficiaries, as the
case may be.
Expenses including counsel fees, reasonably incurred by any such Director,
officer, trustee, employee or agent in connection with the defense or
disposition of any such action, suit or other proceeding may be paid from time
to time by the corporation in advance of the final disposition thereof upon
receipt of an undertaking by such individual to repay the amounts so paid to the
corporation if it is ultimately determined that indemnification for such
expenses is not authorized under this section. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
any such Director, officer, trustee, employee or agent may be entitled. Nothing
contained in this Article shall affect any rights to indemnification to which
corporate personnel other than such Directors, officers, trustee, employees or
agents may be entitled by contract or otherwise under law. As used in this
Article the terms "Director," "officer," "trustee," "employee," and "agent"
include their respective heirs, executors and administrators, and an
"interested" Director, officer, trustee, employee or agent is one against whom
in such capacity the proceedings in question or other proceeding on the same or
similar grounds is then pending.
II-2
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1 Form of Underwriting AgreementAgreement*
4.1 Form of Indenture of Registrant relating to the Junior
Subordinated DebenturesDebentures*
4.2 Form of Certificate of Junior Subordinated Debenture
(included as Exhibit A to Exhibit 4.1)*
4.3 Certificate of Trust of Independent Capital Trust IIIIII*
4.4 Form of Declaration of Trust of Independent Capital Trust
IIIIII*
4.5 Form of Amended and Restated Declaration of Trust for
Independent Capital Trust IIIIII*
4.6 Form of Preferred Security Certificate for Independent
Capital Trust III (included as Exhibit D to Exhibit 4.5)*
4.7 Form of Preferred Securities Guarantee Agreement of
Independent Capital Trust IIIIII*
5.1 Opinion of Kelley Drye & Warren LLP as to the legality of
the Junior Subordinated Debentures and the Guarantee to be
issued by Independent Bank Corp.
5.2 Opinion of Richards, Layton & Finger, P.A. as to the
legality of the Preferred Securities to be issued by
Independent Capital Trust IIIIII*
8.1 Opinion of Kelley Drye & Warren LLP as to certain federal
income tax matters
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kelley Drye & Warren LLP (included in Exhibits
5.1 and 8)
23.4 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers, directors and
trustees of Independent Bank Corp. and Independent Capital
Trust III, respectively (located on the signature pages
hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the IndentureIndenture*
25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Declaration of Trust of Independent
Capital Trust IIIIII*
25.3 Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee Agreement for the benefit of the holders
of the Preferred SecuritiesSecurities*
- ------------------------
* Previously filed
ITEM 17. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each 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 each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling person of each
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the
II-3
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such
II-3
indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Independent Bank
Corp. 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 Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Rockland, Massachusetts, on the 1st30th
day of November 2001.
INDEPENDENT BANK CORP.
By: /s/ DOUGLAS H. PHILIPSENPHILIPSEN*
-----------------------------------------
Douglas H. Philipsen
Chairman of the Board, Chief Executive
Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Each of the directors and/or officers of
Independent Bank Corp. whose signature appears below hereby appoints Douglas H.
Philipsen and Denis K. Sheahan, and each of them severally, as his
attorney-in-fact to sign in his or her name and behalf, in any and all
capacities stated below and to file with the Securities and Exchange Commission
any and all amendments, including post-effective amendments, to this
Registration Statement on Form S-3, and any Registration Statement relating to
the same offering as this Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, making such
changes in the Registration Statement as appropriate, and generally to do all
such things in their behalf in their capacities as directors and/or officers to
enable Independent Bank Corp. to comply with the provisions of the Securities
Act of 1933, and all requirements of the Securities and Exchange Commission.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DOUGLAS H. PHILIPSENPHILIPSEN* Chairman of the Board,
------------------------------------------- Chief Executive Officer November 1,30, 2001
Douglas H. Philipsen and President
/s/ RICHARD S. ANDERSONANDERSON*
------------------------------------------- Director November 1,30, 2001
Richard S. Anderson
/s/ W. PAUL CLARKCLARK*
------------------------------------------- Director November 1,30, 2001
W. Paul Clark
/s/ ROBERT L. CUSHINGCUSHING*
------------------------------------------- Director November 1,30, 2001
Robert L. Cushing
/s/ ALFRED L. DONOVANDONOVAN*
------------------------------------------- Director November 1,30, 2001
Alfred L. Donovan
/s/ BENJAMIN A. GILMORE II*
------------------------------------------- Director November 30, 2001
Benjamin A. Gilmore II
/s/ E. WINTHROP HALL*
------------------------------------------- Director November 30, 2001
E. Winthrop Hall
II-5
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BENJAMIN A. GILMORE IIKEVIN J. JONES*
------------------------------------------- Director November 1, 2001
Benjamin A. Gilmore II
/s/ E. WINTHROP HALL
------------------------------------------- Director November 1, 2001
E. Winthrop Hall
/s/ KEVIN J. JONES
------------------------------------------- Director November 1,30, 2001
Kevin J. Jones
/s/ LAWRENCE M. LEVINSONLEVINSON*
------------------------------------------- Director November 1,30, 2001
Lawrence M. Levinson
/s/ RICHARD H. SGARZISGARZI*
------------------------------------------- Director November 1,30, 2001
Richard H. Sgarzi
/s/ WILLIAM J. SPENCESPENCE*
------------------------------------------- Director November 1,30, 2001
William J. Spence
/s/ JOHN H. SPURR JR.*
------------------------------------------- Director November 1,30, 2001
John H. Spurr Jr.
/s/ ROBERT D. SULLIVANSULLIVAN*
------------------------------------------- Director November 1,30, 2001
Robert D. Sullivan
/s/ BRIAN S. TEDESCHITEDESCHI*
------------------------------------------- Director November 1,30, 2001
Brian S. Tedeschi
/s/ THOMAS J. TEUTENTEUTEN*
------------------------------------------- Director November 1,30, 2001
Thomas J. Teuten
/s/ DENIS K. SHEAHAN
------------------------------------------- Chief Financial Officer and November 1,30, 2001
Denis K. Sheahan Treasurer
*By: /s/ DENIS K. SHEAHAN
--------------------------------------
Denis K. Sheahan
PURSUANT TO POWER OF ATTORNEY DATED
NOVEMBER 1, 2001
II-6
Pursuant to the requirements of the Securities Act of 1933, Independent
Capital Trust III certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Rockland, Massachusetts, on the 1st30th day of November 2001.
INDEPENDENT CAPITAL TRUST III
By: /s/ EDWARD H. SEKSAY
-----------------------------------------
Edward H. Seksay
Administrative Trustee
By: /s/ ANTHONY W. DIROBBIO
-----------------------------------------
Anthony W. DiRobbio
Administrative Trustee
By: /s/ DENIS K. SHEAHAN
-----------------------------------------
Denis K. Sheahan
Administrative Trustee
II-7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1 Form of Underwriting AgreementAgreement*
4.1 Form of Indenture of Registrant relating to the Junior
Subordinated DebenturesDebentures*
4.2 Form of Certificate of Junior Subordinated Debenture
(included as Exhibit A to Exhibit 4.1)*
4.3 Certificate of Trust of Independent Capital Trust IIIIII*
4.4 Form of Declaration of Trust of Independent Capital Trust
IIIIII*
4.5 Form of Amended and Restated Declaration of Trust of
Independent Capital Trust IIIIII*
4.6 Form of Preferred Security Certificate for Independent
Capital Trust III (included as Exhibit D to Exhibit 4.5)*
4.7 Form of Preferred Securities Guarantee Agreement of
Independent Capital Trust IIIIII*
5.1 Opinion of Kelley Drye & Warren LLP as to the legality of
the Junior Subordinated Debentures and the Guarantee to be
issued by Independent Bank Corp.
5.2 Opinion of Richards, Layton & Finger, P.A. as to the
legality of the Preferred Securities to be issued by
Independent Capital Trust IIIIII*
8.1 Opinion of Kelley Drye & Warren LLP as to certain federal
income tax matters
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kelley Drye & Warren LLP (included in Exhibits
5.1 and 8)
23.4 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers, directors and
trustees of Independent Bank Corp. and Independent Capital
Trust III, respectively (located on the signature pages
hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the IndentureIndenture*
25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Declaration of Trust of Independent
Capital Trust IIIIII*
25.3 Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee Agreement for the benefit of the holders
of the Preferred SecuritiesSecurities*
- ------------------------
* Previously filed