As filed with the Securities and Exchange Commission on AprilAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1997
Registration No.1999
REGISTRATION NO. 333-
333- -01
===============================================================================01
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FormFORM S-3
Registration Statement under the Securities Act ofREGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
INDEPENDENT BANK CORP. INDEPENDENT CAPITAL TRUST I
(Exact name of Registrant as specified (Exact name of Registrant as
in its charter) specified in its trust agreement)
MASSACHUSETTS DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
_________ _________
6022 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
04-2870273 Applied for------------------
INDEPENDENT BANK CORP INDEPENDENT CAPITAL TRUST II
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its trust
agreement)
MASSACHUSETTS DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
- ------------------------------- -------------------------------
6022 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
04-2870273 04-6901632
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
------------------------
----------------------------------
288 Union Street
Rockland, MassachusettsUNION STREET
ROCKLAND, MASSACHUSETTS 02370
(617) 878-6100
(Address, including zip code, and telephone number, including area code,
of Registrants' principal executive offices)
------------------------
Richard----------------------------------
RICHARD J. Seaman
Chief Financial Officer
Independent Bank Corp.SEAMAN
CHIEF FINANCIAL OFFICER
INDEPENDENT BANK CORP.
288 Union Street
Rockland, MassachusettsUNION STREET
ROCKLAND, MASSACHUSETTS 02370
(617) 878-6100
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
------------------------
Copies to:
Norman B. Antin, Esq. Vince Pisano, Esq.
Elias, Matz, Tiernan & Herrick L.L.P. Skadden, Arps, Slate, Meagher & Flom LLP
734 15th Street, N.W. 919 Third Avenue
Washington,----------------------------------
COPIES TO:
NORMAN B. ANTIN, ESQ. RICHARD A. SCHABERG, ESQ.
JEFFREY D. HAAS, ESQ. THACHER PROFFITT & WOOD
ELIAS, MATZ, TIERNAN & HERRICK L.L.P. 1700 PENNSYLVANIA AVENUE
734 15TH STREET, N.W. WASHINGTON, D.C. 20006
WASHINGTON, D.C. 20005
New York, New York 10022
------------------------
----------------------------------
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 Formform 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 the formation of a holding company and there is compliance
with General Instruction G,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
===================================================================================================
Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1) Fee(2)AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
===================================================================================================
Trust Preferred Securities of Independent
Capital Trust I ...... $28,750,000II........................... $23,000,000 100% $28,750,000 $8,713
- ---------------------------------------------------------------------------------------------------$23,000,000 $6,394
Junior Subordinated Deferrable Interest
Debentures of Independent Bank Corp.(2)..................... $28,750,000.... $23,000,000 100% $28,750,000$23,000,000 N/A
- ---------------------------------------------------------------------------------------------------
Independent Bank Corp. Guarantee with respect
to the Trust Preferred Securities(3).................. N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------
Total........................... $28,750,000(4)Total........................................ $23,000,000(4) 100% $28,750,000(4) $8,713
===================================================================================================$23,000,000(4) $6,394
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Junior Subordinated
Deferrable Interest Debentures of Independent Bank Corp. (the "Junior
Subordinated Debentures") distributed upon any liquidation of Independent
Capital Trust I.II.
(3) No separate consideration will be received for the Independent Bank Corp.
Guarantee.
(4) Such amount represents the liquidation amount of the Independent Capital
Trust III Trust Preferred Securities and the principal amount of Junior
Subordinated Debentures that may be distributed to holders of such Trust
Preferred Securities upon any liquidation of Independent Capital Trust I.
------------------------II.
----------------------------------
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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- --------------------------------------------------------------------------------
The Registrants hereby amendinformation in this prospectus is not complete and may be changed. We may
not sell these securities until the Securities and Exchange Commission declares
our registration statement on such dateeffective. 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 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.
==============================================================================sale is not permitted.
SUBJECT TO COMPLETION, DATED _______ __, 1997
PROSPECTUS
1,000,000OCTOBER 28, 1999
2,000,000 TRUST PREFERRED SECURITIES
INDEPENDENT CAPITAL TRUST II
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER TRUST PREFERRED SECURITY)
[LOGO]
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
INDEPENDENT BANK CORP.
---------------------
INDEPENDENT BANK CORP.: We are a bank holding company that offers, through
our subsidiary Rockland Trust Company, a full range of commercial and retail
banking and trust services to our customers in Southeastern Massachusetts.
INDEPENDENT CAPITAL TRUST II: Independent Capital Trust II is a subsidiary
of Independent Bank Corp. and a statutory business trust created under Delaware
law.
THE OFFERING: In connection with this offering, the Trust will sell Trust
Preferred Securities Independent Capital Trust I
___% Cumulative Trust Preferredto the public and Common Securities (Liquidation Amount $25 per Trust Preferred Security)
Fullyto us; use the proceeds
from these sales to buy an equivalent principal amount of % Junior
Subordinated Debentures due , 2029 issued by us, and Unconditionally Guaranteed, as Described Herein, by
Independent Bank Corp.
The _____% Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") offered hereby will represent undivided beneficial interests in
Independent Capital Trust I, a trust formed underdistribute the
lawsfuture cash payments it receives on the Junior Subordinated Debentures to the
holders of the State of
Delaware (the "Trust"). Independent Bank Corp., a Massachusetts corporation (the
"Corporation" or "Independent"), will be the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Trust Preferred Securities the "Trust
Securities"). The Bankand Common Securities.
- For each Trust Preferred Security that you own, you will receive
cumulative cash distributions at an annual rate of New York is the Property Trustee% on March 31,
June 30, September 30 and December 31 of the Trust. The
Trust exists for the exclusive purposes of issuing the Trust Securities and
investing the proceeds thereof in the _____% Junior Subordinated Deferrable
Interest Debentures (the "Junior Subordinated Debentures")each year, beginning
, 1999. Distribution payments to be issued by the
Corporation, and certain other limited activities described herein. The Junior
Subordinated Debentures are scheduled to mature on ______, 2027 which dateyou may be shortened (such date, as it may be shortened, the "Stated Maturity Date")deferred for up to
a date not earlier than ___________, 2002 if certain conditions are met
(including the Corporation having received prior regulatory approval to do so if
then required under applicable capital guidelines or regulatory policies).20 consecutive calendar quarters.
- The Trust Preferred Securities will have a preference over the Common Securities
under certain circumstances with respect to cash distributions and amounts
payablemature on liquidation, redemption or otherwise. See "Description of, 2029.
- The Trust Preferred Securities-Subordination of Common Securities."
(Continued on next page)
-----------
See "Risk Factors" beginning on page __ for a discussion of certain factors that
should be considered by prospective investors in evaluating an investment inmay redeem the Trust Preferred Securities.
-----------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
Price to Underwriting Proceeds to
Public Commission(1) Trust(2)(3)
- --------------------------------------------------------------------------------
PerSecurities, at a redemption price
of $10 per Trust Preferred Security..... $25.00 (2) $Security on or after , 2004, plus
accrued and unpaid distributions, and under certain other circumstances.
- --------------------------------------------------------------------------------
Total(4)......................... $25,000,000 (2) $
================================================================================
(1) The Corporation andA brief description of the Trust have agreedPreferred Securities can be found under
"Summary" in this prospectus.
- We intend to indemnifyapply for listing of the Underwriters
against certain liabilities, including certain liabilitiesTrust Preferred Securities on the
Nasdaq National Market under the Securities Act. See "Underwriting.symbol "INDBO."
(2)--------------------------
THERE ARE CERTAIN RISKS YOU SHOULD CONSIDER BEFORE INVESTING IN THE TRUST
PREFERRED SECURITIES. SEE "RISK FACTORS" BEGINNING ON PAGE 10.
--------------------------
PER SECURITY TOTAL
------------ --------
Public Offering Price....................................... $10.00 $
Proceeds to the Trust....................................... $10.00 $
In view of the fact that the proceeds of the sale of the Trust Preferred
Securities will be invested in the Junior Subordinated Debentures, the
Corporation,we,
Independent Bank Corp., as issuer of the Junior Subordinated Debentures, hashave
agreed to pay the Underwriters, as compensation, $__underwriter $ per Trust Preferred Security (or
$__________$ ($ if the underwriter's over-allotment option is exercised
in full) in the aggregate). See "Underwriting."
(3) Before deducting estimated expenses of $_______ payable by as compensation.
We and the Corporation.
(4) The Trust hashave granted the Underwritersunderwriter a 30-day option to purchase up
to 150,000300,000 additional Trust Preferred Securities on the same terms and
conditions set forthdiscussed above solely to cover over-allotments, if any. If this
option is exercised in full, the total Price to Public will be $28,750,000Offering Price and Proceeds to the
Trust will be $______________. See "Underwriting."
----------
The Trust Preferred Securities are offered by the Underwriters, subject to
prior sale, when, as$ and if issued to and accepted by the Underwriters and
subject to approval of certain legal matters by counsel for the Underwriters and
to certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Trust Preferred Securities will be made through
the facilities of the Depository Trust Company ("DTC") in certificated form in
New York, New York on or about _____ __, 1997 against payment therefor in
immediately available funds.
----------
Legg Mason Wood Walker Piper Jaffray Inc.
Incorporated
The date of this Prospectus is ___________ __, 1997
Information contained is subject to completion or amendment.$ .
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF ANYONE'S INVESTMENT IN THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A registration
statement relating to these securities has been filed with the Securities and
Exchange Commission. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any jurisdiction in
which such offer, solicitation, or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction.
(Continued from the previous page)CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OBLIGATIONS OF ANY
BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
The Trust Preferred Securities will be represented by one or more global
certificates registeredready for delivery in the name ofbook-entry form
through The Depository Trust Company ("Depository"on or "DTC")about , 1999.
--------------------------
Legg Mason Wood Walker
Incorporated
The date of this prospectus is , 1999
[MAP]
TABLE OF CONTENTS
PAGE
--------
Forward Looking Statements..................................
Where You Can Find More Information.........................
Summary.....................................................
Summary Consolidated Financial and Other Data...............
Risk Factors................................................
Ratios of Earnings to Fixed Charges.........................
Use of Proceeds.............................................
Capitalization..............................................
Independent Capital Trust II................................
Description of Trust Preferred Securities...................
Description of Junior Subordinated Debentures...............
Description of Guarantee....................................
Book-Entry Issuance.........................................
Relationship Among the Trust Preferred......................
Securities, the Junior Subordinated.........................
Debentures and the Guarantee................................
Certain Federal Income Tax Consequences.....................
ERISA Considerations........................................
Underwriting................................................
Legal Matters...............................................
Experts.....................................................
------------------------
FORWARD LOOKING STATEMENTS
This document contains and incorporates by reference certain forward looking
statements regarding our financial condition, results of operations and
business. These statements are not historical facts and include statements about
our
- confidence,
- strategies about earnings,
- new and existing programs and products,
- relationships,
- opportunities,
- technology, and
- market conditions.
You may identify these statements by looking for
- forward-looking terminology, like "expect," "believe" or "anticipate;"
- expressions of confidence like "strong" or "on-going;" or
- similar statements or variations of those terms.
i
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from the results the forward-looking
statements contemplate because of, among others, the following possibilities:
- competitive pressure in the banking and financial services industry
increases significantly;
- changes occur in the interest rate environment;
- our Year 2000 compliance program does not effectively address Year 2000
computer problems; and
- general economic conditions, either nationally, in New England or in the
state of Massachusetts, are less favorable than expected.
------------------------
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Our SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any documents we file with the
SEC at its nominee. Beneficial interests in such Trust
Preferred Securities will be shownpublic reference facilities at 450 Fifth Street, NW, Washington, DC
20549, 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You
can also obtain copies of the documents at prescribed rates by writing to the
Public Reference Section of the SEC at 450 Fifth Street, NW, Washington, DC
20549. Please call the SEC at 1-800-SEC-0330 for further information on and transfers thereof will be effected
through, records maintained by DTC and its participants. Except as described
herein, Trust Preferred Securities in certificate form will not be issued in
exchange for global certificates. See "Book-Entry Issuance."
Application has been made to list the
Trust Preferred Securities onoperation of the public reference facilities. Our SEC filings are also available
at the office of the Nasdaq National Market. Although the Underwriters have indicated an intention to
make a market in the Trust Preferred Securities, the Underwriters are not
obligated to make a market in the Trust Preferred Securities, and any market
making may be discontinued at any timeFor further information on
obtaining copies of our public filings at the sole discretion of the
Underwriters. There can be no assurance that a market will develop for theNasdaq National Market, you should
call (212) 656-5060.
The Trust Preferred Securities. See "Risk Factors--Absence of Existing Public Market;
Market Prices" and "Underwriting."
Holders of the Trust Preferred Securities will be entitled to receive
cumulative cash distributions arising from the payment of interest on the Junior
Subordinated Debentures, accruing from the date of original issuance and payable
quarterly in arrears on the ____ day of March, June, September and December each
year, commencing _____________1997, at the annual rate of _____% of the
Liquidation Amount of $25 per Trust Preferred Security ("Distributions"). So
long as no Debenture Event of Default (as defined herein) has occurred and is continuing, the Corporation will have the right to defer payments of interest on
the Junior Subordinated Debentures at any time and from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
deferral period (each, an "Extension Period"), provided that no Extension Period
shall end on a date other than an Interest Payment Date (as defined herein) or
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Corporation may
elect to begin a new Extension Period,currently subject to the requirements set forth
herein. If and for so long as interest payments on the Junior Subordinated
Debentures are so deferred, Distributions on the Trust Preferred Securities also
will be deferred and the Corporation will not be permitted, subject to certain
exceptions described herein, to declare or pay any cash distributions with
respect to the Corporation's capital stock or to make any payment with respect
to debt securities of the Corporation that rank pari passu with or junior to the
Junior Subordinated Debentures. During an Extension Period, interest on the
Junior Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Trust Preferred Securities are entitled
will continue to accumulate) at the rate of _____% per annum, compounded
quarterly, and holders of Trust Preferred Securities will be required to accrue
such deferred interest income for United States federal income tax purposes
prior to the receipt of the cash attributable to such income. See "Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Date" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
2
The Corporation will, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Indenture (each as defined herein), taken
together, fully, irrevocably and unconditionally guarantee all of the Trust's
obligations under the Trust Preferred Securities. See "Relationship Among the
Trust Preferred Securities, the Junior Subordinated Debentures and the
Guarantee--Full and Unconditional Guarantee." The Guarantee and the Common
Securities Guarantee will guarantee payments of Distributions and payments upon
liquidation of the Trust or redemption of the Trust Preferred Securities, but in
each case only to the extent that the Trust has funds on hand legally available
therefor and has failed to make such payments, as described herein. See
"Description of Guarantee." If the Corporation fails to make a required payment
on the Junior Subordinated Debentures, the Trust will not have sufficient funds
to make the related payments, including Distributions, on the Trust Preferred
Securities. The Guarantee and the Common Securities Guarantee will not cover any
such payment when the Trust does not have sufficient funds on hand legally
available therefor. In such event, a holder of Trust Preferred Securities may
institute a legal proceeding directly against the Corporation to enforce its
rights in respect of such payment. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Trust Preferred
Securities." The obligations of the Corporation under the Guarantee, the Common
Securities Guarantee and the Junior Subordinated Debentures will be unsecured
and will rank subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness (as defined in "Description of Junior Subordinated
Debentures--Subordination"). See "Risk Factors--Ranking of Subordinated
Obligations under the Guarantee and the Junior Subordinated Debentures." In
addition, because the Corporation is a holding company, the Junior Subordinated
Debentures, the Common Securities Guarantee and the Guarantee effectively will
be subordinated to all existing and future liabilities, including deposits, of
the Corporation's subsidiaries.
The Trust Preferred Securities will be subject to mandatory redemption in a
Like Amount (as defined herein), (i) in whole but not in part, on the Stated
Maturity Date upon repayment of the Junior Subordinated Debentures, (ii) in
whole but not in part, at any time prior to _______, 2002, contemporaneously
with the optional prepayment of the Junior Subordinated Debentures by the
Corporation, upon the occurrence and continuation of a Special Event (as defined
herein), and (iii) in whole or in part, on or after _____________, 2002,
contemporaneously with the optional prepayment by the Corporation of all or part
of the Junior Subordinated Debentures, in each case, at a redemption price equal
to the aggregate Liquidation Amount of such Trust Preferred Securities, plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). See "Description of Trust Preferred Securities--Redemption."
The Corporation will have the right at any time to terminate the Trust and,
after satisfaction of liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Junior Subordinated Debentures to
be distributed to the holders of the Trust Preferred Securities in liquidation
of the Trust, subject to (i) the Corporation having received an opinion of
counsel to the effect that such distribution will not be a taxable event to
holders of Trust Preferred Securities and (ii) the prior approval of the Board
of Governors of the Federal Reserve System (the "Federal Reserve") if then
required under applicable capital guidelines or policies of the Federal Reserve.
Unless the Junior Subordinated Debentures are distributed to the
3
holders of the Trust Preferred Securities, in the event of a liquidation of the
Trust as described herein, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, the holders of the Trust Securities
generally will be entitled to receive a Liquidation Amount of $25 per Trust
Preferred Security plus accumulated and unpaid Distributions thereon to the date
of payment. See "Description of Trust Preferred Securities--Liquidation of the
Trust and Distribution of Junior Subordinated Debentures."
-------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
TRUST PREFERRED SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE
PURCHASE OF TRUST PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
4
AVAILABLE INFORMATION
The Corporation is subject to the informationalinformation reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with. The
Trust will become subject to such requirements upon the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained by
mail from the Public Reference Sectioneffectiveness of the
Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. If available, such information
also may be accessed through the Commission's electronic data gathering,
analysisregistration statement that contains this prospectus, although it intends to
seek and retrieval system ("EDGAR") via electronic means, including the
Commission's home page on the Internet (http://www.sec.gov.). The Corporation's
common stock is traded on the Nasdaq National Market. Such reports, proxy
statementsexpects to receive an exemption therefrom.
We and other information concerning the Corporation also may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington D.C. 20006.
No separate financial statements of the Trust have been included herein.
The Corporation andfiled with the Trust do not consider that such financial statements
would be materialSEC a registration statement on
Form S-3 (together with all amendments thereto, the "registration statement"),
of which this prospectus is a part, under the Securities Act of 1933, as amended
(the "Securities Act") with respect to holders of the Trust Preferred Securities, because the Trust
is a newly-formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the
Junior Subordinated Debentures issuingand the Guarantee, each of which is discussed in
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement, certain portions of which have been omitted
as permitted by the rules and regulations of the SEC. For further information
with respect to us, the Trust, Securities and engaging in incidental activities.
See "Independent Capital Trust I," "Description ofthe Trust Preferred Securities,"
"Description of the Junior
Subordinated Debentures"Debentures and "Descriptionthe Guarantee, reference is made to the registration
statement, including its exhibits. The registration statement may be inspected
without charge at the principal office of Guarantee."
In addition, the Corporation does not expect thatSEC in Washington, D.C., and
copies of all or part of it may be obtained from the Trust willSEC upon payment of the
prescribed fees.
We "incorporate by reference" into this prospectus the information we file reports,
proxy statements and other information under the Exchange Act
with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCESEC, which means that we can disclose important information to you by
referring you to those documents. The following documents filedinformation incorporated by the Corporationreference is
an important part of this prospectus and information that we file subsequently
with the Commission are
incorporated intoSEC will automatically update this Prospectusprospectus. We incorporate by
reference:
1. The Corporation's Annual Report on Form 10-K forreference the year ended December
31, 1996.
All documents subsequently filed bylisted below and any filings we make with the Corporation pursuant to SectionSEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, after the date hereofinitial
filing of the registration statement that contains this prospectus and prior to
the terminationtime that we sell all the securities offered by this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998.
ii
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999.
- Current Report on Form 8-K filed with the SEC on October 1, 1999.
You may request a copy of the offering of the Trust Preferred Securities offered hereby
shall be deemedthese filings (other than an exhibit to bea filing
unless that exhibit is specifically incorporated by reference into this Prospectus andthat filing)
at no cost, by writing to be a
part of this Prospectus fromor telephoning us at the date of filing of such document. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.
5
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits unless such exhibits are specifically incorporated by reference in
such documents). Requests for such documents should be directed to: Independent
Bank Corp.,following address: 288 Union
Street, Rockland, Massachusetts 02370, Attention: Shareholder Relations (telephone (617) 878-6100).
6Corporate Secretary, telephone
(781) 878-6100.
------------------------
WE HAVE NOT, AND THE UNDERWRITER HAS NOT, AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL,
NOR IS IT SEEKING AN OFFER TO BUY, THESE TRUST PREFERRED SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF THE DATE ON THE FRONT COVER, BUT THE INFORMATION MAY
HAVE CHANGED SINCE THAT DATE.
iii
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. As used herein, (i) the
"Indenture" means the Indenture, to be dated as of ______ __, 1997, as amended
and supplemented from time to time, between the Corporation and The Bank of New
York, as trustee (the "Debenture Trustee"), relating to the Junior Subordinated
Debentures, (ii) the "Trust Agreement" means the Amended and Restated
Declaration of Trust relating to the Trust among the Corporation, as Sponsor,
The Bank of New York, as Property Trustee (the "Property Trustee"), The Bank of
New York (Delaware), as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"), (iii) the "Guarantee" means the
Guarantee Agreement relating to the Trust Preferred Securities between the
Corporation and The Bank of New York, as Guarantee Trustee (the "Guarantee
Trustee") and (iv) the "Common Guarantee" means the Guarantee Agreement relating
to the Common Securities.
Independent Bank Corp.
The Corporation isTHE ITEMS IN THE FOLLOWING SUMMARY ARE DESCRIBED IN MORE DETAIL LATER IN
THIS PROSPECTUS. THIS SUMMARY PROVIDES AN OVERVIEW OF SELECTED INFORMATION AND
DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER. THEREFORE, YOU SHOULD
ALSO READ THE MORE DETAILED INFORMATION SET OUT IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE. IN THIS PROSPECTUS, REFERENCES TO "WE," "OUR,"
AND "INDEPENDENT" ARE TO INDEPENDENT BANK CORP.
OUR COMPANY
We are the holding company of Rockland Trust Company (the "Bank"), a
Massachusetts trust company which was chartered in 1907. Independent
isWe are headquartered in
Rockland, Massachusetts and at December 31, 1996, the
CorporationSeptember 30, 1999, we had consolidated assets of
$1.1$1.6 billion, deposits of $918.6 million$1.1 billion and stockholders' equity of $81.1$94 million.
Through the Bank, the Corporation offerswe offer a full range of commercial and retail banking and
trust services through itsour network of 3334 banking offices, seveneight commercial
lending centers, and two trust and financial services offices located in the
Plymouth, Norfolk, and Bristol Counties of Southeastern Massachusetts. The Corporation isWe are
the only locally basedlocally-based commercial bank in Plymouth County. As a community
focused commercial bank, the Corporation seekswe seek to service the needs of local customers in itsour
market by developing long-term deposit and lending relationships. As such, the Corporation haswe
have become a prominent financial institution in Plymouth County, which
represents the majority of itsour market area. At June 30, 19961998 (the most recent
date for deposit market share information), the Bank had approximately 16.6%22.4% of
the total deposits in Plymouth County. That amount represents approximately 169%178%
of the market share of itsour closest competitor. In addition, on the lending side of its business, the
Corporation has been the leading originator of residential mortgages in Plymouth
County for the last five years.
In its lending activities, the Bank has emphasized the origination of
residential and commercial loans within its primary market areas. At
December
31, 1996,September 30, 1999, the Bank's gross loan portfolio consisted of 29.0%30% mortgage
loans collateralized by commercial real estate, 28.5%20% of mortgage loans
collateralized by residential real estate, 17.9%13% of commercial loans, 4.5%5% of real
estate construction loans, and 20.1%32% of consumer loans. The Bank stresses asset
quality through its emphasis on lending in its local markets where management is
most qualified to make educated underwriting decisions and the application of
generally conservative underwriting criteria.
7
In May 1997, we 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 I invested the proceeds of the sale of these securities in
$29.64 million of 9.28% junior subordinated debentures issued by us.
Distributions on these securities are payable quarterly in arrears on the last
day of March, June, September and December, such distributions can be deferred
at our option for up to five years. The trust preferred securities 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 the redemption. The trust preferred securities of Trust I are quoted on
the Nasdaq National Market under the symbol "INDBP."
PENDING BRANCH ACQUISITION. In September 1999, we entered into an agreement
with Fleet Financial Group, Inc., Fleet National Bank and BankBoston, N.A. to
acquire 12 branches, two of which are located in Brockton, Massachusetts, which
is within our primary market area, and ten of which are located on Cape Cod,
Massachusetts in Barnstable County, a market contiguous to where we presently
operate. The 12 branches to be acquired presently have total deposits
aggregating approximately $269 million. In connection with the acquisition,
which is subject to, among other things, the receipt of regulatory approvals, we
expect to acquire approximately $150 million of commercial and consumer loans.
Following the acquisition, we will have approximately $1.8 billion in assets,
$1.3 billion in deposits and 46 retail branches. We expect to pay a core deposit
premium of approximately $32 million in connection with the acquisition. We
filed our regulatory applications in October 1999 and presently expect that the
transaction will close during the third quarter of 2000.
Our principal office is located at 288 Union Street, Rockland, Massachusetts
02370 and our telephone number is (781) 878-6100.
INDEPENDENT CAPITAL TRUST II
Independent Capital Trust II (the "Trust"), the issuer of the Trust
Preferred Securities, is a statutory business trust formed by us under Delaware law upon
the filing of a certificate of trust with the
Delaware Secretary of State.
The Trust's business and affairs are conducted by the Issuer Trustees: the
Property Trustee, the Delaware Trustee and the three individual
Administrative Trustees, who are officers of the Corporation.Business Trust Act. The Trust exists for the exclusive purposessole purpose of
(i) issuing and sellingcommon securities of the Trust (the "Common Securities") to us and
the Trust Preferred Securities (ii) using(the Trust Preferred Securities and the Common
Securities are referred to in this prospectus as the "Trust Securities") for
cash and investing the proceeds fromin an equivalent amount of % Junior
Subordinated Deferrable Interest Debentures due , 2029 (the "Junior
Subordinated Debentures") issued by us and (ii) engaging in other activities
that are necessary or incidental to the saleissuance of the Trust Securities to
acquireand the
investment in the Junior Subordinated Debentures issued byDebentures.
The Trust has no separate financial statements. We do not believe that the
Corporation and
(iii) engaging in only those other activities necessary, advisable or
incidental thereto. The Junior Subordinated Debentures willstatements would be significant to you because the sole
assetsTrust is a direct wholly
owned subsidiary of the TrustCompany, has no independent operations and accordingly, payments underexists solely
for the Junior Subordinated
Debentures will be the sole revenue of the Trust. All of the Common
Securities will be owned by the Corporation.reasons summarized above.
The Trust's principal offices
areoffice is located at c/o The Bank of New York, 101
Barclay Street, New York, New York 10286 and its telephone number is
(212) 815-5359.
The Offering
Trust Preferred Securities
Issuer............................. Independent Capital Trust I
Securities Offered................. 1,000,000 Trust Preferred Securities.RISK FACTORS
Prior to making an investment decision, you should carefully consider all of
the information in this prospectus, and, in particular, you should evaluate the
risk factors set forth under the caption "Risk Factors," which are described
immediately following this Summary.
2
THE OFFERING
Issuer of the Trust Preferred Securities..... Independent Capital Trust II, a Delaware
statutory business trust.
Securities offered........................... 2,000,000 % Trust Preferred Securities,
liquidation amount $10 per security
(2,300,000 Trust Preferred Securities if the
underwriter's over-allotment option is
exercised in full). The Trust Preferred
Securities represent preferred undivided
beneficial interests in the Trust's assets,
which will consist solely of the Junior
Subordinated Debentures and payments under
the Junior Subordinated Debentures.
The Trust will sell the Trust Preferred
Securities to the public and the Common
Securities to us. The Trust will use the
proceeds from the sale of the Trust
Securities to buy the Junior Subordinated
Debentures from us.
Distributions................................ If you purchase the Trust Preferred
Securities, you will be entitled to receive
cumulative cash distributions at a %
annual rate. Distributions will accumulate
from the date the Trust issues the Trust
Preferred Securities, and will be paid
quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year,
beginning on , 1999.
Distributions on the Trust Preferred
Securities may be deferred, as described
below. The initial cash distribution payable
on , 1999 will equal $ for
each Trust Preferred Security. Subsequent
cash distributions will equal $ for each
Trust Preferred Security.
The record date for distributions on the
Trust Preferred Securities will be one
business day prior to the relevant
distribution date for so long as the Trust
Preferred Securities remain in book-entry
form (if not book-entry form the record date
will be the fifteenth day of the month in
which the distributions are made).
Maturity..................................... The Junior Subordinated Debentures will
mature on , 2029.
Redemption................................... We may redeem all or a part of the Junior
Subordinated Debentures on or after , 2004 at
a redemption price of $10 per Junior
Subordinated Debenture, plus accrued and
unpaid distributions.
3
In addition, we may redeem all of the Junior
Subordinated Debentures at our option:
- if certain tax events occur;
- if there is a change in the Investment
Company Act of 1940 that requires the
Trust to register under that law; or
- if there is a change in, among other
things, the regulatory capital adequacy
guidelines that apply to us.
These circumstances are collectively referred
to as "Special Events."
We will not redeem the Junior Subordinated
Debentures before they mature without
approval by the regulatory agencies which
supervise us if such approval is then
required under applicable requirements.
Upon any redemption of the Junior
Subordinated Debentures, the Trust will use
the cash proceeds of such redemption to pay
you a liquidation amount for the Trust
Preferred Securities. The liquidation amount
you will receive will be equal to the
redemption price described above.
Deferral of distributions.................... The Trust relies solely on payments made by
us on the Junior Subordinated Debentures to
pay distributions on the Trust Preferred
Securities. If no event of default under the
Junior Subordinated Debentures has occurred
or is continuing, we have the right, at one
or more times, to defer interest payments on
the Junior Subordinated Debentures for up to
20 consecutive calendar quarters, but not
beyond the maturity date of the Junior
Subordinated Debentures. If we defer interest
payments on the Junior Subordinated
Debentures:
- the Trust will also defer distributions
on the Trust Preferred Securities;
- your distributions will continue to
accrue at an annual rate of % of the
liquidation amount of $10 per Trust
Preferred Security; and
- you will accumulate additional
distributions at the same rate,
compounded quarterly, on any unpaid
distributions (to the extent permitted
by law).
4
When a deferral period ends, we will be
required to pay to the Trust all accumulated
and unpaid interest due on the Junior
Subordinated Debentures and, when the Trust
receives this payment, it will be required to
pay all accumulated and unpaid distributions
on the Trust Securities.
If we defer payments of interest on the
Junior Subordinated Debentures, the Trust
Preferred Securities will be treated as being
issued with original issue discount for
United States federal income tax purposes.
This means that you will still be required to
include income in your gross income for
United States federal income tax purposes
before you receive any corresponding cash
distribution, even if you are a cash basis
taxpayer.
We have agreed to certain restrictions if we
exercise our right to defer interest
payments. During any period in which we defer
interest payments on the Junior Subordinated
Debentures, we will not be permitted to (with
limited exceptions described under
"Description of Junior Subordinated
Debentures--Option to Extend Interest Payment
Date"):
- declare or pay dividends or make other
distributions on, redeem, purchase or
acquire, or make liquidation payments
with respect to, our capital stock;
- pay interest, principal or premium on,
or repay, repurchase or redeem any of our
debt securities that rank equal with or
junior to the Junior Subordinated
Debentures; or
- make guarantee payments with respect to
the foregoing.
Guarantee.................................... We will fully and unconditionally guarantee
the Trust Preferred Securities based on:
- our obligations to make payments on the
Junior Subordinated Debentures;
- our obligations under a guarantee
executed for your benefit (the
"Guarantee"); and
5
- our obligations under the Trust
Agreement, which sets forth the terms of
the Trust Securities.
If we do not make payments on the Junior
Subordinated Debentures, the Trust will not
have sufficient funds to make payments on the
Trust Preferred Securities. The Guarantee
does not cover payments when the Trust does
not have sufficient funds. Instead, you (to
the fullest extent of the law) or the
property trustee may enforce the holder's
rights under the Junior Subordinated
Debentures directly against us.
Distribution of the Junior Subordinated
Debentures................................. We may dissolve the Trust at any time and
distribute the Junior Subordinated Debentures
to you, subject to any required approval by
the regulatory agencies which supervise us.
If the Junior Subordinated Debentures are
distributed, we will use our best efforts to
list them on a national securities exchange
or comparable automated quotation system.
Ranking...................................... Our obligations under the Junior Subordinated
Debentures are unsecured and will rank junior
in priority of payment to our current and any
future senior and subordinated indebtedness
and will be effectively subordinated to all
existing and future liabilities and
obligations of our subsidiaries, including
the Bank. As of September 30, 1999, we had no
senior or subordinated indebtedness
outstanding and our subsidiaries had total
liabilities (excluding liabilities owed to
us) of $1.5 billion. Our obligations under
the Junior Subordinated Debentures will rank
equal to other junior subordinated debentures
issued or to be issued by us to similar
trusts, including the junior subordinated
debentures sold to Trust I in May 1997.
Our obligations under the Guarantee are
unsecured and will rank in priority of
payment:
- junior to all of our indebtedness,
except for those liabilities made equal
or subordinate to the Junior
Subordinated Debentures by their terms;
6
- equal to all other guarantees issued or
to be issued by us with respect to other
similar trust preferred securities,
including the issuance of $28.75
million of trust preferred securities
of Trust I in May 1997; and
- senior to our capital stock.
Limited voting rights........................ Except in limited circumstances, you as a
holder of the Trust Preferred Securities will
have no voting rights.
Listing...................................... We intend to apply for listing of the Trust
Preferred Securities on the Nasdaq National
Market under the symbol "INDBO."
Book-entry................................... The Trust 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 for your Trust
Preferred Securities.
Use of proceeds.............................. The Trust plans to use the proceeds from the
sale of the Trust Securities to purchase the
Junior Subordinated Debentures from us. We
intend to use the net proceeds from the sale
of the Junior Subordinated Debentures for
general corporate purposes, which shall
include capital contributions to the Bank,
and for working capital.
- To the extent that the previously
announced branch acquisition
transaction with Fleet Financial Group,
Inc. is completed, the offering will
ensure that the Bank will continue to
be "well capitalized" following
consummation of the transaction.
Initially, we may use the net proceeds to
make short-term investments.
7
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial and other data below should be read in
connection with the financial information included in our Annual Report on
Form 10-K for the year ended December 31, 1998 and our Quarterly Report on
Form 10-Q for the nine months ended September 30, 1999. See "Where You Can Find
More Information."
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
BALANCE SHEET DATA: ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
Total assets............................... $1,565,400 $1,514,730 $1,575,069 $1,370,007 $1,092,793 $987,589 $929,194
Loans, net of unearned discount............ 1,019,295 909,284 941,112 828,132 695,406 628,141 590,689
Securities held to maturity................ 233,565 308,743 284,944 308,112 290,894 226,896 256,785
Securities available for sale.............. 201,640 200,916 195,199 131,842 26,449 32,628 4,250
Total deposits............................. 1,066,656 986,332 1,043,317 988,148 918,572 871,085 796,612
FHLB borrowings............................ 265,224 301,224 313,724 206,724 78,000 20,000 25,000
Stockholders' equity....................... 94,086 96,291 95,848 92,493 81,110 72,572 64,202
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
OPERATIONS DATA: ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
Interest income............................ $ 83,386 $ 80,818 $ 108,712 $ 93,820 $ 77,424 $ 72,918 $ 63,540
Interest expense........................... 37,620 36,480 49,569 41,578 32,354 29,143 22,029
---------- ---------- ---------- ---------- ---------- -------- --------
Net interest income........................ 45,766 44,338 59,143 52,242 45,070 43,775 41,511
Provision for possible loan losses......... 2,945 2,721 3,960 2,260 1,750 1,000 801
---------- ---------- ---------- ---------- ---------- -------- --------
Net interest income after provision for
loan losses.............................. 42,821 41,617 55,183 49,982 43,320 42,775 40,710
Non-interest income........................ 10,907 9,745 13,125 11,742 11,381 10,341 10,005
Non-interest expenses...................... 33,918 31,828 41,697 38,595 36,951 38,000 41,069
Minority interest expense.................. 2,001 2,001 2,668 1,645 -- -- --
---------- ---------- ---------- ---------- ---------- -------- --------
Income before income taxes................. 17,809 17,533 23,943 21,484 17,750 15,116 9,646
Income taxes............................... 5,423 5,785 7,804 7,326 6,153 4,729 1,533
---------- ---------- ---------- ---------- ---------- -------- --------
Net income................................. $ 12,386 $ 11,748 $ 16,139 $ 14,158 $ 11,597 $ 10,387 $ 8,113
========== ========== ========== ========== ========== ======== ========
PER SHARE DATA:
Net income:
Basic.................................... $ 0.87 $ 0.79 $ 1.10 $ 0.97 $ 0.80 $ 0.72 $ 0.56
Diluted.................................. 0.86 0.78 1.08 0.95 0.79 0.71 0.56
Cash dividends............................. 0.30 0.30 0.40 0.34 0.25 0.18 0.08
Book value, end of period.................. 6.71 6.59 6.63 6.25 5.55 5.00 4.45
AT OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
SELECTED FINANCIAL RATIOS(1): ---------- ---------- ---------- ---------- ---------- -------- --------
(UNAUDITED)
Return on average assets................... 1.06% 1.11% 1.12% 1.15% 1.13% 1.10% 0.94%
Return on average equity................... 17.28 16.20 16.71 16.45 15.20 15.28 13.36
Net interest margin........................ 4.25 4.44 4.36 4.52 4.72 4.97 5.19
Operating expenses as a percent of average
assets................................... 2.90 3.01 2.88 3.14 3.60 4.02 4.75
Nonperforming loans as a percent of gross
loans.................................... 0.38 0.60 0.56 0.69 0.63 0.83 1.31
Nonperforming assets as a percent of total
assets at end of period.................. 0.26 0.37 0.34 0.43 0.43 0.60 1.26
Reserve for possible loan losses as a
percent of loans, net of unearned
discount................................. 1.44 1.50 1.46 1.53 1.76 1.92 2.32
Reserve for possible loan losses as a
percent of nonperforming loans at end of
period................................... 372.89 242.94 255.69 215.14 273.89 229.33 174.45
Dividend payout ratio...................... 34.88 37.97 37.03 35.78 31.64 25.35 14.28
Capital ratios at end of period:
Tier 1 leverage capital ratio............ 7.93 8.13 7.91 8.64 7.35 7.24 6.76
Tier 1 risk-based capital ratio.......... 10.77 11.81 11.38 13.52 10.89 10.67 10.05
Total risk-based capital ratio........... 12.03 13.06 12.63 14.78 12.15 11.92 11.31
Ratio of earnings to fixed charges(2):
Including interest on deposits............. 1.47x 1.47x 1.48x 1.51x 1.54x 1.51x 1.43x
Excluding interest on deposits............. 2.18x 2.31x 2.27x 3.02x 4.26x 5.00x 5.66x
- ------------------------------
(1) With the exception of end-of-period ratios, all ratios are based on average
daily balances during the indicated periods.
(2) See "Ratios of Earnings to Fixed Charges."
8
RISK FACTORS
YOU SHOULD CAREFULLY READ THE FOLLOWING RISK FACTORS BEFORE YOU DECIDE TO
BUY ANY TRUST PREFERRED SECURITIES. YOU SHOULD ALSO CONSIDER THE OTHER
INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE.
RISKS RELATED TO AN INVESTMENT IN THE TRUST PREFERRED SECURITIES
PAYMENTS ON THE TRUST PREFERRED SECURITIES ARE ENTIRELY DEPENDENT ON OUR MAKING
PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES; THE GUARANTEE COVERS PAYMENTS
ONLY IF THE TRUST HAS CASH AVAILABLE.
The Trust's ability to timely pay distributions (including the $10 per Trust
Preferred Security liquidation distribution) is entirely dependent on our making
the related payments on the Junior Subordinated Debentures when due. If we do
not make payments on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to pay distributions or the $10 per Trust Preferred Security
liquidation amount. Because the Guarantee does not cover payments when the Trust
does not have sufficient funds, you will not be able to rely upon the Guarantee
for payment of these amounts. Instead, you may directly sue us or seek other
remedies to collect your pro rata share of payments owed or rely on the property
trustee to enforce the Trust's rights under the Junior Subordinated Debentures
directly against us.
THE TRUST'S ABILITY TO MAKE PAYMENTS ON THE TRUST PREFERRED SECURITIES DEPENDS
ON OUR ABILITY TO MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES.
The Junior Subordinated Debentures and the Guarantee will be exclusively our
obligations. We are a bank holding company regulated by the Board of Governors
of the Federal Reserve System and substantially all of our assets are held by
our subsidiaries. Our ability to make payments on the Junior Subordinated
Debentures depends primarily on the results of operations of our subsidiaries
and their ability to provide funds to us. Our subsidiaries are separate and
distinct legal entities and have no obligations to pay any amounts due under the
Junior Subordinated Debentures or to make funds available, whether by dividend,
loan or otherwise, for such purpose. In addition, there are various legal
limitations on the extent to which certain of our subsidiaries may extend
credit, pay dividends or otherwise supply funds to, or engage in transactions
with, us or some of our subsidiaries. The Trust will be unable to make payments
to you if we do not receive funds from our subsidiaries which allow us to pay
interest on or principal of the Junior Subordinated Debentures and
payments thereunder.
Distributions...................... The Distributions payable on each Trust
Preferred Security will be fixed at a rate
per annum of ___%Debentures.
Our right to participate in any distribution of the Liquidation Amountassets of $25 per Trust Preferred Security, will be
cumulative, will accrue fromany
subsidiary, including the date of
issuance of the Trust Preferred Securities,
and will be payable quarterly in arrears on
the __ day of March, June, September and
December of each year, commencing on ______
__, 1997 (subject to possible deferral as
described below). The amount of each
Distribution due with respectBank, upon a subsidiary's liquidation or
reorganization or otherwise, is subject to the Trust
Preferred Securities will include amounts
accrued through the date the Distribution
payment is due. See "Descriptionprior claims of the
Trust Preferred Securities--Distributions."
Extension Periods.................. So long as no Debenture Eventcreditors of Default (as
defined herein) has occurred and is
continuing, the Corporation shall have the
right to defer the payment of interest on
the Junior Subordinated Debentures. During
an Extension Period, Distributions on Trust
Preferred Securities will be deferred. No
Extension Period will exceed 20 consecutive
quarterly periods, end on a date other than
an Interest Payment Date or extend beyond
the Stated Maturity Date. See "Description
of Junior Subordinated Debentures--Option to
Extend Interest Payment Date" and "Certain
Federal Income Tax Consequences--Interest
Income and Original Issue Discount."
8
Maturity........................... The Junior Subordinated Debentures will
mature on ______, 2027 which date may be
shortened (such date, as it may be
shortened, the"Stated Maturity Date") to a
date not earlier than _____, 2002 if certain
conditions are met (including the
Corporation having received prior approval
of the Federal Reserve to do so if then
required under applicable capital guidelines
or policies of the Federal Reserve).
Ranking............................ The Trust Preferred Securities will rank
pari passu, and payments thereon will be
made pro rata, with the Common Securitiesthat
subsidiary, except as described under "Description of
Trust Preferred Securities - Subordination
of Common Securities." The Junior
Subordinated Debentures will rank pari passu
with all other junior subordinated
debentures (if any) issued by the
Corporation (the "Other Debentures"), which
are issued and sold (if at all) to other
trusts established by the Corporation (if
any), in each case similar to the Trust
("Other Trusts"), and will constitute
unsecured obligations of the Corporation and
will rank subordinate and junior in right of
payment to all current and future Senior and
Subordinated Indebtedness to the extent and
in the manner set forth in the Indenture.
See "Descriptionthat we may be recognized as a creditor of Junior Subordinated
Debentures." The Guarantee will rank pari
passu with all other guarantees (if any)
issued by the Corporation with respect to
trust preferred securities (if any) issued
by Other Trusts ("Other Guarantees") and
will constitute an unsecured obligation of
the Corporation and will rank subordinate
and junior in right of payment to all Senior
Indebtedness to the extent and in the manner
set forth in the Guarantee Agreement. See
"Description of Guarantee." In addition,
because the Corporation isthat
subsidiary. As a holding
company,consequence, the Junior Subordinated Debentures and the
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation'sour subsidiaries. As of September 30, 1999, our subsidiaries including the Bank's deposit
liabilities. See "Descriptionhad
total liabilities (excluding liabilities owed to us) of Junior
Subordinated Debentures--Subordination."
9
Redemption......................... The Trust Preferred Securities will be
subject to mandatory redemption in a Like
Amount, (i) in whole but not in part, on the
Stated Maturity Date upon repayment$1.5 billion. Holders of
the Junior Subordinated Debentures (ii) in
whole but not in part, at any time priorand beneficiaries of the Guarantee should
look only to _______, 2002, contemporaneously with the
optional prepayment ofour assets for payments on the Junior Subordinated Debentures byor
under the Corporation
uponGuarantee, as the occurrence and continuation of a
Special Event (as defined herein) and (iii)
in whole or in part, on or after _______,
2002, contemporaneously with the optional
prepayment by the Corporation of all or part
of the Junior Subordinated Debentures, in
each case at a redemption price equal to
the accrued and unpaid interest on the Trust
Preferred Securities so redeemed to the
Redemption Date, plus 100% of the principal
amount thereof. See "Description of Trust
Preferred Securities--Redemption" and
"Description of Junior Subordinated
Debentures--Special Event Prepayment."
Distribution of Junior
Subordinated Debentures............ The Corporation has the right at any time to
terminate the Trust and cause the Junior
Subordinated Debentures to be distributed to
holders of Trust Preferred Securities in
liquidation of the Trust, subject the
Corporation having received (i) an opinion
of counsel that such distribution will not
be a taxable event to the holders of the
Trust Preferred Securities and (ii) prior
approval of the Federal Reserve to do so if
then required under applicable capital
guidelines or policies of the Federal
Reserve. See "Description of the Trust
Preferred Securities--Distribution of Junior
Subordinated Debentures."
Absence of Market for the The Trust Preferred Securities will be a new
Trust Preferred issue of securities for which there
Securities......................... currentlymay be. There is no market. Although the
Underwriters have informed the Trust and the
Corporation that they currently intend to
make a market inlimit under the Trust
Preferred Securities, the Underwriters are not
obligated to do so, and any such market
making may be discontinued at any time
without notice. Accordingly, there can be no
assuranceJunior Subordinated Debentures or the Guarantee as to
the development or liquidity
of any market for the Trust Preferred
Securities. The Trust and the Corporation
have applied for quotation of the Trust
Preferred Securities on the Nasdaq National
Market. See "Underwriting."
10
Guarantee.......................... The Corporation has guaranteed the payment
of Distributions and payments on liquidation
or redemption of the Trust Preferred
Securities, but only in each caseour subsidiaries' ability to the
extent of funds held by the Trust, as
described herein. The Corporation and the
Trust believe that, taken together, theincur additional indebtedness.
OUR OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES WILL
BE SUBORDINATED IN RIGHT OF PAYMENT TO OUR CURRENT AND FUTURE SENIOR AND
SUBORDINATED INDEBTEDNESS.
Our obligations of the Corporation under the Guarantee are unsecured and will rank in priority
of payment:
- junior to all of our indebtedness, except for those liabilities made equal
or subordinate to the Guarantee by their terms;
9
- equal to all other guarantees issued or to be issued by us with respect to
other similar trust preferred securities, including the issuance of
$28.75 million of trust preferred securities of Trust Agreement,I in May 1997; and
- senior to our capital stock.
This means that we cannot make any payments on the Junior
Subordinated Debentures and the Indenture
provide, in the aggregate, a full,
irrevocable and unconditional guaranty,Guarantee if we default
on a subordinated basis,payment of allany of the
obligations of the Corporation relatingour other liabilities, except those liabilities made
equal with or subordinate to the Trust Preferred Securities. TheGuarantee by their terms. In the event of our
bankruptcy, liquidation or dissolution, our assets would be available to pay
obligations of the Corporation under the Guarantee and the Trust Preferred Securities
areonly after all payments have been made on our
other liabilities, except those liabilities made equal with or subordinate and junior in right of
payment to all current and future Senior and
Subordinated Indebtedness of the
Corporation. If the Trust has insufficient
funds to pay Distributions on the Trust
Preferred Securities (i.e., if the
Corporation has failed to make required
payments under the Junior Subordinated
Debentures), a holder of the Trust Preferred
Securities would have the right to institute
a legal proceeding directly against the
Corporation to enforce payment of such
Distributions to such holder. See
"Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by
Holders of the Trust Preferred Securities,"
"Debenture Events of Default" and
"Description of Guarantee."
Limited Voting Rights.............. Holders of Trust Preferred Securities
generally will have limited voting rights
relating only to
the modification of the
Trust Preferred Securities and the exercise
of the Trust's rights as holder of Junior
Subordinated Debentures. Holders of Trust
Preferred Securities will not be entitled to
vote to appoint, remove or replace, or to
increase or decrease the number of, the
Issuer Trustees, which voting rights are
vested exclusively in the holder of the
Common Securities except upon the occurrence
of certain events described herein.
Proposed Nasdaq National
Market Symbol......................
Use of Proceeds.................... All of the proceeds to the Trust from the
sale of the Trust Securities will be
investedGuarantee by the Trust in the Junior
Subordinated Debentures. The Corporation
intends to use the net proceeds from the
sale of the Junior Subordinated Debentures
for general corporate purposes, including
contributions to the Bank to fund its
operations and the funding of repurchases of
the Corporation's common stock which may be
made from time to time. Initially, the net
proceeds may be used to make short-term
investments. See "Use of Proceeds."
Risk Factors....................... For a discussion of considerations relevant
to an investment in the Trust Preferred
Securities which should be carefully
considered by prospective investors, see
"Risk Factors."
11
RISK FACTORS
Prospective purchasers of the Trust Preferred Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. Information contained in this
Prospectus contains "forward-looking statements" which can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "projected," "contemplates" or "anticipates" or the negative thereof
or other variations thereon or comparable terminology. No assurance can be given
that the future results covered by the forward-looking statements will be
achieved. Certain of the following matters constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially from the future results covered in such forward-looking
statements. Other factors, such as the general state of the economy, could also
cause actual results to vary materially from the future results covered in such
forward-looking statements.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures; Limitations on Source of Funds
Thetheir terms.
Our obligations of the Corporation under the Guarantee issued by it for the
benefit of the holders of Trust Preferred Securities, as well as under the Junior Subordinated Debentures will beare unsecured and
will rank subordinate and
junior in rightpriority of payment to allour current and future Seniorsenior and
Subordinated
Indebtednesssubordinated indebtedness, and will be effectively subordinated to all existing
and future liabilities and obligations of our subsidiaries, including the extent and in the manner set forth in the Guarantee and the
Indenture, respectively. No payment may be madeBank.
This means that we cannot make any payments of the principal of,(including redemption
payments) or interest on the Junior Subordinated Debentures or in respect of any redemption,
retirement, purchase or other acquisition ofif we default on a
payment on any of our senior indebtedness or subordinated indebtedness. In the
event of our bankruptcy, liquidation or distribution, our assets would be
available to pay obligations under the Junior Subordinated Debentures at any time when (i) there shallonly after
all payments have occurred and be continuing a
default in any payment in respect of any Senior and Subordinated Indebtedness,
or there has been an acceleration of the maturity thereof because of a default,
or (ii) in the event of the acceleration of the maturity of the Junior
Subordinated Debentures, until payment has been made on all Seniorour senior indebtedness and Subordinated Indebtedness. At December 31, 1996, the Corporationour subordinated
indebtedness. As of September 30, 1999, we had no Senior
Indebtedness outstanding. Because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidationsenior or reorganization or otherwise
(and thus the ability of holders of the Trust Preferred Securities to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary (including depositors, in the case of the Bank), except to
the extent that the Corporation may itself be recognized as a creditor of that
subsidiary. At December 31, 1996, the subsidiary of the Corporationsubordinated
indebtedness outstanding and our subsidiaries had total liabilities (excluding
liabilities owed to us) of $1.5 billion. There is no limit under the Corporation) of $1.0 billion.
Accordingly,Trust
Preferred Securities, the Junior Subordinated Debentures effectively will be subordinatedor the Guarantee as to
all existing and future liabilitiesour ability to incur additional indebtedness, including indebtedness that ranks
senior in priority of payment to the Corporation's subsidiary and
holders of Junior Subordinated Debentures should look only toand the
assetsGuarantee.
OUR ABILITY TO DEFER INTEREST PAYMENTS HAS ADVERSE TAX CONSEQUENCES FOR YOU AND
MAY AFFECT THE TRADING PRICE FOR THE TRUST PREFERRED SECURITIES.
So long as no event of default under the Corporation forJunior Subordinated Debentures has
occurred and is continuing, we may defer interest payments one or more times on
the Junior Subordinated Debentures. The Guarantee
will constitute an unsecured obligationDebentures for up to 20 consecutive calendar quarters,
but not beyond the maturity date of the Corporation and will rank
subordinate and junior in right of payment to all current and future Senior and
Subordinated Indebtedness in the same manner as the Junior Subordinated Debentures.
None of the Indenture, the Guarantee or the Trust Agreement places
any limitation on the amount of secured or unsecured debt, including Senior and
Subordinated
12
Indebtedness, that may be incurred by the Corporation or any of its
subsidiaries. See "Description of Guarantee--Status of the Guarantee" and
"Description of Junior Subordinated Debentures-- "General" and
"--Subordination."
The ability of the Trust to pay amounts due on the Trust Preferred
Securities is solely dependent upon the Corporation makingIf we defer interest payments on the Junior Subordinated Debentures, as and when required.
The Corporation is a holding company and almost all of the
operating assets
of the Corporation are owned by the Corporation's subsidiary. The Corporation
relies primarily on dividends from the Bank to pay dividends to its stockholders
and to meet its obligations for payment of its corporate expenses. There are
regulatory limitations on the payment of dividends directly or indirectly to the
Corporation from the Bank. As of December 31, 1996, under applicable banking
statutes and the Bank's dividend policy, the total capital available for payment
of dividends by the Bank to the Corporation was approximately $24 million.
However, federal and state bank regulatory agencies have the power to prohibit
any act, including the payment of dividends, if such act would reduce the Bank's
capital to a point that, in their opinion, would render the Bank
undercapitalized and thus constitute an unsafe or unsound banking practice. In
addition to restrictions on the payment of dividends, the Bank is subject to
certain restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, the Corporation and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent the Corporation and such other affiliates from borrowing from the Bank
unless the loans are secured by various types of collateral. Further, such
secured loans, other transactions and investments by the Bank are generally
limited in amount as to the Corporation and as to each of such other affiliates
to 10% of the Bank's capital and surplus and as to the Corporation and all of
such other affiliates to an aggregate of 20% of the Bank's capital and surplus.
Option to Extend Interest Payment Period; Tax Consequences; Market Price
Consequences
So long as no Debenture Event of Default (as defined herein) shall have
occurred and be continuing, the CorporationTrust will have the right under the
Indenture toalso defer payments of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 20 consecutive
quarterly periods with respect to each Extension Period, provided that no
Extension Period shall end on a date other than an Interest Payment Date or
extend beyond the Stated Maturity Date. As a consequence of any such deferral,
quarterly Distributionsdistributions on the Trust Securities by the Trust will be deferred
(and the amount of Distributions to which holders of the Trust Securities are
entitled will accumulate additional Distributions thereon at the rate of _____%
per annum, compounded quarterly) from the relevant payment date for such
Distributions during any such Extension Period.Preferred Securities. During the pendency of any
Extension Period, the Corporation generally will be prohibited from declaring or
paying dividends on the Corporation's capital stock or from making payments with
respect to debt securities which rank pari passu with or junior to the Junior
Subordinated Debentures. See "Description of Trust Preferred
Securities--Distributions."
13
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 20 consecutive quarterly periods, end on a
date other than an Interest Payment Date or to extend beyond the Stated Maturity
Date. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid on the Junior Subordinated Debentures (together
with interest thereon at the annual rate of _____%, compounded quarterly, to the
extent permitted by applicable law), the Corporation may elect to begin a new
Extension Period, subject to the above requirements. There is no limitation on
the number of times that the Corporation may elect to begin an Extension Period.
See "Description of Trust Preferred Securities--Distributions" and "Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Date."
The Corporation has no current plan to exercise its right to defer payments
of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Trust Preferred Securitiesdeferral period, you will be required to accrue income (in the form of original
issue discount ("OID")) in
respect of the deferred stated interest allocable to its Trust Securitiesdiscount) for United States federal income tax purposes which will be allocated but not
distributedequal to holdersthe
interest that accrues on your pro-rata share of Trust Securities.the Junior Subordinated
Debentures held by the Trust. As a result, each holder of Trust
Preferred Securities will recognizeyou must include the accrued but
unpaid income in your gross income for United States federal income tax purposes
in advance of the receipt ofbefore you receive cash, andeven if you are a cash basis taxpayer. You will also
not receive the cash related to such incomeany accrued and unpaid interest from the Trust
if the holder disposes ofyou sell the Trust Preferred Securities prior tobefore the record date for the payment of Distributions thereafter.
See "Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount" and "--Sales of Trust Preferred Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Trust Preferred Securities is likely to be affected. A holder that
disposes of its Trust Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder that
continues to hold its Trust Preferred Securities. In addition, the mere
existence of the Corporation's right to defer payments of interest on the Junior
Subordinated Debentures may cause the market price of the Trust Preferred
Securities to be more volatile than the market prices of other securities that
are not subject to such deferrals.
Special Event Redemption
Upon the occurrence and continuation of a Special Event (defined as a Tax
Event, an Investment Company Event or a Regulatory Capital Event (in each case
as defined under "Description of Junior Subordinated Debentures--Special Event
Prepayment")) (whether occurring before or after _____, 2002) the Corporation
will have the right to prepay the Junior Subordinated Debentures in whole (but
not in part) at 100% of the principal amount together with accrued but unpaid
interest to the date fixed for redemption within 90 days following the
occurrence of such Special Event and therefore cause a mandatory redemption of
the Trust Preferred Securities at a redemption price equal to the aggregate
Liquidation Amount of such
14
Trust Preferred Securities, plus accrued and unpaid interest thereon. The
exercise of such right is subject to the Corporation having received any
required regulatory approval. See "Description of Trust Preferred
Securities--Redemption."
Proposed Tax Legislation
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that would,
among other things, deny an issuer a deduction for United States federal income
tax purposes for the payment of interest on instruments with characteristics
similar to the Junior Subordinated Debentures. If the proposed legislation were
enacted in its current form, it is not expected to apply to the Junior
Subordinated Debentures since the proposed effective date for this provision is
the date of first committee action. There can be no assurances, however, that
the proposed legislation, if enacted, or similar legislation enacted after the
date hereof would not adversely affect the tax treatment of the Junior
Subordinated Debentures, resulting in a Tax Event, which would permit the
Corporation, upon the approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve, to cause a
redemption of the Trust Preferred Securities by electing to prepay the Junior
Subordinated Debentures. See "Description of Trust Preferred
Securities--Redemption" and "Description of Junior Subordinated
Debentures--Special Event Prepayment." See also "Certain Federal Income Tax
Consequences - Proposed Tax Legislation."
Liquidation Distribution of Junior Subordinated Debentures
The Corporation will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Preferred Securities in liquidation of the Trust. Such
right is subject to (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to the holders of
the Trust Preferred Securities and (ii) the prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies of the Federal Reserve and the receiptend of any other required regulatory
approval. Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Trust Preferred Securities. Upon the occurrence
of a Special Event, a dissolution of the Trust in which holders of the Trust
Preferred Securities receive cash would be a taxable event to such holders. See
"Certain Federal Income Tax Considerations--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
Shortening of Stated Maturity of Junior Subordinated Debentures
The Corporation will have the right at any time to shorten the maturity of
the Junior Subordinated Debentures to a date not earlier than five years from
the date of issuance and thereby cause the Trust Preferred Securities to be
redeemed on such earlier date. The exercise of such right is subject to the
Corporation having received prior approval of the Federal Reserve
15
if then required under applicable capital guidelines or policies of the Federal
Reserve. See "Description of Junior Subordinated Debentures--Redemption."
Possible Adverse Effect on Market Prices
There can be no assurance as to the market prices for the Trust Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Trust Preferred Securities if a termination of the Trust were to
occur. Accordingly, the Trust Preferred Securities or the Junior Subordinated
Debentures may trade at a discount from the price that the investor paid to
purchase the Trust Preferred Securities offered hereby. Because holders of Trust
Preferred Securities may receive Junior Subordinated Debentures in liquidation
of the Trust and because Distributions are otherwise limited to payments on the
Junior Subordinated Debentures, prospective purchasers of the Trust Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of Junior Subordinated Debentures."
Rights Under the Guarantee
The Guarantee will guarantee to the holders of the Trust Preferred
Securities the following payments, to the extent not paid by or on behalf of the
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Trust Preferred Securities, to the extent that the Trust has funds on hand
legally available therefor at such time, (ii) the redemption price with respect
to the Trust Preferred Securities called for redemption, to the extent that the
Trust has funds on hand legally available therefor at such time and (iii) upon a
voluntary or involuntary termination, winding up or liquidation of the Trust
(unless the Junior Subordinated Debentures are distributed to holders of the
Trust Preferred Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Trust has funds on hand legally available therefor at such
time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Trust Preferred Securities at such time, after
the satisfaction of liabilities to creditors of the Trust as provided by
applicable law.
The holders of a majority in Liquidation Amount of the Trust 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 or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Trust
Preferred Securities may institute a legal proceeding directly against the
Corporation 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. If the Corporation defaults on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust will not have sufficient
funds for the payment of Distributions or amounts payable on redemption of the
Trust Preferred Securities or otherwise, and, in such event, holders of the
Trust Preferred Securities will not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture
16
Event of Default shall have occurred and be continuing and such event is
attributable to the failure of the Corporation to pay the principal or interest
(including Additional Sums, as defined below, if any), on the Junior
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Trust Preferred Securities may institute a legal
proceeding directly against the Corporation for enforcement of payment to such
holder of the aggregate Liquidation Amount of the Trust Preferred Securities of
such holder (a "Direct Action"). Notwithstanding any payments made to a holder
of Trust Preferred Securities by the Corporation in connection with a Direct
Action, the Corporation shall remain obligated to pay the principal and interest
(including Additional Sums, if any), on the Junior Subordinated Debentures, and
the Corporation shall be subrogated to the rights of the holder of such Trust
Preferred Securities with respect to payments on the Trust Preferred Securities
to the extent of any payments made by the Corporation to such holder in any
Direct Action. Except as described herein, holders of Trust Preferred Securities
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures or to assert directly any other rights in
respect of the Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Trust
Preferred Securities," "--Debenture Events of Default" and "Description of
Guarantee." The Trust Agreement will provide that each holder of Trust Preferred
Securities by acceptance thereof agrees to the provisions of the Indenture. The
Bank of New York will act as Guarantee Trustee and will hold the Guarantee for
the benefit of the holders of the Trust Preferred Securities. The Bank of New
York will also act as Property Trustee and as Debenture Trustee under the
Indenture. The Bank of New York (Delaware) will act as Delaware Trustee under
the Trust Agreement.
Limited Covenants
The covenants in the Indenture are limited, and there are no covenants
relating to the Corporation in the Trust Agreement. As a result, neither the
Indenture nor the Trust Agreement protects holders of Junior Subordinated
Debentures, or Trust Preferred Securities, respectively, in the event of a
material adverse change in the Corporation or the Corporation's financial
condition or results of operations or limits the ability of the Corporation or
any subsidiary to incur additional indebtedness. Therefore, the provisions of
these governing instruments should not be considered a significant factor in
evaluating whether the Corporation will be able to comply with its obligations
under the Junior Subordinated Debentures or the Guarantee.
Limited Voting Rights
Holders of Trust Preferred Securities generally will have limited voting
rights relating only to the modification of the Trust Preferred Securities and
the exercise of the Trust's rights as holder of Junior Subordinated Debentures.
Holders of Trust Preferred Securities will not be entitled to vote to appoint,
remove or replace, or to increase or decrease the number of, the Issuer
Trustees, which voting rights are vested exclusively in the holder of the Common
Securities except upon the occurrence of certain events described herein. The
Property Trustee, the Administrative Trustees and the Corporation may amend the
Trust Agreement without the consent of holders of Trust Preferred Securities to
ensure that the Trust will be classified for United
17
States federal income tax purposes as a grantor trust. Holders of Trust
Preferred Securities will have no voting rights with respect to any matters
submitted to a vote of the Corporation's stockholders. See "Description of Trust
Preferred Securities--Voting Rights; Amendment of the Trust Agreement" and
"--Removal of Issuer Trustees."
Absence of Existing Public Market
There is no existing market for the Trust Preferred Securities. Application
has been made to list the Trust Preferred Securities on the Nasdaq National
Market. There can be no assurance that an active and liquid trading market for
the Trust Preferred Securities will develop or that a continued listing of the
Trust Preferred Securities will be available on the Nasdaq National Market.
Although the Underwriters have informed the Trust and the Corporation that the
Underwriters intend to make a market in the Trust Preferred Securities offered
hereby, the Underwriters are not obligated to do so and any such market-making
activity may be terminated at any time without notice to the holders of the
Trust Preferred Securities. Future trading prices of the Trust Preferred
Securities will depend on many factors including, among other things, prevailing
interest rates, the operating results and financial condition of the
Corporation, and the market for similar securities.
18
Trading Characteristics of the Trust Preferred Securitiesdeferral
period. The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as
ordinary income (i.e., interest or, possibly, OID), and to add such amount to
its adjustedDebentures.
During a deferral period, your tax basis in its sharethe Trust Preferred Securities
will increase by the amount of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid interest),distributions. If you sell the
Trust Preferred Securities during a holderdeferral period, your increased tax basis
will recognize adecrease the amount of any capital loss. Subject togain or increase the amount of any
capital loss that you may have otherwise realized on the sale. A capital loss,
except in certain limited exceptions, capital lossescircumstances, 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.
We do not currently intend to exercise our right to defer interest payments
on the Junior Subordinated Debentures. However, if we exercise our right in the
future, we expect that the market
10
price of the Trust Preferred Securities would be adversely affected. If you sell
the Trust Preferred Securities during a deferral period, you may not receive the
same return on your investment as someone who continues to hold the Trust
Preferred Securities.
WE MAY REDEEM THE TRUST PREFERRED SECURITIES AT ANY TIME UPON THE OCCURRENCE OF
A SPECIAL EVENT.
At any time that a Special Event occurs and continues, we may redeem all of
the Junior Subordinated Debentures. A Special Event means a Tax Event, an
Investment Company Event or a Regulatory Capital Event and is more fully
described under "Description of Trust Preferred Securities--Redemption" and
defined under "Description of Trust Preferred Securities--Definitions." If there
is a Special Event and we redeem the Junior Subordinated Debentures, the Trust
must redeem the Trust Preferred Securities within 90 days at a redemption price
equal to the liquidation amount of $10 per Trust Preferred Security, plus
accrued and unpaid distributions. We may exercise this right only if we receive
any required approval by the regulatory agencies which supervise us.
WE MAY REDEEM SOME OR ALL OF THE JUNIOR SUBORDINATED DEBENTURES ON OR AFTER
, 2004, WHICH WILL CAUSE THE TRUST TO REDEEM SOME OR ALL OF THE
TRUST PREFERRED SECURITIES.
We may redeem some or all of the Junior Subordinated Debentures on or after
, 2004, which will cause the Trust Preferred Securities to be redeemed on
that date. You should assume that we will exercise our redemption option if we
are able to refinance our obligations at a lower interest rate or if it is
otherwise in our interest to redeem the Junior Subordinated Debentures. If less
than all of the Junior Subordinated Debentures are redeemed, the Trust must
redeem an amount of Trust Preferred Securities having an aggregate liquidation
value equal to the principal amount of the Junior Subordinated Debentures that
have been redeemed. We can exercise this right only if we receive any required
approval by the regulatory agencies which supervise us.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES COULD ADVERSELY AFFECT THE
MARKET PRICE FOR THE TRUST PREFERRED SECURITIES AND HAVE TAX CONSEQUENCES FOR
YOU.
We may dissolve the Trust at any time before the maturity of the Junior
Subordinated Debentures on , 2029. As a result, and subject to the
terms of the Trust Agreement, the Trustees may distribute the Junior
Subordinated Debentures to the holders of Trust Preferred Securities. Although
we have agreed to use our best efforts to list the Junior Subordinated
Debentures on a national securities exchange or comparable automated quotation
system if this occurs, there can be no assurance that the Junior Subordinated
Debentures will be approved for listing or that a trading market will exist for
the Junior Subordinated Debentures.
We cannot predict the market prices for the Junior Subordinated Debentures
that may be distributed. Accordingly, the Junior Subordinated Debentures that
you receive upon a distribution, or the Trust Preferred Securities you hold
pending such a distribution, may trade at a price that is less than the price
you paid to purchase the Trust Preferred Securities. Because you may receive
Junior Subordinated Debentures, you must also make an investment decision with
regard to the Junior Subordinated Debentures. You should carefully review all
the information regarding the Junior Subordinated Debentures contained in this
prospectus.
Under current United States federal income tax laws, a distribution of the
Junior Subordinated 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. See "Certain Federal Income Tax
Considerations--Interest Incomepurposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the Junior
Subordinated Debentures would be a taxable event to you. In addition, if there
is a change in law, a distribution of the Junior Subordinated Debentures upon
the dissolution of the Trust could be a taxable event to you.
11
THE HOLDERS OF THE TRUST PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED
DEBENTURES ARE NOT PROTECTED BY COVENANTS IN THE INDENTURE OR THE TRUST
AGREEMENT.
Neither the Indenture, which sets forth the terms of the Junior Subordinated
Debentures, nor the Trust Agreement, which sets forth the terms of the Trust
Securities, protects holders of Junior Subordinated Debentures, or Trust
Preferred Securities, respectively, in the event we experience significant
adverse changes in our financial condition or results of operations. In
addition, neither the Indenture nor the Trust Agreement limits our ability or
the ability of our subsidiaries to incur additional indebtedness, including
indebtedness that ranks senior to the Junior Subordinated Debentures and Original Issue Discount" and "--Salesthe
Guarantee. Therefore, the provisions of these governing instruments should not
be considered a significant factor in evaluating whether we will be able to
comply with our obligations under the Junior Subordinated Debentures or the
Guarantee.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of Trust Preferred Securities."
INDEPENDENT BANK CORP.
The Corporation isSecurities, you will have limited voting
rights. Your voting rights will relate only to the holding companymodification of the Bank,Trust
Preferred Securities and the exercise of the Trust's rights as holder of the
Junior Subordinated Debentures. In general, only we can replace or remove any of
the Trustees. The property trustee, the administrative trustees and we may amend
the Trust Agreement without your consent for certain things, including to ensure
that the Trust will be classified for United States federal income tax purposes
as a Massachusetts trust
company which was charteredgrantor trust. You also will have no voting rights on matters submitted to
a vote of our stockholders. However, if an event of default under the Trust
Agreement occurs and is continuing, the holders of at least a majority in
1907. Independent is headquartered in Rockland,
Massachusettsaggregate liquidation amount of the Trust Preferred Securities may replace the
property trustee and at December 31, 1996, the Corporation had consolidated assetsDelaware trustee.
POTENTIAL TAX LAW CHANGES COULD REQUIRE US TO REDEEM THE TRUST PREFERRED
SECURITIES.
From time to time, certain tax law changes have been proposed that would
deny interest deductions to corporate issuers of $1.1 billion, depositsdebt instruments with terms
that include certain of $918.6 million and stockholder's equitythe terms of $81.1
million.
Through the Bank,Junior Subordinated Debentures. In
addition, the Corporation provides a full range of commercial and
retail banking and trust services through its network of 33 banking offices,
seven commercial lending centers, and two trust and financial services offices
locatedInternal Revenue Service ("IRS") has in the Plymouth, Norfolk,past challenged
taxpayers' treatment as indebtedness of securities issued with characteristics
similar to the Junior Subordinated Debentures. To date, such tax law change
proposals have not been enacted and Bristol Counties of Southeastern
Massachusetts. The Corporation is the only locally based commercial bankknown challenge that has advanced
as far as litigation was settled short of trial, with resolution favorable to
the taxpayer's position. However, if any similar tax law change were enacted or
any such challenge by the IRS were upheld, such event could give rise to a Tax
Event (as defined under "Description of Trust Preferred Securities--Redemption")
which could result in Plymouth County. As a community focused commercial bank, the Corporation seeks
to service the needs of local customers in its market by developing long-term
deposit and lending relationships. As such, the Corporation has become a
prominent financial institution in Plymouth County, which represents the
majority of its market area. At June 30, 1996 (the most recent date for deposit
market share information), the Bank had approximately 16.6%an early redemption of the deposits in
Plymouth County. That amount represents approximately 169% ofTrust Preferred Securities.
THERE MAY BE NO ACTIVE OR LIQUID MARKET FOR THE TRUST PREFERRED SECURITIES.
Before this offering, there has been no market share of
its closest competitor. In addition,for the Trust Preferred
Securities. We plan to have the Trust Preferred Securities quoted on the lending side of its business, the
Corporation has been the leading originator of residential mortgages in Plymouth
CountyNasdaq
National Market. We cannot predict whether an active and liquid trading market
for the last five years.
In its lending activities, the Bank has emphasized the origination of
residential and commercial loans within its primary market areas. At December
31, 1996, the Bank's gross loan portfolio consisted of 29.0% mortgage loans
collateralized by commercial real estate, 28.5% mortgage loans collateralized by
residential real estate, 17.9% commercial loans, 4.5% real estate construction
loans, and 20.1% consumer loans. The Bank stresses asset quality through its
emphasis on lending in its local markets where management is most qualified to
make educated underwriting decisions and the application of generally
conservative underwriting criteria.
19
The Corporation is registered asTrust Preferred Securities will develop or whether a bank holding company under the Bank
Holding Company Act of 1956, as amended ("BHCA"), and as such is subject to
regulation by the Federal Reserve. The Bank is subject to regulation and
examination by the Commissioner of Banks of the Commonwealth of Massachusetts
(the "Commissioner") and the Federal Deposit Insurance Corporation ("FDIC"). The
majority of Rockland's deposit accounts are insured to the maximum extent
permitted by law by the Bank Insurance Fund ("BIF") which is administered by the
FDIC. In 1994, the Bank purchased the deposits of three branches of a failed
savings and loan association from the Resolution Trust Corporation. These
deposits are insured to the maximum extent permitted by law by the Savings
Association Insurance Fund ("SAIF").
The Corporation currently is in compliance with all regulatory capital
requirements. At December 31, 1996, the Corporation had Tier 1 capital and total
capital equal to 10.89% and 12.15% of total risk-adjusted assets, respectively,
and Tier 1 leverage capital equal to 7.35% of total assets. The Corporation
reported net income of $11.6 million, or $0.79 per share, for the year ended
December 31, 1996, which equated to a 15.2% return of average equity and 1.13%
return on average assets.
The principal executive offices of the Corporation are located at 288 Union
Street, Rockland, Massachusetts 02370, and its telephone number is (617)
878-6100.
20
USE OF PROCEEDS
The proceeds to the Trust from the offeringcontinued quotation
of the Trust Preferred Securities will be $25,000,000. All ofavailable on the proceeds fromNasdaq National
Market. Although the saleunderwriter has informed the Trust and us that it intends
to make a market in the Trust Preferred Securities, the underwriter is not
obligated to do so and any such market-making activity may be terminated at any
time without notice. Future trading prices of the Trust Preferred Securities
will depend on many factors including, among other things, prevailing interest
rates, our operating results and financial condition, and the Common Securitiesmarket for similar
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."
12
RISKS RELATING TO OUR COMPANY
CHANGES IN INTEREST RATES COULD REDUCE OUR PROFITABILITY.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets (such as
loans and investment securities) and the interest expense we pay on our
interest-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 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,
international disorders, instability in domestic and foreign financial markets,
and other factors beyond our 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 may be invested byreinvested at a lower rate than the Trustloan or
mortgage-backed security being prepaid. Although we pursue an asset-liability
management strategy designed to control our risk from changes in market interest
rates, changes in interest rates can still have a material adverse effect on our
profitability.
OUR ALLOWANCE FOR LOAN LOSSES MAY BE INADEQUATE TO COVER LOSSES ACTUALLY
INCURRED, WHICH COULD AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE JUNIOR
SUBORDINATED DEBENTURES.
We maintain an allowance for loan losses in an amount we believe is
sufficient to provide for known and inherent risks in our loan portfolio. If the
Bank incurs actual losses on its loans in excess of its allowance for loan
losses, it may have insufficient income to extend credit, pay dividends or
otherwise supply funds to us. If this occurs, we may be unable to make payments
of interest and principal on the Junior Subordinated Debentures. The estimated net proceedsDebentures, and the Trust
may be unable to make payments of interest and principal to you.
A SIGNIFICANT AMOUNT OF OUR LOANS ARE CONCENTRATED IN MASSACHUSETTS, AND ADVERSE
CONDITIONS IN MASSACHUSETTS COULD NEGATIVELY IMPACT OUR OPERATIONS.
Substantially all of the loans we originate are secured by properties
located in or are made to businesses which operate in Massachusetts. Because of
the current concentration of our loan origination activities in Massachusetts,
in the event of adverse economic conditions in Massachusetts, we would likely
experience higher rates of loss and delinquency on our loans than if our loans
were more geographically diversified. Additionally, our loans may be subject to
a greater risk of default than other comparable loans in the event of adverse
economic, political or business developments or natural hazards that may affect
Massachusetts and the ability of property owners in Massachusetts to make
payments of principal and interest on the underlying loans, which could have an
adverse effect on our 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, other 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 banks, savings institutions and credit unions, 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
13
adversely 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. 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.
OUR FUTURE PROFITS WILL BE AFFECTED BY OUR ABILITY TO SUCCESSFULLY INTEGRATE THE
NEW BRANCHES TO BE ACQUIRED FROM FLEET FINANCIAL GROUP, INC.
We have agreed, subject to regulatory approval, to acquire 12 branches, two
of which are located in Brockton, Massachusetts, which is within our primary
market area, and ten of which are located on Cape Cod, Massachusetts in
Barnstable County, a market contiguous to where we presently operate. In
connection with the acquisition, we will acquire approximately $__________$269 million of
deposits and $150 million of commercial and consumer loans. Our future profits
will be availableaffected by our ability to retain the acquired deposits, to generate
revenues from the new branch locations as well as the loans we are acquiring, to
manage the costs associated with the acquired branch offices and to otherwise
successfully integrate the new branches into our operations.
IF OUR COMPUTER SYSTEMS DO NOT PROPERLY WORK ON JANUARY 1, 2000, OUR BUSINESS
OPERATIONS COULD BE DISRUPTED.
The Year 2000 issue is the result of computer programs being able to use
only two digits rather than four to define the applicable year. Thus,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations,
causing disruptions of operations, including, among others, a temporary
inability to process deposit and loan transactions, effect financings or engage
in normal business activities. We have established programs to prepare our
computer systems and applications for the Year 2000 and we are utilizing both
internal and external resources to identify, correct and test our systems for
Year 2000 compliance.
All financial institutions are heavily dependent on technology and the
services of third party vendors in the delivery of products and services. An
interruption in these services would severely hamper our ability to provide
products and services to our customers. For example, without telephone, power,
or mainframe computer access in 2000, we would have to resort to manual
processing in order to serve customers. This type of scenario could not continue
indefinitely without severe erosion in service levels and consequently earnings.
In 1997, we converted our core operating system software to a leading provider
of data processing services, Alltel. As a consequence, Alltel is leading the
company's effort for ensuring Year 2000 compliance for all mainframe application
software. Management has overall responsibility for ensuring compliant systems
and is working closely with Alltel to ensure compliance by December 31, 1999.
Costs related to this aspect of the Year 2000 effort are the responsibility of
Alltel.
An additional type of risk that banks face is customer risk. Specifically,
large corporate borrowers face many of the Year 2000 issues that the Bank faces.
To the extent that many of these issues are not resolved and the viability of
the borrower organization is compromised, a credit risk issue could be created
for the Bank. Management continues to monitor and manage the customer risk posed
in this type of scenario.
Bank regulatory agencies have issued guidance as to the Corporation for general corporate purposes,
including contributionsstandards they will
use when assessing Year 2000 readiness. The failure of a financial institution,
such as ourselves, to take appropriate steps to address deficiencies in its Year
2000 project management process may result in regulatory enforcement actions
which could have material adverse effect on the Bank to fund its operations,institution, result in the
fundingimposition of onecivil money penalties, or more future acquisitions andresult in the fundingdelay (or receipt of repurchasesan
unfavorable or critical evaluation of the Corporation's
common stock which may be made from time to time. From time to time, the
Corporation investigates and holds discussions and negotiationsmanagement of a financial institution
in connection with possible transactions withregulatory review) of applications seeking to acquire other
financial institutionsentities or otherwise expand the institution's activities.
14
CHANGES IN STATUTES AND REGULATIONS COULD ADVERSELY AFFECT US.
We are subject to extensive regulation and holding
companies thereof. Assupervision by federal and state
authorities. Such supervision and regulation establish a comprehensive framework
of activities in which an institution may engage, and are intended primarily for
the protection of the datefederal deposit insurance fund and the Bank's depositors.
This regulatory structure also provides our regulators with significant
discretion in the performance of this Prospectus,their supervisory and enforcement duties. Any
change in such regulation, whether by our regulators or as a result of
legislation subsequently enacted by the Corporation has not
entered into any agreements or understandings with respect to any such
acquisitions or any other material transactionsCongress of the type referred to above.
Initially,United States, could
have a substantial impact on the net proceedsBank and its operations. Additional legislation
and regulations may be used to make short-term investments.
The Trust Preferred Securities will be eligible to qualify as Tier 1
Capital underenacted or adopted in the capital guidelines of the Federal Reserve, providedfuture that under
current Federal Reserve guidelines no more than 25% of the Corporation's Tier 1
Capital may comprise Trust Preferred Securitiescould significantly
affect our powers, authority and other capital securities and
cumulative preferred stock of the Corporation.operations, which could have a material adverse
effect on our operations.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth theour consolidated ratios of earnings to fixed
charges of
the Corporation on a consolidated basis for the respective periods indicated.
Year Ended DecemberNINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
---------------------------------------------------------------SEPTEMBER 30, --------------------------------------------------------
1999 1998 1997 1996 1995 1994
1993 1992
---------- ---------- ----------- ---------- ----------------------- -------- -------- -------- -------- --------
Ratios of Earningsearnings to Fixed Charges:fixed charges:
Including interest on deposits................deposits................. 1.47x 1.48x 1.51x 1.54x 1.51x 1.43x
1.22x 1.01x
Excluding interest on deposits................deposits................. 2.18x 2.27x 3.02x 4.26x 5.00x 5.66x 4.54x 1.25x
For purposes of computing the ratios of earnings to fixed charges, earnings
represent net income (loss) before extraordinary items and cumulative effect of changes in
accounting principles plus applicable income taxes and fixed charges. Fixed
charges includeincludes 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.
21USE OF PROCEEDS
All of the proceeds from the sale of the Trust Preferred Securities together
with proceeds of the Common Securities will be invested by the Trust in the
Junior Subordinated Debentures to be issued by us. We intend to use the
estimated net proceeds from the sale of the Junior Subordinated Debentures of
approximately $ million ($ million if the underwriter's
over-allotment option is exercised in full) for general corporate purposes,
including capital contributions to the Bank, and for working capital. To the
extent that the previously announced branch acquisition transaction with Fleet
Financial Group, Inc. is completed, the offering will ensure that the Bank will
continue to be "well capitalized" following consummation of the transaction. See
"Summary--Our Company." Initially, the net proceeds may be used to make
short-term investments.
15
CAPITALIZATION
The following table sets forth theour unaudited consolidated capitalization of
the Corporation as
of December 31, 1996,September 30, 1999 and such capitalization as adjusted, to give effect toreflect the consummation of the offeringsale
of the Trust Preferred Securities, offered hereby. The following datathe issuance of the Junior Subordinated
Debentures and the application of the estimated net proceeds as described in
"Use of Proceeds." You should bealso read the more detailed information included
or incorporated by reference in conjunction withthis prospectus, including the financial
information included in documents incorporated herein by reference
or included herein. See "Incorporation of Certain Documents by Reference."
December 31, 1996
-----------------
Actual As Adjusted
------ -----------
(Dollars in Thousands)
Deposits ............................................. $ 918,572 $ 918,572
Advances from Federal Home Loan Bank ................. 78,000 78,000
Federal funds purchasedstatements and assets sold under
agreements to repurchase ............................ 840 840
Treasury tax and loan notes .......................... 2,296 2,296
Other liabilities .................................... 11,975 11,975
---------- ----------
Total liabilities .................................... $1,011,683 $1,011,683
---------- ----------
Corporation-obligated mandatorily redeemable trust
preferred securities of subsidiary trust holding
solely junior subordinated debentures of the
Corporation(1) ..................................... -- 25,000
---------- ----------
Stockholders' equity:
Preferred stock, par value $.01 per share, 1,000,000
shares authorized, none issued ................... -- --
Common stock, par value $0.01 per share, 30,000,000
shares authorized, 14,604,501 shares issued ...... 146 146
Surplus ............................................ 44,433 44,433
Retained earnings .................................. 36,666 36,666
Unrealized loss on securities available for sale,
net of tax ........................................ (135) (135)
---------- ----------
Total stockholders' equity ........................... 81,110 81,110
---------- ----------
Total liabilities, minority interest in subsidiaries
and stockholders' equity ............................ $1,092,793 $1,117,793
==========related notes.
SEPTEMBER 30, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
Company-obligated mandatorily redeemable 9.28% trust
preferred securities of Independent Capital Trust I due
May 19, 2027.............................................. $ 28,750 $28,750
Company-obligated mandatorily redeemable % trust preferred
securities of Independent Capital Trust II due ,
2029(1)................................................... --
---------- -------
Stockholders' equity:
Preferred stock, $0.01 par share, 1,000,000 shares
authorized; none issued................................. -- --
Common stock, par value $0.01, 30,000,000 shares
authorized, 14,863,821 shares issued.................... 149 149
Surplus................................................... 45,024 45,024
Retained earnings......................................... 64,329 64,329
Treasury stock, 854,893 shares............................ (11,628) (11,628)
Transitional unrealized loss on common stock shares held
in rabbi trust.......................................... (1,312) (1,312)
Accumulated other comprehensive income.................... (2,476) (2,476)
---------- -------
Total stockholders' equity.................................. $ 94,086 $94,086
---------- -------
Total liabilities, minority interest in subsidiaries and
stockholders' equity...................................... $1,565,400 $
========== =======
- -----------------------------------
(1) Reflects the Trust Preferred Securities at their issue price. As described
herein, theThe sole assets of the Trust, which is aour subsidiary, of the Corporation,
will be $25,774,000 aggregate principal amount of the Junior
Subordinated Debentures (including the amounts attributable to the issuance of the Common
Securities of the Trust), which will mature on _______, 2027. The Corporation, 2029. We will own
all of the Common Securities issued by the Trust.
22
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Corporation and, accordingly, the accounts of the Trust will be included
in the consolidated financial statements of the Corporation. The Trust Preferred
Securities will be presented as a separate line item in the consolidated balance
sheets of the Corporation, entitled "Corporation-Obligated Mandatorily
Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior
Subordinated Debentures of the Corporation" and appropriate disclosures about
the Trust Preferred Securities, the Guarantee and the Junior Subordinated
Debentures will be included in the notes to the consolidated financial
statements of the Corporation. For financial reporting purposes, the Corporation
will record Distributions payable on the Trust Preferred Securities as a
minority interest expense in its consolidated statements of income.
23
RECENT DEVELOPMENTS
(Dollars in Thousands, Except Per Share Data)
The summary consolidated financial data as of and for the three month
periods ended March 31, 1997 and 1996 have been derived from the unaudited
consolidated financial statements of the Corporation which have been prepared by
management on the same basis as the audited consolidated financial statements of
the Corporation incorporated by reference herein and, in the opinion of
management of the Corporation, reflect all adjustments, consisting of only
normal recurring adjustments, necessary for a fair presentation of such data as
of such dates.
March 31, December 31,
Balance Sheet Data: 1997 1996
---- ----
Total assets......................................... $1,118,767 $1,092,793
Loans, net of unearned discount...................... 715,714 695,406
Securities held to maturity.......................... 301,182 290,894
Securities available for sale........................ 31,463 26,449
Total deposits....................................... 909,370 918,572
Stockholders' equity................................. 82,908 81,110
Nonperforming loans.................................. 4,287 4,462
Nonperforming assets................................. 4,833 4,733
Reserve for possible loan losses..................... 12,142 12,221
Three Months Ended March 31,
----------------------------
Operations Data: 1997 1996
---- ----
Interest income...................................... $20,626 $18,564
Interest expense..................................... 8,799 7,699
------- -------
Net interest income.................................. 11,827 10,865
Provision for possible loan losses................... 500 250
------- -------
Net interest income after provision for loan losses.. 11,327 10,615
Non-interest income.................................. 3,157 3,143
Non-interest expense................................. 9,788 9,687
------- -------
Income before income taxes........................... 4,696 4,071
Income taxes......................................... 1,699 1,494
------- -------
Net income........................................... $ 2,997 $ 2,577
======= =======
Per Share Data:
Net income........................................... $.20 $.18
Cash dividends....................................... .08 .06
Book value, end of period............................ 5.67 5.10
(Continued on next page)
24
At or For the
Three Months Ended
March 31,
--------------------
Selected Financial Ratios(1): 1997 1996
---- ----
Return on average assets.................................. 1.09% 1.06%
Return on average equity.................................. 14.55 14.05
Net interest margin....................................... 4.60 4.79
Operating expenses as a percent of average
assets(2) ................. ............................ 3.61 4.00
Nonperforming assets as a percent of total assets
at end of period........................................ .43 .67
Reserve for possible loan losses as a percent of
nonperforming loans at end of period................... 283.23 193.29
Dividend payout ratio..................................... 39.00 33.80
Capital ratios at end of period:
Tier 1 leverage capital ratio....................... 7.33 7.35
Tier 1 risk-based capital ratio..................... 11.09 10.63
Total risk-based capital ratio...................... 12.35 11.89
- ----------
(1) With the exception of end-of-period ratios, all ratios are based on average
daily balances during the indicated periods.
(2) Annualized
The Corporation earned $3.0 million or $.20 per share during the three
months ended March 31, 1997, compared to $2.6 million or $.18 per share for the
comparable quarter in 1996. The $420,000 or 16.3% increase was primarily due to
a $962,000 or 8.9% increase in net interest income. The increase in interest net
income was due to a $68.0 million or 10.7% increase in the average balance of
the loan portfolio, net of unearned discount, resulting from increases in both
the residential and commercial real estate portfolios and indirect automobile
lending, as well as a $56.5 million or 21.0% increase in the investment
securities portfolio, which reflects the Corporation's strategy of leveraging
its capital. The average balance of borrowings increased by $50.7 million or
93.0%, while the average balance of deposits increased by $64.1 million or 7.7%.
The provision for loan losses increased by $250,000 or 50%, as management
determined that an increase was appropriate due to the increase in the size of
the loan portfolio.
The Corporation's non-interest income was essentially unchanged during the
three months ended March 31, 1997 over the comparable period. During the current
quarter, income from trust services increased by $100,000 or 17%. This increase
was offset by a non-recurring recovery of $95,000 during the March 1996 quarter
associated with a former real estate owned property.
25
The Corporation's non-interest expense increased by $101,000 or 1.0% during
the quarter ended March 31, 1997 over the comparable period. As previously
reported, in connection with a change in the Bank's pension plan which was
effective January 1, 1997, the Corporation recognized $394,000 of previously
accrued pension liability as a credit against non-interest expense during the
March 31, 1997 quarter. Without giving effect to the aforementioned credit,
non-interest expense increased by $495,000 or 5.0%.
26
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Data)
The selected consolidated financial data below should be read in connection
with the financial information included in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996. See "Available Information" and
"Incorporation of Certain Documents by Reference."
At December 31,
--------------------------------------------------
Balance Sheet Data: 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Total assets ..................... $1,092,793 $987,589 $929,194 $829,681 $807,146
Loans, net of unearned discount... 695,406 628,141 590,689 487,584 499,052
Securities held to maturity ...... 290,894 226,896 256,785 266,544 194,635
Securities available for sale .... 26,449 32,628 4,250 -- --
Total deposits ................... 918,572 871,085 796,612 743,385 729,020
Stockholders' equity ............. 81,110 72,572 64,202 57,385 52,746
Nonperforming loans .............. 4,462 5,271 7,864 16,982 28,802
Nonperforming assets ............. 4,733 5,909 11,730 25,866 44,714
Reserve for possible loan losses.. 12,221 12,088 13,719 15,485 15,971
Year Ended December 31,
-------------------------------------------
Operations Data: 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Interest income ....................... $77,211 $73,031 $63,487 $57,450 $63,055
Interest expense ...................... 32,354 29,143 22,029 22,920 29,127
------- ------- ------- ------- -------
Net interest income ................... 44,857 43,888 41,458 34,530 33,928
Provision for possible loan
losses ............................... 1,750 1,000 801 5,075 11,014
------- ------- ------- ------- -------
Net interest income after provision for
loan losses ........................ 43,107 42,888 40,657 29,455 22,914
Non-interest income ................... 12,709 11,480 11,470 12,995 17,059
Non-interest expenses ................. 38,066 39,252 42,481 37,331 39,583
------- ------- ------- ------- -------
Income before income taxes ............ 17,750 15,116 9,646 5,119 390
Income taxes .......................... 6,153 4,729 1,533 483 215
------- ------- ------- ------- -------
Net income ............................ $11,597 $10,387 $ 8,113 $ 4,636 $ 175
======= ======= ======= ======= =======
Per Share Data:
Net income ............................ $0.79 $0.71 $0.56 $0.32 $0.03
Cash dividends ........................ 0.25 0.18 0.08 -- --
Book value, end of period ............. 5.55 5.00 4.45 3.98 3.66
(Continued on next page)
27
At or For the Year Ended December 31,
-------------------------------------------
Selected Financial Ratios(1): 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Return on average assets .................... 1.13% 1.10% 0.94% 0.59% 0.02%
Return on average equity .................... 15.20 15.28 13.36 8.48 0.56
Net interest margin ......................... 4.70 4.99 5.18 4.74 4.74
Operating expenses as a percent of
average assets ............................. 3.7 4.1 4.9 4.7 4.9
Nonperforming assets as a percent of
total assets at end of period .............. 0.43 0.60 1.26 3.12 5.54
Reserve for possible loan losses as a percent
of nonperforming loans at end of period .... 273.89 229.33 174.45 91.18 55.45
Dividend payout ratio ....................... 31.6 25.4 14.3 N/A N/A
Capital ratios at end of period:
Tier 1 leverage capital ratio ......... 7.35 7.24 6.76 6.83 6.50
Tier 1 risk-based capital ratio ....... 10.89 10.67 10.05 10.71 9.67
Total risk-based capital ratio ........ 12.15 11.92 11.31 11.98 10.94
- ----------
(1) With the exception of end-of-period ratios, all ratios are based on average
daily balances during the indicated periods.
28
MANAGEMENT OF INDEPENDENT AND THE BANK
The executive officers and directors of the Corporation and the Bank are as
follows:
Name Position
- ------------------------ -----------------------------------------------------
John F. Spence, Jr. Chairman of the Board of Directors and Chief
Executive Officer of the Company; Chairman of the
Board of the Directors of the Bank
Douglas H. Philipsen President of the Company; President and Chief
Executive Officer of the Bank
Richard J. Seaman Chief Financial Officer and Treasurer of the Company
and the Bank
Richard F. Driscoll Executive Vice President, Retail and Operations
Division of the Bank
Ferdinand T. Kelley Executive Vice President, Commercial Lending Division
of the Bank
S. Lee Miller Executive Vice President, Trust and Financial
Services Division of the Bank
Raymond G. Fuerschbach Senior Vice President and Human Resource Officer of
the Bank
Richard S. Anderson Director
Donald S. Atkins Director
W. Paul Clark Director
Robert L. Cushing Director
Benjamin A. Gilmore, II Director
Lawrence M. Levinson Director
Richard H. Sgarzi Director
Robert J. Spence Director
William J. Spence Director
Brian S. Tedeschi Director
Thomas J. Teuten Director
29
John F. Spence, Jr. Mr. Spence is Chairman of the Board of Directors and
Chief Executive Officer of the Company and Chairman of the Bank. He served as
President of the Company from January to December 1991. Mr. Spence has been a
director of the Bank since 1951 and served in various executive positions with
the Bank beginning in 1965, including Chief Executive Officer, a position he
held from 1976 until 1991. He became Chairman of the Board of the Bank in 1972
and Chairman of the Board of Directors and Chief Executive Officer of the
Company in 1986.
Douglas H. Philipsen. Mr. Philipsen is President of the Company and
President and Chief Executive Officer of the Bank. Mr. Philipsen joined the Bank
in December 1991 as President, Chief Executive Officer and a director. At that
time, he also became President and a director of the Company. From October 1987
through November 1990, Mr. Philipsen served as President and Chief Executive
Officer of Bank of New England-Worcester, Worcester, Massachusetts, and its
predecessor financial institutions, Guaranty Bank & Trust and Consumers Savings
Bank.
Richard Seaman. Mr. Seaman has been the Chief Financial Officer and
Treasurer of the Company and the Bank since July 1992. From December 1990 to
July 1992, Mr. Seaman was a management consultant with RJS Associates and
Danielson Associates, Inc., Rockville, Maryland, providing consulting to the
financial services industry on, among other matters, troubled bank
rehabilitation.
Richard F. Driscoll. Mr. Driscoll has been Executive Vice President, Retail
and Operations Division of the Bank since March 1992. Prior thereto, Mr.
Driscoll served as Executive Vice President--Dealer Lending Division of Fleet
Bank--Massachusetts, N.A. from July 1991 to March 1992.
Ferdinand T. Kelley. Mr. Kelley has served as Executive Vice President,
Commercial Lending Division of the Bank, since February 1993. Prior thereto, Mr.
Kelley served as Senior Vice President and Credit Administrator of Multibank
Financial Corp., Dedham, Massachusetts, from August 1992 to January 1993. From
February 1990 to July 1991, Mr. Kelley was the Regional President of the
Worcester Region (Central Massachusetts) of Bank of New England, N.A., and
continued in that position with Fleet Bank of Massachusetts, N.A., from July
1991 to August 1992 following the Bank of New England's acquisition by Fleet
Bank.
S. Lee Miller. Mr. Miller has been Executive Vice President, Trust and
Financial Services Division of the Bank since July 1994. Prior thereto, Mr.
Miller was President and Chief Executive Officer of Old Stone Trust Company, a
subsidiary of Old Stone Bank in Providence, Rhode Island from 1971 through July
1994.
Raymond G. Fuerschbach. Mr. Fuerschbach has served as Senior Vice
President, Human Resources Division of the Bank, since April 1994. Prior
thereto, Mr. Fuerschbach had been Vice President and Human Resource Officer of
the Bank since November 1992. From January 1991
30
to October 1992, Mr. Fuerschbach served as Director of Human Resources for
Cliftex Corp., New Bedford, Massachusetts, a tailored clothing manufacturer.
Richard S. Anderson. Mr. Anderson is an owner and principal executive of
Anderson-Cushing Insurance Agency, Inc. (insurance broker, Middleboro,
Massachusetts). Mr. Anderson became a director of the Company and the Bank in
1992 and served as a director of Middleborough from 1980 until its merger with
the Bank.
Donald K. Atkins. Mr. Atkins served as President and Chief Executive
Officer of Winthrop-Atkins Co., Inc. (manufacturer of calendars, Middleboro,
Massachusetts) until his retirement in 1987. Mr. Atkins, a director of the
Company since 1986, became a director of the Bank in 1992 and served as a
director of Middleborough from 1963 until its merger with the Bank.
W. Paul Clark. Mr. Clark is the President and General Manager of Paul
Clark, Inc. (Ford and Volkswagen dealership, Brockton, Massachusetts). Mr. Clark
has served as a director of the Bank since 1970 and of the Company since 1986.
Robert L. Cushing. Mr. Cushing is owner of Robert L. Cushing Insurance
(insurance broker associated with Anderson-Cushing Insurance Agency, Inc.,
Middleboro, Massachusetts). Mr. Cushing was a director of Middleborough from
1957 until 1990 at which time he became an honorary director of Middleborough.
Mr. Cushing became a director of the Company in 1986 and an honorary director of
the Bank in 1992.
Benjamin A. Gilmore II. Mr. Gilmore is President of Gilmore Cranberry Co.
(cranberry grower, South Carver, Massachusetts). Mr. Gilmore became a director
of Middleborough in 1989 and a director of the Company and the Bank in 1992.
Lawrence M. Levinson. Mr. Levinson is a partner in the law firm of Burns &
Levinson, Boston, Massachusetts and has been a practicing attorney in Boston
since 1948. Mr. Levinson was a director of the Bank from 1960 until 1990, at
which time he became an honorary director of the Bank. Mr. Levinson has served
as a director of the Company since 1986. Mr. Levinson is also a director of
Arrow Automotive Industries, Inc. and Sonesta International Hotels Corporation.
Richard H. Sgarzi. Mr. Sgarzi is the Treasurer of Black Cat Cranberry Corp.
(cranberry grower, Plymouth, Massachusetts). Mr. Sgarzi has served as a director
of the Company since 1994 and of the Bank since 1980.
Robert J. Spence. Mr. Spence is President of Albert Culver Co. (retail fuel
company, Rockland, Massachusetts). Mr. Spence has served as a director of the
Bank since 1961 and of the Company since 1986.
31
William J. Spence. Mr. Spence is President of Mass. Bay Lines, Inc.
(excursion boat rentals, Boston, Massachusetts) and President of New Boston
Concessions, Inc. (food and beverage concessionaire, Boston, Massachusetts). Mr.
Spence became a director of the Bank in 1966 and a director of the Company in
1986.
Brian S. Tedeschi. Mr. Tedeschi is President of Tedeschi Realty Corp. (real
estate development, Rockland, Massachusetts). Mr. Tedeschi has served as a
director of the Bank since 1980 and of the Company since 1991.
Thomas J. Teuten. Mr. Teuten is Executive Vice President, A.W. Perry, Inc.
and A.W. Perry Security Corporation (real estate investment, Boston,
Massachusetts). Mr. Teuten has served as a director of the Bank since 1975 and
of the Company since 1986.
3216
INDEPENDENT CAPITAL TRUST III
The Trust is a statutory business trust formed under Delaware law upon the
filing of a certificate of trust with the Delaware Secretary of State. The Trust
will be governed by the terms of the Amended and Restated Declaration of Trust
of the Trust (the "Trust Agreement") which will be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities,
(ii) using the proceeds from the sale of Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities that are
incidental or necessary advisable or incidental thereto.to these purposes. The Junior Subordinated Debentures
will be the sole assets of the Trust, and, accordingly, payments under the
Junior Subordinated Debentures will be the sole revenues of the Trust.
All of the Common Securities will be owned by the Corporation. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Trust Preferred Securities, except that upon the occurrence and
continuance of an event of default under the Trust Agreement resulting from a
Debenture Event of Default, the rights of the Corporation as holder of the
Common Securities to payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Trust Preferred Securities. See "Description of Trust Preferred
Securities--Subordination of Common Securities." The Corporationus. We will acquire Common
Securities inwith a Liquidation Amount$10 liquidation amount, equal to at least 3% of the total
capital of the Trust. While the Common Securities will have terms equal in
priority of payment with the Trust Preferred Securities, if we default on the
Junior Subordinated Debentures, then cash distributions and liquidation,
redemption and other amounts payable on the Common Securities will be
subordinated to the Trust Preferred Securities in priority of payment.
The Trust has a term of approximately 31 years, but may terminatebe dissolved earlier
as provided in the Trust Agreement. The Trust's business and affairs are
conducted by the Issuer Trustees, eachwho are appointed by the Corporationus as holder of the
Common Securities. The Issuer Trusteestrustees for the Trust will be The Bank of New York, as
the Property Trustee (the "Property Trustee"), The Bank of New York (Delaware),
as the Delaware Trustee (the "Delaware Trustee") and three Administrative
Trustees who are our officers of(each, an "Administrative Trustee" and
collectively, the Corporation."Administrative Trustees"). The Bank of New York,Property Trustee, the Delaware
Trustee and the Administrative Trustees are collectively referred to as the
"Issuer Trustees" in this prospectus. The Property Trustee will act as sole
indenture trustee under the Trust Agreement. The Bank of New York will also act
as indenture
trustee under the Guarantee and the Indenture. See "DescriptionThe duties and obligations of
Guarantee"
and "Description of Junior Subordinated Debentures."each Issuer Trustee are governed by the Trust Agreement. The holder of the
Common Securities of the Trust or, if an Eventevent of Defaultdefault under the Trust
Agreement has occurred and is continuing, the holders of not less than a
majority in Liquidation Amountliquidation amount of the Trust Preferred Securities, will be
entitled to appoint, remove or replace the Property Trustee and/or the Delaware
Trustee. In no event will the holders of the Trust Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees; suchTrustees, whose
voting rights will be vested exclusively in the holder of the Common Securities.
The
duties and obligations of each Issuer Trustee are governed by the Trust
Agreement. The Corporation, as issuer of the Junior Subordinated Debentures,We will pay all fees, expenses, debts and obligations (other than the payment of
principal, interest and premium, if any, on the Trust Securities) related to the Trust
and the offering of the Trust Preferred Securities and will pay, directly or
indirectly, all ongoing costs and expenses of the Trust, except the Trust's
obligations with respect to the Trust Preferred Securities and liabilities (other than the paymentCommon
Securities.
For financial reporting purposes, the Trust will be treated as our
subsidiary and, accordingly, the accounts of principal, interestthe Trust will be included in our
Consolidated Financial Statements. We will present the Trust Preferred
Securities as a separate line item in our consolidated Statement of Financial
Condition entitled "Company-Obligated Mandatorily Redeemable Trust Preferred
Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of
the Company" and premium, if any,we will include appropriate disclosures about the Trust
Preferred Securities, the Guarantee and the Junior Subordinated Debentures in
the notes to our Consolidated Financial Statements. For financial reporting
purposes, we will record distributions payable on the Trust Securities)Preferred Securities
as "minority interest income of subsidiaries" in our Consolidated Statements of
Operations. We treat the Trust. The principal executive office of9.28% trust preferred securities issued by Trust I in
May 1997 and the Trust is c/o The Bank of New
York, 101 Barclay Street, New York, New York 10286.
33related junior subordinated debentures in the same manner.
17
DESCRIPTION OF TRUST PREFERRED SECURITIES
The Trust Preferred Securities will represent undivided beneficial
interests in the Trust and the holders thereof will be entitled to a preference
over the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "--Subordination of Common Securities." The Trust
Agreement will be qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
This summary of certain provisions of the Trust Preferred Securities, the
Common Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms, and
the Trust Indenture Act. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectusprospectus forms a part. General
PursuantThe
Trust Agreement will be qualified under the Trust Indenture Act. The Property
Trustee will act as the indenture trustee (the "Debenture Trustee") for purposes
of complying with the Trust Indenture Act.
GENERAL
The Administrative Trustees will issue the Trust Preferred Securities on
behalf of the Trust pursuant to the terms of the Trust Agreement, the Issuer Trustees, on
behalf of the Trust,Agreement. We will issue the Trust Securities. Allown
all of the Common Securities will be owned by the Corporation.Securities. The Trust Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Trust and the
holders thereofof the Trust Preferred Securities will be entitled to a preference in
certain circumstances with respect to Distributions (as defined below) and
amounts payable on redemption or liquidation over the Common Securities, as well
as other benefits as described in the Trust Agreement. The Trust Agreement
does not permitprohibits the issuance by the Trust of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Trust.
The Trust Preferred Securities will rank pari passu,equal in priority of payment, and
payments will be made thereon pro rata,PRO RATA with the Common Securities except as described under
certain circumstances. See "--Subordination of Common Securities." Legal title
to the Junior Subordinated Debentures will be held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The Guarantee will
not guarantee payment of Distributions or amounts payable on redemption of the
Trust Preferred Securities or liquidation of the Trust when the Trust does not
have funds on hand legally available for such payments.
See "Description of Guarantee."
Distributions
Payment of Distributions.DISTRIBUTIONS
PAYMENT OF DISTRIBUTIONS. Distributions on each Trust Preferred Security
will be cumulative, will accumulateaccrue from __________ __, 1997, 1999 and will be payable
quarterly in arrears on the __ day of March 31, June 30, September 30 and December 31 of each
year, commencing _________, 1997,, 1999, at the annual rate of _____%% of the stated
Liquidation Amountliquidation amount of $25,$10 per Trust Preferred Security ("Distributions"). The
initial Distribution will equal $ for each Trust Preferred
Security. Subsequent Distributions will equal $ for each Trust
Preferred Security. Distributions in arrears for more than one quarter will (to
the extent permitted by law) accrue interest at the rate per annum of %
thereof compounded quarterly. Distributions shall be made to the holders of the
Trust Preferred Securities on the relevant record date, which for so long as the
Trust Preferred Securities remain in book-entry form, will be one Business Day
(as defined
below) prior to the relevant Distribution Date (as defined below) and, in the event the
Trust Preferred Securities are not in book-entry form, will be the [first day of the
month/fifteenth day
of the month immediately preceding the month] in which the relevant Distribution Date occurs. The amount of
Distributions payable
34
for any period will be computed on the basis of a 360-day
year of twelve 30-day months and, for any period of less than a full calendar
month,quarter, on the basis of the actual number of days elapsed in such month.the quarter based
on 30-day months. In the event that any date on which Distributions are payable
on the Trust Preferred Securities is not a Business Day (as defined below),
payment of the Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect to any
such delay), except that if suchthe next succeeding Business Day falls in the next
succeeding calendar year, suchthe payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date (each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
18
than a Saturday or a Sunday, or a day on which banking institutions in the City
of New York, New York or Rockland, Massachusetts are authorized or required by
law or executive order to remain closed.
Extension Period.close.
DEFERRAL PERIOD. So long as no Debenture Event of Default shall have
occurred and be continuing, the Corporationwe will have the right under the Indenture to elect to defer
the payment of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarterly periodscalendar quarters
with respect to each Extension Period,deferral period (each, a "Deferral Period"), provided that
no ExtensionDeferral Period shall end on a date other than an Interest Payment Date (as
defined herein) or extend beyond , 2029, which is the Stated"Stated Maturity
Date." Upon any such election, quarterly Distributions on the Trust Preferred
Securities will be deferred by the Trust during such ExtensionDeferral Period.
Distributions to which holders of the Trust Preferred Securities are entitled
during any such ExtensionDeferral Period will accumulate additional Distributions thereon
at the rate per annum of ____%% thereof, compounded quarterly from the relevant
Distribution Date. The term "Distributions," as used herein, shall includeincludes any such
additional Distributions.
Prior to the termination of any such ExtensionDeferral Period, the Corporationwe may further extend such Extensionthe
Deferral Period, provided that an extension will only be permitted under the
Trust Agreement to the extent that the Deferral Period, together with all other
extensions occurring both before and after such extension, does not cause such Extension Period to exceed 20
consecutive quarterly periods, tocalendar quarters, end on a date other than an Interest Payment Date
or to extend beyond the Stated Maturity Date. Upon the termination of any such
ExtensionDeferral Period and the payment of all amounts then due on any Interest Payment
Date, the Corporationwe may elect to begin a new ExtensionDeferral Period, subject to the above
requirements. No interest shall be due and payable during an Extensiona Deferral Period,
except at the end thereof.
The Corporationof the period. If Distributions are deferred, the deferred
Distributions and accrued interest will be paid to holders of the Trust
Preferred Securities as they appear on the books and records of the Trust on the
record date for Distributions due at the end of the Deferral Period. We must
give the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of itsour election of any such ExtensionDeferral Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Trust Preferred Securities would have been payable except for the
election to begin such ExtensionDeferral Period and (ii) the date the Administrative
Trustees are required to give notice to any securities exchange or automated
quotation system or to holders of such Trust Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. There is no limitation on the
number of times that the Corporationwe may elect to begin an
Extensiona Deferral Period. See "Description of Junior Subordinated Debentures--Option to
Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
35
During any such ExtensionDeferral Period, the Corporationwe may not
(i)- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Corporation'sour capital
stock,
(ii)stock;
- make any payment of principal, ofinterest or premium, if any, on or repay,
repurchase or redeem any of our debt securities of the Corporation (including any other
debentures related to other trust preferred securities ("Other
Debentures)Debentures")) that rank pari passuequal with or junior in right of payment to the
Junior Subordinated DebenturesDebentures; or
(iii)- make any guarantee payments with respect to any guarantee made by the Corporationus of
the debt securities of any subsidiary of the Corporationour subsidiaries (including Other Guarantees)other guarantees
of trust preferred securities) if such guarantee ranks pari passuequal with or
junior in right of payment to the Junior Subordinated Debentures (other
than (a)Debentures.
However, we will not violate the first bullet point above if we
- declare or pay dividends or make distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, our common
stock of the Corporation, (b) any
declaration ofstock;
19
- declare a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance ofissue stock under any such plan in the
future, or the redemptionredeem or repurchase of any such rights pursuant thereto, (c)to any such
plan;
- make payments under the Guarantee, (d) theGuarantee;
- purchase ofany fractional shares resulting
fromas a result of a reclassification of the Corporation'sour
capital stock, (e) thestock;
- purchase ofany fractional interests in shares of the Corporation'sour capital stock pursuant
to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases oftherefor; or
- purchase common stock related toas a result of the issuance of common stock or
rights under any of the Corporation'sour benefit plans for its directors, officers or employees
or any of the Corporation'sour dividend reinvestment plans).
The Corporation has no current intentionplans.
We do not currently intend to exercise itsour option to defer payments of
interest on the Junior Subordinated Debentures.
Source of Distribution.SOURCE OF DISTRIBUTION. The revenue of the TrustTrust's funds available for distribution to
holders of the Trust Preferred Securities will be limited to payments under the
Junior Subordinated Debentures in which the Trust will invest the proceeds
from the issuance and sale of the Trust Securities. See "Description of Junior
Subordinated Debentures--General."Debentures. If the Corporation doeswe do not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Trust Preferred Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the Corporationus on a
limited basis as set forth herein under "Description of
Guarantee."
Redemption
Mandatory Redemption.basis.
REDEMPTION
MANDATORY REDEMPTION OF THE TRUST PREFERRED SECURITIES. Upon the repayment
or redemption at any time, in whole or in part, of any Junior Subordinated
Debentures, the proceeds from such repayment or prepayment shallredemption will be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the Trust
Securities, upon not less than 30 nor more than 60 days' notice of a date of
redemption (the "Redemption Date"), at a redemption price equal to 100% of the principal amount of the$10 per Trust
Securities together withPreferred Security plus any accrued and unpaid interest thereon. See "Description
of Junior Subordinated Debentures--Redemption."Distributions thereon to the
Redemption Date. If less than all of the Junior Subordinated Debentures are to
be prepaid on a Redemption Date, then the proceeds of such prepayment shallwill be
allocated pro rataPRO RATA to the Preferred and Common Trust Securities.
36
Optional Redemption. The CorporationSecurities, as described
below.
OPTIONAL REDEMPTION OF THE JUNIOR SUBORDINATED DEBENTURES. On or after
, 2004, we will have the right to redeem the Junior Subordinated
Debentures (i) on or after _________________, 2002, in whole at any time or in part from time to time at a redemption
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% ofredemption. We would redeem the principal amount thereof,Junior Subordinated Debentures upon not less
than 30 nor more than 60 days written notice, in each case subject to receipt of
prior approval byif it is then required under applicable regulatory requirements.
If we redeem the Federal Reserve. See
"Description of Junior Subordinated Debentures--Redemption."
Tax Event, Investment Company Event, Regulatory Capital Event or
Distribution of Junior Subordinated Debentures.Debentures, the Trust Securities will be
redeemed as described in the preceding paragraph.
SPECIAL EVENT OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. If a
Special Event shall occur(as defined below) occurs and beis continuing, the Corporation haswe will have the
right upon not less than 30 nor more than 60 days written notice to redeem the
Junior Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of the Trust Securities in whole (but not in part) at the
redemption price within 90 days following the occurrence of such Special Event,
in each case subject to receipt of prior approval by the Federal Reserve if it is then required under
applicable capital guidelines or policies of the Federal Reserve.
In the eventregulatory requirements. If a Special Event has occurred and is
continuing and the Corporation
doeswe do not elect to redeem the Junior Subordinated Debentures and(and
thereby cause a mandatory redemption of the Trust SecuritiesSecurities) or to liquidatedissolve the
Trust and, after satisfaction of creditors as required by applicable law, cause
the Junior Subordinated Debentures to be
20
distributed to holders of the Trust Securities, in liquidation of the Trust as described below, such Trust Securities will remain
outstanding and Additional Sums (as defined below) may be payable on the Junior
Subordinated Debentures.
DefinitionsDEFINITIONS. The terms described in the preceding paragraph have the
following meanings:
"Additional Sums" means the additional amounts as may be necessary to be
paid by the Corporationus with respect to the Junior Subordinated Debentures in order that the
amount of Distributions then due and payable by the Trust on the outstanding
Trust Securities of the Trust shallwill not be reduced as a result of any additional taxes, duties
and other governmental charges to which the Trust has become subject as a result of a Tax Event.subject.
An "Investment Company Event" means the receipt by the Corporationus of an opinion of
counsel experienced in such matters to the effect that, as a result of any
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940 (the "Investment Company Act"), which change
becomes effective on or after the original issuance of the Trust Preferred
Securities.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Trust Preferred Securities based upon the relative Liquidation
Amounts of such classes and the proceeds of which will be used to pay the
redemption price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of the Trust, Junior Subordinated
Debentures having a principal amount equal to the 37
Liquidation Amount of the
Trust Securities of the holderholders to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $25$10 per Trust Security.
A "Regulatory Capital Event" means that the Corporationwe shall have received an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (oror any regulations thereunder) of the United States or any
rules, guidelines or policies of the Federal Reserveapplicable regulatory agencies or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of the original
issuance of the Trust
Preferred Securities,Agreement, there is more than an insubstantial risk that the Trust Preferred
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier I1 Capital (or its then equivalent); provided, however, that for purposes of the capital
adequacy guidelines of the Board of Governors of the Federal Reserve (or any
successor regulatory authority with jurisdiction over bank holding companies),
or any capital adequacy guidelines as then in effect and applicable to us. The
distribution of the Junior Subordinated Debentures in connection with the
terminationdissolution of the Trust by the Corporation shallus will not in and of itself constitute a Regulatory
Capital Event.
A "Special Event" means a Tax Event, an Investment Company Event or a
Regulatory Capital Event, as the case may be.
A "Tax Event" means the receipt by the Corporationus and the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws or any
regulations thereunder of the United States or of any political subdivision or taxing
authority, thereof or therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the original issuancedate of the Trust Preferred Securities,Agreement, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior
21
Subordinated Debentures, (ii) interest payable by the Corporationus on the Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Corporation,us, in whole or in part, for United States federal income tax
purposes or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimisminor amount of other taxes, duties or other
governmental charges.
38
Distribution of Junior Subordinated Debentures
The CorporationDISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We will have the right at any time to terminatedissolve the Trust and, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law, to cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust. SuchThis right is
subject to (i) the Corporationour having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Trust Preferred
Securities and (ii) the prior approval by the Federal Reserveapplicable regulatory authorities if
it is then required under applicable capital guidelines or policies of the Federal Reserve.regulatory requirements.
After the liquidation date is fixed for any distribution of Junior Subordinated
Debentures to holders of the Trust Securities, (i) the Trust Securities will no
longer be deemed to be outstanding, (ii) DTCThe Depository Trust Company ("DTC" or
"Depositary") or its nominee will receive, in respect of each registered global
certificate, if any, representing Trust Securities and held by it, a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing Trust Securities not held by DTC or its nominee will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of such Trust Securities with an interest rate identical to
the distribution rate of, and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on, such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the Corporationwe will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior Subordinated
Debentures.
ThereWe can begive no assurance as to the market prices for the Trust Preferred
Securities, or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Securities, if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Trust Preferred Securities that an investoryou may
purchase, or the Junior Subordinated Debentures that the investoryou may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investoryou paid to purchase the Trust Preferred Securities.
If the Junior Subordinated Debentures are distributed to the holders of
Trust Preferred Securities, offered
hereby.
Redemption Procedureswe will use our best efforts to list the Junior
Subordinated Debentures on a national securities exchange or comparable
automated quotation system.
REDEMPTION PROCEDURES
If applicable, Trust Securities shallwill be redeemed at the redemption price
with the proceeds from the contemporaneous repayment or prepaymentredemption of the Junior
Subordinated Debentures. Any redemption of Trust Securities shallwill be made and the
redemption price shall be payable on the Redemption Date only to the extent that
the Trust has funds legally available for the payment of such redemption price.
See also "--SubordinationThe Trust may not redeem fewer than all of Common Securities."the outstanding Trust Preferred
Securities unless all accrued and unpaid Distributions have been paid on all
Trust Preferred Securities for all quarterly Distribution periods terminating on
or prior to the date of redemption. If a partial redemption of the Trust
Preferred Securities would result in the delisting of the Trust Preferred
Securities by a national securities exchange or other organization on which the
Trust Preferred Securities are listed, then, pursuant to the Indenture, we may
only redeem the Junior Subordinated Debentures in whole and, as a result, the
Trust may only redeem the Trust Preferred Securities in whole.
22
If the Trust gives a notice of redemption in respect of the Trust Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the Redemption Date, to the extent that we have deposited with the
Property Trustee by 10:00 a.m., New York City time, funds are legally available,sufficient to pay the
redemption price with respect to the Trust Preferred Securities held by DTC or
its nominees, the Property Trustee will deposit or cause the Paying Agent (as
defined herein) to deposit irrevocably with DTC funds sufficient to pay the
redemption price and will give DTC or its nominees irrevocable instructions and
authority to pay the redemption price to the holders of such Trust 39
Preferred
Securities. See "Book-Entry Issuance." If such Trust Preferred Securities are no
longer in book-entry form, the Property Trustee, to the extent we have deposited
with the Property Trustee funds are legally available,sufficient to pay the redemption price, will
irrevocably deposit with the paying agentPaying Agent for such Trust Preferred Securities
funds sufficient to pay the aggregate redemption price and will give such paying agentPaying
Agent irrevocable instructions and authority to pay the redemption price to the
holders thereof upon surrender of their certificates evidencing such Trust
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date shall be payable to the holders of such Trust
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of the
Trust Preferred Securities called for redemption will cease, except the right of
the holders of such Trust Preferred Securities to receive the redemption price,
but without interest on such redemption price and such Trust Preferred
Securities will cease to be outstanding. In the event that any Redemption Date
of Trust Preferred Securities is not a Business Day, then the redemption price
payable on such date will be paid on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such next succeeding Business Day falls in the next calendar
year, such payment shall be made on the immediately preceding Business Day. In
the event that we fail to repay the Junior Subordinated Debentures on maturity
or payment of the redemption price is improperly withheld or refused and not
paid either by the Trust or by the Corporationus pursuant to the Guarantee as described under
"Description of Guarantee," (i) Distributions on Trust Preferred Securities will
continue to accumulateaccrue at the then applicable rate from the Redemption Date
originally established by the Trust to the date such redemption price is
actually paid and (ii) the actual payment date will be the Redemption Date for
purposes of calculating the redemption price.
Subject to the Trust Agreement and applicable law (including, without
limitation, United States federal securities law and the regulations of the Federal Reserve)law), the
Corporationwe or itsour subsidiaries may at
any time and from time to time purchase outstanding Trust Preferred Securities
by tender, in the open market or by private agreement.
Payment of the redemption price on the Trust Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Trust Preferred
Securities shallwill be made on the Redemption Date.
If less than all of the Trust Securities issued by the Trust are to be
redeemed on a Redemption Date, then the aggregate redemption price for such
Trust Securities to be redeemed shallwill be allocated pro rataPRO RATA to the Trust
Preferred Securities and Common Securities based upon the relative Liquidation
Amounts of the Trust Securities or such classes.other method as the Trustee shall deem
appropriate, not more than 60 days prior to the date fixed for redemption. The
particular Trust Preferred Securities to be redeemed shallwill be selected by the
Property Trustee from the outstanding Trust Preferred Securities not previously
called for redemption, by such method as the Property Trustee shall deemdeems fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25$10 or an integral multiple thereof) of the Liquidation Amount of
Trust Preferred Securities. The Property Trustee shallwill promptly notify the
security registrar in writing of the Trust Preferred Securities selected for
redemption and, in the case of any Trust Preferred Securities selected for
partial redemption, the Liquidation Amount thereof to be redeemed. For 40
all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Trust Preferred Securities shall
23
relate to the portion of the aggregate Liquidation Amount of Trust Preferred
Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Corporation defaultswe default in payment of the redemption price on, or
in the repayment of, the Junior Subordinated Debentures, on and after the
Redemption Date, Distributions will cease to accrue on the Trust Securities
called for redemption.
Subordination of Common SecuritiesSUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the redemption price of, the Trust
Securities, as applicable, shall be made pro rataPRO RATA based on the Liquidation
Amount of the Trust Securities; provided, however, thatSecurities. However, if on any Distribution Date or
Redemption Date a Debenture Event of Default (as described in "Description of
Junior Subordinated Debentures--Debenture Events of Default") shall have
occurred and be continuing, no payment of any Distribution on, or applicable
redemption price of, any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of the Common
Securities, shallwill be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Trust Preferred Securities for
all Distribution periods terminating on or prior thereto,to the Debenture Event of
Default, or in the case of payment of the redemption price, the full amount of
such redemption price shall have been made or provided for, and all funds
available to the Property Trustee shallwill first be applied to the payment in full
in cash of all Distributions on, or redemption price of, the Trust Preferred
Securities then due and payable.
In the case of any Event of Default under the Trust Agreement relating to a
Debenture Event of Default the Corporation(as described in "--Events of Default; Notice"), as
holder of the Common Securities, we will be deemed to have waived any right to
act with respect to such Event of Default until the effect of such Event of
Default shall havehas been cured, waived or otherwise eliminated. Until any such Event of
Default has been so cured, waived or otherwise eliminated, the Property Trustee
shallwill act solely on behalf of the holders of the Trust Preferred Securities and
not on behalf of the
Corporationus as holder of the Common Securities, and only the holders of
the Trust Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
Liquidation Distribution Upon Termination
The CorporationLIQUIDATION DISTRIBUTION UPON DISSOLUTION
We will have the right at any time to terminatedissolve the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Preferred Securities. SuchOur right is subject to (i) the Corporationour having received an opinion
of an independent tax counsel experienced in such matters to the effect that
such distribution will not be a taxable event to holders of Trust Preferred
Securities for United States federal income tax purposes, and (ii) the
Corporationour having
received prior approval of the Federal Reserve if it is then required under applicable capital guidelines or policies of the Federal Reserve.regulatory
requirements. See "--Distribution of Junior Subordinated Debentures."
41
In addition, the Trust shallwill automatically terminatedissolve upon the first to occur
of: (i) certain events of our bankruptcy, dissolution or liquidation of the
Corporation;liquidation; (ii) the
distribution of a Like Amount of the Junior Subordinated Debentures to the
holders of the Trust Securities, if the Corporation, as
Sponsor, haswe have given written direction to the
Property Trustee to terminatedissolve the Trust (which direction is optional and, except
as described above, wholly within the discretion of the Corporation, as Sponsor)our discretion); (iii) redemption of all of
the Trust Securities as described under "--Redemption;"Securities; (iv) expiration of the term of the Trust; and (v) the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction.
24
If a terminationdissolution occurs as described in clause (i), (ii), (iv), or
(v) above, the Trust shallwill be liquidated by the IssuerAdministrative Trustees as
expeditiously as the IssuerAdministrative Trustees determine to be possible by
distributing to the holders of the Trust Securities, after satisfaction of
liabilities to creditors of the Trust, as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Junior Subordinated
Debentures, unlessDebentures. However, if such a distribution is determined by the Property
Trustee not to be practicable, in which event suchthe holders will be entitled to receive out of
the assets of the Trust legally available for distribution, to holders, after satisfaction
of liabilities to creditors of the Trust, as provided by applicable
law, an amount equal to the aggregate of
the Liquidation Amount plus accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Trust Securities shall be paid on a pro rata basis,
except thatPRO RATA basis. However, if a Debenture
Event of Default has occurred and is continuing, the Trust Preferred Securities
shallwill have a priority over the Common Securities. See "--Subordination of Common
Securities."
If the Corporation electswe elect not to prepayredeem the Junior Subordinated Debentures prior to
maturity in accordance with their terms and either electselect not to or isare unable to
liquidate the Trust and distribute the Junior Subordinated Debentures to holders
of the Trust Securities, the Trust Securities will remain outstanding until the
repayment of the Junior Subordinated Debentures on the Stated Maturity Date.
If the Corporation electswe elect to liquidatedissolve the Trust and thereby causescause the Junior Subordinated
Debentures to be distributed to holders of the Trust Preferred Securities in
liquidation of the Trust, the Corporationwe shall continue to have the right to shortenredeem the maturity of such
Junior Subordinated Debentures, subject to certain conditions.
See "Description of Junior
Subordinated Debentures--General."
42
Events of Default; NoticeEVENTS OF DEFAULT; NOTICE
Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Trust Preferred Securities, (whateverregardless of the
reason for such Event of Default and whether it shall beoccurs voluntary or involuntary
or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i)regulation:
- the occurrence of a Debenture Event of Default (see "Description of Junior
Subordinated Debentures--Debenture Events of Default");
or
(ii)- default by the Trust in the payment of any Distribution when it becomes
due and payable, and continuation of such default for a period of
30 days;
or
(iii)- default by the Trust in the payment of the redemption price of any Trust
Security when it becomes due and payable;
or
(iv)- default in the performance, or breach, in any material respect, of any
covenant or warranty of the Issuer Trustees in the Trust Agreement (other
than a default or breach in the performance of a covenant or warranty
which is addressed in clause (ii)the second or (iii)third clause above), and continuation
of suchthe default or breach, for a period of 60 days after there has been
given, by registered or certified mail, to the defaulting Issuer Trustee
or Trustees by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Trust Preferred Securities, a written notice specifying
suchthe default or breach and requiring it to be remedied and stating that suchthe
notice is a "Notice of Default" under the Trust Agreement; or
(v)- the occurrence of certain events of bankruptcy or insolvency with respect
to the Property Trustee and the failure by the Corporationus to appoint a successor
Property Trustee within 60 days thereof.of the event.
Within ten Business Days90 days after the occurrence of any Event of Default actually known to the
Property Trustee, the Property Trustee shallwill transmit notice of suchthe Event of
Default to the holders of the Trust Preferred Securities, the Administrative
Trustees and the Corporation, as Sponsor,us, unless suchthe Event of Default shall havehas been cured or waived. The Corporation, as
Sponsor,We and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate
25
as to whether or not we or they are in compliance with all the conditions and
covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Trust
Preferred Securities shallwill have a preference over the Common Securities as
described under "--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" andSecurities. See
"--Subordination of Common Securities.Securities" and "--Liquidation Distribution Upon
Default." Upon a Debenture Event of Default, unless the principal of all the
Junior Subordinated Debentures has already become due and payable, either the
Property Trustee or the
43
holders of not less than 25% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding may declare all of
the Junior Subordinated Debentures to be due and payable immediately by giving
notice in writing to the Corporationus (and to the Property Trustee, if notice is given by
holders of the Junior Subordinated Debentures). If the Property Trustee or the
holders of the Junior Subordinated Debentures fail to declare the principal of
all of the Junior Subordinated Debentures due and payable upon a Debenture Event
of Default, the holders of at least 25% in Liquidation Amount of the Trust
Preferred Securities then outstanding shallwill have the right to declare the Junior
Subordinated Debentures immediately due and payable. In either event, payment of
principal and interest on the Junior Subordinated Debentures shallwill remain
subordinated to the extent provided in the Indenture. In addition, holders of
the Trust Preferred Securities have the right in certain circumstances to bring
a direct action ("Direct Action.Action"). See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Trust Preferred
Securities."
Removal of Issuer TrusteesREMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall havehas occurred and beis continuing, any
Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Trust Preferred Securities. In
no event will the holders of the Trust Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Corporationus, as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee (other than an Administrative
Trustee) and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
Co-trustees and Separate Property TrusteeCO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall havehas occurred and beis continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any partproperty of the Trust Property may at the time be
located, the Corporationwe, as the holder of the Common Securities, and the Administrative
Trustees shall have powerthe right to appoint one or more persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property,property, or to act as separate trustee of any such property, in either case,
with such powers as may be provided in the instrument of appointment, and to
vest in suchthe person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the Trust
Agreement. In case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone shallwill have power to make suchthe appointment.
Merger or Consolidation of Issuer TrusteesMERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee or the Delaware Trustee or any
Administrative Trustee that is
not a natural person may be merged or converted or with which it may be
44
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall beis a party, or any Person succeeding
to all or substantially all the corporate trust business of such Issuer Trustee,
shallwill be the successor of such Issuer Trustee under the Trust Agreement, provided
suchthe Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust26
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 as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below or as otherwise described under "--Liquidation of the
Trust and Distribution"--Distribution of
Junior Subordinated Debentures." The Trust may, at theour request, of the Corporation, as Sponsor, with the consent
of the Administrative Trustees but without the consent of the holders of the
Trust Preferred Securities, the Property Trustee or the Delaware Trustee, merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to a trust organized as such under the laws of any State; provided, that (i) suchthe
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (b) substitutes for the Trust
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities"), so long as the Successor Securities
rank the same as the Trust Securities rank in priority with respect to
distributionsDistributions and payments upon liquidation, redemption and otherwise, (ii) the Corporationwe
expressly appointsappoint a trustee of such successor entity possessing the same powers
and duties as the Property Trustee with respect to the Junior Subordinated
Debentures, (iii) the Trust Preferred Securities or the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Trust Preferred Securities are then listed or quoted, if any, (iv) if the Trust
Preferred Securities (including any Successor Securities) are rated by any
nationally recognized statistical rating organization prior to suchthe transaction,
suchthe merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Trust Securities (including any Successor Securities)
or, if the Junior Subordinated Debentures are so rated, the Junior Subordinated
Debentures, to be downgraded by any such nationally recognized statistical
rating organization, (v) suchthe merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect,, (vi) suchthe successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Corporation haswe have received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) suchthe merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), and (b) following suchthe merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act, of 1940,and (c) the Trust will continue to be, or the successor entity will be,
classified as amended (the
"Investment Company Act"), anda grantor trust for federal income tax purposes, (viii) the Corporationwe or any
permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
45
the Successor Securities at least to the extent provided by the Guarantee.Guarantee and
(ix) the Property Trustee is given an officer's certificate and an opinion of
counsel each to the effect that all conditions precedent in the Trust Agreement
to the transactions have been satisfied. Notwithstanding the foregoing, the
Trust shallwill not, except with the consent of holders of 100% in Liquidation Amount
of the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
suchthe consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity not to be classified as a
grantor trust for United States federal income tax purposes.
Voting Rights; Amendmentpurposes or each holder of
the Trust AgreementSecurities not to be treated as owning an undivided interest in the
Junior Subordinated Debentures.
27
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Mergers, Consolidations, Amalgamations
or Replacements of the Trust" and "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Trust Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Corporation,us, the Property
Trustee and the Administrative Trustees, without the consent of the holders of
the Trust Securities (i) 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, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
"investment company"investment company under the Investment Company Act; provided, however, that
such action shallAct. However, the amendment to
the Trust Agreement under these circumstances may not adversely affect in any material respect the
interests of the holders of the Trust Securities. Any amendments of the Trust
Agreement pursuant to the foregoing shallunder these circumstances will become effective when notice thereof is given
to the holders of the Trust Securities. The Trust Agreement may be amended by
the IssuerAdministrative Trustees, the Property Trustee and the Corporationus (i) with the consent of
holders representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities and (ii) upon receipt by the Issuer Trustees of an
opinion of counsel experienced in such matters to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status as an
"investment
company"investment company under the Investment Company Act, provided that,Act. However, without the
consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or reduce the amount payable on redemption thereof or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such payment
on or after the specified date. Notwithstanding the foregoing, no amendments or
modification may be made to the Declaration if such date.amendment or modification
would (i) cause the Trust to be classified as other than a grantor trust for
United States federal income tax purposes, (ii) reduce or otherwise adversely
affect the powers of the Property Trustee in contravention of the Trust
Indenture Act or (iii) cause a Special Event.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, subject to the Issuer Trustees shall not (i)requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in Liquidation Amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for 46
any remedy available to the Debenture Trustee, or
executedirect the exercise of any trust or power conferred on the Property Trustee with
respect to the Junior Subordinated Debentures, including the right to direct the
Property Trustee, as holder of the Junior Subordinated Debentures, to
(i) exercise the remedies available under the Indenture with respect to the
Junior Subordinated Debentures, (ii) waive certainany past defaults under the Indenture
that are available under the Indenture, (iii) exercise any right to rescind or
annul a declaration of acceleration of the maturity of the principal of the
Junior Subordinated Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Junior Subordinated Debentures, where suchthe
consent shallwill be required, without, in each
case, obtaining the prior approval of the holders of a majority in Liquidation
Amount of all outstanding Trust Preferred Securities; provided, however, thatrequired. However, where a consent under the Indenture would
require the consent of each affected holder of Junior Subordinated Debentures,
affected thereby, no such consent shallmay be given by the Property Trustee without the prior approval of
each holder of the Trust Preferred Securities. The Issuer Trustees shallwill not
revoke any action previously authorized or approved by a vote of the holders of
the Trust Preferred Securities except by subsequent vote of suchthose holders.
28
The Property Trustee shallwill notify each holder of Trust Preferred Securities
within 90 days of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of suchthe holders of
the Trust Preferred Securities prior to taking any of the foregoing actions, the
Issuer Trustees shallwill obtain an opinion of counsel experienced in such matters to
the effect that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of Trust Preferred Securities may be given
at a meeting of suchthe holders convened for suchthat purpose or pursuant to written
consent.consent without prior notice. The Property TrusteeAdministrative Trustees will cause a notice of
any meeting at which holders of Trust Preferred Securities are entitled to vote or of any matter
upon which action by written consent of such holders is to be taken,
to be given to each holder of record of Trust Preferred Securities in the manner
set forth in the Trust Agreement.
No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem and cancel the Trust Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Trust Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Trust Preferred Securities that are owned by the Corporation,us, the Trustees or any affiliate
of the Corporationus or any Trustees, shall,will, for purposes of such vote or consent, be treated as
if they were not outstanding.
Global Trust Preferred SecuritiesGLOBAL TRUST PREFERRED SECURITIES
The Trust Preferred Securities will be represented by one or more global
certificates registered in the name of the DepositoryDTC or its nominee ("Global(a "Global Trust
Preferred Security"). Beneficial interests in the Trust Preferred Securities
will be shown on, and transfer thereof will be effected only through, records
maintained by persons that have accounts with such Depositary ("Participants").
Except as described below, Trust Preferred Securities in the certificated form
will not be issued in exchange for the global certificates. See "Book-Entry
Issuance."
47
A global security shallwill be exchangeable for Trust Preferred Securities
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Corporationus that it is unwilling or unable to continue as
a depositary for suchthe global security and no successor depositary shall have been
appointed within 90 days, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depository
is required to be so registered to act as such depository, (ii) the Trust in its
sole discretion determines that suchthe global security shallmay be so exchangeable, or
(iii) there shall have occurred and be continuing an Event of Default under the
Indenture. Any global security that is exchangeable pursuant toas described in the
preceding sentence shallwill be exchangeable for definitive certificates registered
in suchthe names as the Depositary shall direct. It is expectedWe expect that suchthe instructions
will be based upon directions received by the Depositary with respect to
ownership of beneficial interests in suchthe global security. In the event that
Trust Preferred Securities are issued in definitive form, suchthe Trust Preferred
Securities will be in denominations of $25$10 and integral multiples thereof 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 Trust
Preferred Securities, represented thereby, a Global Trust Preferred Security may not be transferred
except as a whole by the Depositary to a nominee of suchthe Depositary or by a
nominee of suchthe Depositary to suchthe Depositary or another nominee of suchthe Depositary
or by the Depositary or any nominee to a successor Depositary or any nominee of
suchthe successor.
Payments on Trust Preferred Securities represented by a global security will
be made to the Depositary, as the depositary for the Trust Preferred Securities.
In the event the Trust Preferred Securities are issued in definitive form,
Distributions will be payable, the transfer of the Trust Preferred Securities
will be registrable, and Trust Preferred Securities will be exchangeable for
Trust Preferred
29
Securities of other denominations of a like aggregate Liquidation Amount, at the
corporate trust office of the Property Trustee, or at the offices of any paying
agent or transfer agent appointed by the Administrative Trustees by check mailed
to the address of the persons entitled thereto or by wire transfer. For a
description of the terms of the depositary arrangements relating to payments,
transfers, voting rights, redemptions and other notices and other manners, seeSee
"Book-Entry Issuance."
Upon the issuance of a Global Trust Preferred Security, and the deposit of
suchthe Global Trust Preferred Security with or on behalf of the Depositary, the
Depositary for suchthe Global Trust Preferred Security or its nominee will credit,
on its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Trust Preferred Securities represented by
suchthe Global Trust Preferred Securities to the accounts of Participants. SuchThese
accounts shallwill be designated by the dealers, underwriters or agents with respect
to suchthe Trust Preferred Securities. Ownership of beneficial interests in a Global
Trust Preferred Security will be limited to Participants or persons that may
hold interests through Participants. Ownership of beneficial interests in suchthe
Global Trust Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that 48
certain purchasers of
securities take physical delivery of suchthe securities in definitive form. SuchThese
limits and such laws may impair the ability to transfer beneficial interest in a
Global Trust Preferred Security.
So long as the Depositary for a Global Trust Preferred Security, or its
nominee, is the registered owner of suchthe Global Trust Preferred Security, suchthe
Depositary or suchthe nominee, as the case may be, will be considered the sole owner
or holder of the Trust Preferred Securities represented by suchthe Global Trust
Preferred Security for all purposes under the Trust Agreement governing such
Trust Preferred Securities. Except as provided below, owners of beneficial
interest in a Global Trust Preferred Security will not be entitled to have any
of the individual Trust Preferred Securities represented by such Global Trust
Preferred Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Trust Preferred Securities in definitive
form and will not be considered the owners or holders thereof under the Trust Agreement.
None of the Corporation,Neither the Property Trustee, any Paying Agent (as defined below), or the
Securities Registrar (defined(as defined below) for suchthe Trust Preferred Securities nor
we 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 Trust Preferred Security representing suchthe Trust Preferred Securities or
for maintaining supervising or reviewing any records relating to suchthe beneficial
ownership interests.
The Corporation expectsWe expect that the Depositary for Trust Preferred Securities or its nominee,
upon receipt of any payment of the Liquidation Amount or Distributions in
respect of a permanent Global Trust Preferred Security, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Trust Preferred Security as shown on the records of such Depositary or
its nominee. The CorporationWe also expectsexpect that payments by Participants to owners of
beneficial interests in such Global Trust Preferred Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." SuchThese payments will be the responsibility
of such Participants.
If the Depositary for the Trust Preferred Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Corporationus within 90 days, the Trust will issue
individual Trust Preferred Securities in exchange for the Global Trust Preferred
Security. In addition, the Trust may at any time and in its sole discretion,
subject to any limitations described herein relating to suchthe Trust Preferred
Securities, determine not to have any Trust Preferred Securities represented by
one or more Global Trust Preferred Securities and, in suchthat event, will issue
individual
30
Trust Preferred Securities in exchange for the Global Trust Preferred Security or Securities representing the Trust Preferred
Securities. Further, if the Trust so specifies with respect to the Trust
Preferred Securities, an owner of a beneficial interest in a Global Trust
Preferred Security representing the Trust Preferred Securities may, on terms
acceptable to the Trust, the Property Trustee and the Depositary for such Global
Trust
49
Preferred Security, receive individual Trust Preferred Securities in exchange
for such beneficial interests, subject to any limitations described herein.Security.
In any such instance, an owner of a beneficial interest in a Global Trust
Preferred Security will be entitled to physical delivery of individual Trust
Preferred Securities represented by suchthe Global Trust Preferred Security equal in
Liquidation Amount to suchthe beneficial interest and to have suchthe Trust Preferred
Securities registered in its name. Individual Trust Preferred Securities so
issued will be issued in denominations, unless otherwise specified by the
Corporation,us, of $25$10
and integral multiples thereof.
Payment and Paying AgencyPAYMENT AND PAYING AGENCY
Payments in respect ofon the Trust Preferred Securities held in global form shallwill be made
to the Depositary, which shallwill credit the relevant accounts at the Depositary on
the applicable Distribution Dates, or in respect ofDates. Payments on the Trust Preferred Securities
that are not held by the Depositary such payments shallwill be made by check mailed to the address
of the holder entitled thereto as suchthe address shall appearwhich appears on the register. The
paying agent (the "Paying Agent") shallwill initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the
Corporation.us. The Paying Agent shallwill be permitted to resign as
Paying Agent upon 30 days' written notice to the Property Trustee, the Administrative Trustees and
the Corporation.Trustees. In the
event that the Property Trustee shallwill no longer be the Paying Agent, the
Administrative Trustees shallwill appoint a successor (which shallwill be a bank or trust
company acceptable to the Administrative Trustees and the
Corporation)us) to act as Paying
Agent.
Registrar and Transfer AgentREGISTRAR AND TRANSFER AGENT
The Property Trustee will initially act as registrar and transfer agent for
the Trust Preferred Securities.Securities (the "Securities Registrar"). Registration of
transfers of the Trust 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 will not be required to register or cause to be registered the transfer of
the Trust Preferred Securities after they have been called for redemption.
Information Concerning the Property TrusteeINFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only suchthe duties as are specifically set
forth in the Trust Agreement and, during the existence of an Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of Trust
Securities unless it is offered reasonable indemnity or security against the
costs, expenses and liabilities that might be incurred thereby.incurred. If no Event of Default
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
50
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 the Trust Securities
are entitled under the Trust Agreement to vote, then the Property Trustee shallmay
take suchthe action as is directed by the Corporation and, if not so directed, shallmay take such action as it
deems advisable and in the best interests of the holders of the Trust Securities
and will have no liability except for its own bad faith, negligence or willful
misconduct. MiscellaneousThe Property Trustee also serves as the property trustee, guarantee
trustee and the indenture trustee with respect to the 9.28% trust preferred
securities issued by Trust I in May 1997 and the related junior subordinated
debentures due May 19, 2027.
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"investment company required to be registered under the
Investment Company Act or classified as an association taxable asother than a corporationgrantor trust for United
31
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated by us as indebtedness of the Corporation for United States federal
income tax purposes. In this connection, the Corporationwe and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that the Corporationwe and the
Administrative Trustees determine in theirour discretion to be necessary or desirable
for suchthese purposes, as long as suchthe action does not materially adversely affect the
interests of the holders of the Trust Securities.Securities or vary the terms thereof. The
Administrative Trustees also serve as administrative trustees of Trust I.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
5132
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under an Indenture, as
supplemented from time to time (as so supplemented, the "Indenture"), between
the CorporationDebenture Trustee and The Bank of New York, as trustee (the "Debenture Trustee").us. The Indenture will be qualified under the Trust
Indenture Act of 1939, as
amended (the "Trust Indenture Act").Act. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be complete, and
where reference is made to particular provisions of
the Indenture, such provisions, including the definitions of certain terms, some
of which are not otherwise defined herein, are qualified in theirits entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act. The form of the Indenture has been filed as an Exhibitexhibit to the Registration
Statement.
Concurrently with the issuance of the Trust Preferred Securities, the Trust
will invest the proceeds, thereof, together with the consideration paid by the
Corporationus for the
Common Securities, in Junior Subordinated Debentures issued by the Corporation.us. The Junior
Subordinated Debentures will be issued as unsecured debt under the Indenture.
GeneralWe may at any time dissolve the Trust and, after satisfaction of liabilities
to creditors of the Trust, cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Preferred Securities, we will use our best efforts to list the Junior
Subordinated Debentures on a national securities exchange or comparable
automated quotation system.
GENERAL
The Junior Subordinated Debentures will bear interest at the annual rate of
____%% of the principal amount thereof, payable quarterly in arrears on the __last
day of March, June, September and December of each year (each, an "Interest
Payment Date"), commencing ___________, 1997,, 1999, to the person in whose name each
Junior Subordinated Debenture is registered, subject to certain exceptions, on
the [first day of the month/fifteenth day of the month immediately preceding the
month] in which the relevant Interest Payment Date
occurs. Notwithstanding the above, in the event that either (i) Junior
Subordinated Debentures are held by the Property Trustee and the Trust Preferred
Securities are no longer in book-entry only form or (ii) the Junior Subordinated
Debentures are not represented by a Global Subordinated Debenture, (as defined herein), the record
date for such payment shall be the first day of the month in which such payment
is made. The amount of each interest payment due with respect to the Junior
Subordinated Debentures will include amounts accrued through the date the
interest payment is due. It is anticipatedWe anticipate that, until the liquidation,dissolution, if any, of
the Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Trust Preferred
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 and, for any period of less
than a full calendar month,quarter, on the basis of the actual number of days elapsed
in such month.the quarter based upon 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable on such
date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that if suchthe next succeeding Business Day falls in the
next succeeding calendar year, then suchthe payment shallwill be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of _____%
52
% thereof, compounded quarterly.
The term "interest," as used herein, shall
includeincludes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2027 (such date, as it
may be shortened as hereinafter described, the2029 (the "Stated
Maturity Date"). Such
date may be shortened onceOn or after , 2004, we will have the right to redeem the
Junior Subordinated Debentures in whole at any time byor in part from time to time
at a redemption price equal to 100% of the Corporationprincipal amount thereof plus accrued
and unpaid interest on the Junior Subordinated Debentures so redeemed
33
to anythe date not
earlier than , 2002fixed for redemption, subject to the Corporationour having received prior approval
of
the Federal Reserve if it is then required under applicable capital guidelines or
policies of the Federal Reserve.regulatory requirements. In the event
that the Corporation electswe elect to shorten the Stated Maturity Date ofredeem the Junior Subordinated Debentures, it shallwe will give notice
to the IndentureDebenture Trustee, and the IndentureDebenture Trustee shallwill give notice of such shorteningthe
redemption to the holders of the Junior Subordinated Debentures no less than
9030 days or more than 60 days prior to the effectiveness thereof.
The Junior Subordinated Debentures will rank pari passuequal with all Other Debentures
and will be unsecured and will rank subordinate and junior in right of payment
to all Senior and Subordinated Indebtedness (as defined under "Description of
Junior Subordinated Debentures--Subordination") to the extent and in the manner
set forth in the Indenture.
See "-- Subordination."
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's subsidiary. The Corporation is
a legal entity separate and distinct from its subsidiary. Holders of Junior
Subordinated Debentures should look only to the Corporation for payments on the
Junior Subordinated Debentures. The principal sources of the Corporation's
income are dividends, interest and fees from its subsidiary. The Corporation
relies primarily on dividends from the Bank to meet its obligations for payment
of principal and interest on its corporate expenses. There are regulatory
limitations on the payment of dividends directly or indirectly to the
Corporation from the Bank. As of December 31, 1996, under applicable banking
statutes and the Bank's dividend policy, the total capital available for payment
of dividends by the Bank to the Corporation was approximately $24 million.
However, banking regulatory authorities have the power to prohibit any act,
including the payment of dividends, if such act would reduce bank capital to a
point that, in the opinion of such regulatory authorities, would render the Bank
undercapitalized and thus constitute an unsafe or unsound banking practice. In
addition, the Bank is subject to certain restrictions imposed by federal law on
any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent the Corporation and such other
affiliates from borrowing from the Bank unless the loans are secured by various
types of collateral. Further, such secured loans, other transactions and
investments by the Bank is generally limited in amount as to the Corporation and
as to each of such other affiliates to 10% of the Bank's capital and surplus and
as to the Corporation and all of such other affiliates to an aggregate of 20% of
the Bank's capital and surplus.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Trust Preferred Securities to benefit indirectly
53
from such distribution), is subject to the prior claims of creditors of that
subsidiary (including depositors, in the case of the Bank), except to the extent
the Corporation may itself be recognized as a creditor of that subsidiary. At
December 31, 1996, the subsidiary of the Corporation had total liabilities
(excluding liabilities owed to the Corporation) of $1.0 billion. Accordingly,
the Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiary and all
liabilities of any future subsidiaries of the Corporation. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation or any subsidiary, including Senior and Subordinated Indebtedness.
See "--Subordination."
Option to Extend Interest Payment DateOPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing, the Corporationwe
will have the right under the Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time and from time to time for a period
not exceeding 20 consecutive quarterly periods with respect to each
Extension Period,calendar quarters, provided that no ExtensionDeferral Period
shallmay end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of such ExtensionDeferral Period, the Corporationwe must pay all
interest then accrued and unpaid (together with interest thereonthereon) at the annual
rate of _____%,%, compounded quarterly, to the extent permitted by applicable
law. During an
Extensiona Deferral Period, interest will continue to accrue and, if the
Junior Subordinated Debentures have been distributed to holders of the Trust
Preferred Securities, holders of Junior Subordinated Debentures (or holders of
the Trust Preferred Securities while Trust Preferred Securities are outstanding)
will be required to accrue such deferred interest income for United States
federal income tax purposes prior to the receipt of cash attributable to such
income. See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any such Extensiona Deferral Period, the Corporation maywe will not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to,undertake any of the Corporation's capital stock,
(ii) make any payment of principal of, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation (including any Other Guarantees) if such guarantee ranks pari
passu with or junior in right of payment to the Junior Subordinated Debentures
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stockactions set forth
below under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) the purchase of fractional shares resulting
from a reclassification of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock related to the
issuance of common stock or rights
54
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans)."--Certain Covenants We Have Made."
Prior to the termination of any such ExtensionDeferral Period, the Corporationwe may further extend
such ExtensionDeferral Period, provided that such extension does not cause such ExtensionDeferral
Period together with all previous and further extensions within the Deferral
Period to exceed 20 consecutive quarterly periods,calendar quarters, end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. Upon the
termination of any such ExtensionDeferral Period and the payment of all amounts then due
on any Interest Payment Date, the Corporationwe may elect to begin a new ExtensionDeferral Period,
subject to the above requirements. No interest shallwill be due and payable during an Extensiona
Deferral Period, except at the end thereof.
The Corporationof that period. We must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of
its election of any ExtensionDeferral Period (or an extension thereof) at least onefive Business
DayDays prior to the earlier of (i) the next succeeding date theon which Distributions
on the Trust Preferred Securities would have beenare payable
except for the election to begin or extend such Extension Period or (ii) the date the Administrative Trustees areTrust is
required to give notice to any securities exchange or to holders of Trust
Preferred Securities of the record date or the date such Distributions are
payable, but in any event not less than onefive Business DayDays prior to suchthe record
date. The Debenture Trustee shallwill give notice of the
Corporation'sour election to begin or extend
a new ExtensionDeferral Period to the holders of the Trust Preferred Securities.
There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period.
Additional SumsADDITIONAL SUMS
If the Trust or the Property Trustee is required to pay any additional
taxes, duties, assessments or other governmental charges, as a result of a Tax Event, the Corporationwe will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional
Sums")Sums as shall be required so that the Distributions payable by the Trust shall not be
reduced as a result of any such additional taxes, duties, assessments or other
governmental charges.
Redemption34
REDEMPTION
Subject to the Corporationour having received any prior approval of the Federal
Reserve, if then required under applicable
capital guidelines or policies of the
Federal Reserve,regulatory requirements, the Junior Subordinated Debentures are redeemable prior
to maturity at theour option of the Corporation (i) on or after , 2002,2004, in whole at(at any timetime) or in
part from(from time to time, or (ii)time), at a redemption price equal to 100% of the principal
amount plus accrued and unpaid interest on the Junior Subordinated Debentures to
the date of redemption.
The Junior Subordinated Debentures are also redeemable prior to maturity at
any time in whole (but not in part), uponwithin 90 days following the occurrence and during the continuance of
a Special Event, in each case at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest on the Junior Subordinated
Debentures so redeemed to the date fixed for redemption. If a partial redemption
plus 100%
of the principal amount thereof.Trust Preferred Securities resulting from a partial redemption of the
Junior Subordinated Debentures would result in a delisting of the Trust
Preferred Securities, then we may redeem the Junior Subordinated Debentures in
whole only.
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 Junior Subordinated
Debentures to be redeemed at suchthe holder's registered address. Unless the
Corporation defaultswe default
in payments of the redemption price,
55
on and after the redemption date, interest
ceases to accrue on suchthe Junior Subordinated Debentures or portions thereof called for
redemption.
If the Trust is required to pay additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
The Junior Subordinated Debentures will not be subject to any sinking fund.
Distribution upon Liquidation
As described under "Description of the Trust Preferred
Securities--Liquidation Distribution Upon Termination," underDISTRIBUTION UPON LIQUIDATION
Under certain circumstances involving the terminationdissolution of the Trust, the
Junior Subordinated Debentures may be distributed to the holders of the Trust
Preferred Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust. See "Description of Trust as provided by applicable law.Preferred
Securities--Liquidation Distribution Upon Dissolution." If distributed to
holders of the Trust Preferred Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of one or more
global securities and the Depositary or any successor depositary for the Trust
Preferred Securities will act as depositary for the Junior Subordinated
Debentures. It is anticipatedWe anticipate that the depositary arrangements for the Junior
Subordinated Debentures would be substantially identical to those in effect for the
Trust Preferred Securities. If the Junior Subordinated Debentures are
distributed to the holders of Trust Preferred Securities upon the liquidation of
the Trust, the Corporationwe will use itsour best efforts to list the Junior Subordinated
Debentures on the Nasdaq National Market or such other stock exchanges or
automated quotation system, if any, on which the Trust Preferred Securities are
then listed or quoted. ThereWe can begive no assurance as to the market price of any
Junior Subordinated Debentures that may be distributed to the holders of Trust
Preferred Securities.
Certain Covenants of the CorporationCERTAIN COVENANTS WE HAVE MADE
If at any time (1) there shall have occurred any event of which the
Corporation haswe have
actual knowledge that (a) is, or with the giving of notice or the lapse of time,
or both, would be, a Debenture Event of Default and (b) in respect of which the Corporationwe
shall not have taken reasonable steps to cure, (2) the Corporation shall bewe are in default with
respect to itsour payment of any obligations under the Guarantee, or (3) the Corporationwe shall
have given notice of itsour election of an Extensiona Deferral Period as provided in the
Indenture and shall not have rescinded such notice, and such ExtensionDeferral Period, or
any extension thereof, shall have commenced and be continuing, then the Corporationwe will not,
(i)- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Corporation'sour capital
stock, (ii)stock;
35
- make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any of our debt securities of the Corporation (including Other
Debentures) that rank pari passuequal with or junior in right of payment to the
Junior Subordinated DebenturesDebentures; or
(iii)- make any guarantee payments with respect to any guarantee by the Corporationus of the
debt securities of any subsidiary of the Corporationour subsidiaries (including under Other
Guarantees) if such guarantee ranks pari
56
passuequal or junior in right of payment to
the Junior Subordinated Debentures (other
than (a)Debentures.
However, we will not violate the first bullet point above if we
- declare or pay dividends or make distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of our common
stock of the Corporation, (b) any
declaration ofstock;
- declare a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance ofissue stock under any such plan in the future, or
the redemptionredeem or repurchase of any rights under such rights pursuant thereto, (c)a plan;
- make payments under the Guarantee, (d) theGuarantee;
- purchase of fractional shares resulting
fromas a result of a reclassification of the Corporation'sour
capital stock, (e) thestock;
- purchase of fractional interests in shares of the Corporation'sour capital stock pursuant to
the conversion or exchange provisions of suchour capital stock or the security
being converted or exchanged, and (f) purchases ofexchanged; or
- purchase common stock related toas a result of the issuance of common stock or
rights under any of the Corporation'sour benefit plans for its directors, officers or employees
or any of the Corporation'sour dividend reinvestment plans).plan.
So long as the Trust Securities remain outstanding, the Corporationwe also will covenanthave agreed
(i) to directly or indirectly maintain 100% direct or indirect ownership of the Common Securities,Securities;
provided, however, that any permitted successor of the Corporationto us under the Indenture may
succeed to the
Corporation'sour ownership of such Common Securities, (ii) to not voluntarily
dissolve, wind-up or terminate the Trust, except in connection with the
distribution of the Junior Subordinated Debentures or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement,
(iii) to timely perform our duties as sponsor of the Trust, (iv) to use itsour
reasonable efforts to cause the Trust (a) to remain a business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes and (iii)(v) to use itsour reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures.
SubordinationSUBORDINATION
In the Indenture, the Corporation haswe have covenanted and agreed that any Junior Subordinated
Debentures issued thereunder will be subordinate and junior in right of payment
to all Senior and Subordinated Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding ofwhich we are the Corporation,subject of, the holders of Senior and
Subordinated Indebtedness will first be entitled to receive payment in full of
principal of all Allocable Amounts (as defined below) on such Senior and
Subordinated Indebtedness before the holders of Junior Subordinated Debentures
will be entitled to receive or retain any payment in respect thereof. As of
September 30, 1999, we had no Senior and Subordinated Indebtedness outstanding.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior and Subordinated Indebtedness outstanding
at the time of such acceleration will first be entitled to receive payment in
full of such amounts due thereon (including any amounts due upon
36
acceleration) before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
57
No payments on account of principal, or interest, if any, in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to any Senior and Subordinated
Indebtedness, or an event of default with respect to any Senior and Subordinated
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any default.
We are a holding company and almost all of our operating assets are owned by
our subsidiaries. We are a legal entity separate and distinct from our
subsidiaries. Holders of Junior Subordinated Debentures should look only to us
for payments on the Junior Subordinated Debentures. The principal sources of our
income are dividends, interest and fees from our subsidiaries. We rely primarily
on dividends from the Bank to meet our obligations for payment of principal and
interest on our corporate expenses. There are regulatory limitations on the
payment of dividends directly or indirectly to us from the Bank. As of
September 30, 1999, under applicable banking statutes, the total capital
available for payment of dividends by the Bank to us was approximately
$27 million. However, bank regulatory authorities have the power to prohibit any
act, including the payment of dividends, if such default.act would reduce bank capital
to a point that, in the opinion of such regulatory authorities, would render the
Bank undercapitalized and thus constitute an unsafe or unsound banking practice.
In addition, the Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, us and
certain affiliates, and on investments in stock or other securities. These
restrictions prevent us and our affiliates from borrowing from the Bank unless
the loans are secured by various types of collateral. Further, secured loans,
other transactions and investments by the Bank are generally limited in amount
as to us and as to each of our affiliates to 10% of the Bank's capital and
surplus and as to us and all of our other affiliates to an aggregate of 20% of
the Bank's capital and surplus.
Because we are a holding company, our right to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Trust
Preferred Securities to benefit indirectly from such distribution), is subject
to the prior claims of creditors of that subsidiary (including depositors, in
the case of the Bank), except to the extent we may be recognized as a creditor
of that subsidiary. At September 30, 1999, our subsidiaries had total
liabilities (excluding liabilities owed to us) of $1.5 billion. Accordingly, the
Junior Subordinated Debentures will be effectively subordinated to all existing
and future liabilities of our subsidiaries and all liabilities of any of our
future subsidiaries. The Indenture does not limit our or our subsidiaries'
ability to incur or issue other secured or unsecured debt, including Senior and
Subordinated Indebtedness.
DEFINITIONS. For purposes of the foregoing paragraphs, the following
definitions apply:
"Allocable Amounts," when used with respect to any Senior and Subordinated
Indebtedness, means all amounts due or to become due on suchthe Senior and
Subordinated Indebtedness less, if applicable, any amount which would have been
paid to, and retained by, the holders of suchthe Senior and Subordinated
Indebtedness (whether as a result of the receipt of payments by the holders of
such Senior and Subordinated Indebtedness from the Corporationus or any other obligor thereonobligated party
or from any holders of, or trustee in respect of, other indebtedness that is
subordinate and junior in right of payment to suchthe Senior and Subordinated
Indebtedness pursuant to any provision of such indebtedness for
the payment over of amounts received on account of such indebtedness to the
holders of such Senior and Subordinated Indebtedness or otherwise)Indebtedness) but for the fact that such Senior and Subordinated Indebtedness is
subordinated or junior in right of payment to (or subject to a requirement that
amounts received on such Senior and Subordinated Indebtedness be paid over to
obligees on) trade accounts payable or accrued liabilities arising in the
ordinary course of business.
"Indebtedness" shall meanmeans with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent:
(i) every obligation of the any person for money
37
borrowed; (ii) every obligation of suchthe person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of suchthe person with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of suchthe person;
(iv) every obligation of suchthe person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital lease
obligation of suchthe person; (vi) all indebtedness of suchthe person whether incurred
on or prior to the date of the Indenture or thereafter incurred, for claims in
respect of derivative products, including interest rate, foreign exchange rate
and commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another person and all dividends of another person the payment of which, in
either case, suchthe person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior and Subordinated Indebtedness" means the principal of (and premium,
if any) and interest, if any (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Corporationus whether or
not suchthe claim for post-petition interest is allowed in such proceeding), on our
Indebtedness of the Corporation whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that suchthe obligations
are not superior in right of payment to the Junior Subordinated Debentures or to
other Indebtedness which is pari passuequal with, or subordinated to, the Junior
Subordinated Debentures; provided,
58
however, thatDebentures. However, Senior and Subordinated Indebtedness shalldoes not be deemed to
include (i) any Indebtedness of the Corporationour Indebtedness which when incurred and without respect to
any election under section 1111(b) of the United States Bankruptcy CodeReform Act of
1978, as amended, was without recourse to the Corporation,us, (ii) any Indebtedness of the Corporationwe have to
any of itsour subsidiaries, (iii) Indebtedness to any employee of the Corporation,our employees, and
(iv) any other debt securities issued pursuant to the Indenture.
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's subsidiary. The Corporation
relies primarily on dividends from the Bank to meet its corporate expenses. The
Corporation is a legal entity separate and distinct from its subsidiaries.
Holders of Junior Subordinated Debentures should look only to the Corporation
for payments on the Junior Subordinated Debentures. There are regulatory
limitations on the payment of dividends directly or indirectly to the
Corporation from the Bank. See "--General." In addition, the Bank is subject to
certain restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, the Corporation and certain other affiliates,
and on investments in stock or other securities thereof. Such restrictions
prevent the Corporation and such other affiliates from borrowing from the Bank
unless the loans are secured by various types of collateral. Further, such
secured loans, other transactions and investments by the Bank are generally
limited in amount as to the Corporation and as to each of such other affiliates
to 10% of the Bank's capital and surplus and as to the Corporation and all of
such other affiliates to an aggregate of 20% of the Bank's capital and surplus.
Accordingly,DENOMINATIONS, REGISTRATION AND TRANSFER
If the Junior Subordinated Debentures will be effectively subordinatedare distributed to all existing and future liabilities of the Corporation's subsidiaries.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of holders of the
Trust Preferred Securities, to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Bank), except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. At
December 31, 1996, the subsidiary of the Corporation had total liabilities
(excluding liabilities owed to the Corporation) of $1.0 billion. Accordingly,
the Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiary and all
liabilities of any future subsidiaries of the Corporation. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation or any subsidiary, including Senior and Subordinated Indebtedness.
Denominations, Registration and Transfer
The Junior Subordinated Debentures will be
represented by global certificates registered in the name of the Depositary or
its nominee ("Global(the "Global Subordinated Debenture"). Beneficial interests in the
Junior Subordinated Debentures will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary. Except as described
below, Junior Subordinated Debentures in certificated form will not be issued in
exchange for the global certificates. See "Book-Entry Issuance."
59
Unless and until a Global Subordinated Debenture is exchanged in whole or in
part for the individual Junior Subordinated Debentures, represented thereby,
it may not be
transferred except as a whole by the Depositary for suchthe Global Subordinated
Debenture to a nominee of suchthe Depositary or by a nominee of suchthe Depositary to
suchthe Depositary or another nominee of suchthe Depositary or by the Depositary or any
nominee to a successor Depositary or any nominee of suchthe successor.
A global security shallGlobal Subordinated Debenture will be exchangeable for Junior Subordinated
Debentures registered in the names of persons other than the Depositary or its
nominee only if (i) the Depositary notifies the Corporationus that it is unwilling or unable to
continue as a depositary for such global securityGlobal Subordinated Debenture and no successor
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered to act as such depositary, (ii) the Corporationwe in itsour sole
discretion determinesdetermine that such global security shallthe Global Subordinated Debenture will be so
exchangeable or (iii) there shall have occurred and be continuing a Debenture
Event of Default with respect to such global security.the Global Subordinated Debenture. Any global securityGlobal
Subordinated Debenture that is exchangeable pursuant to the preceding sentence
shallwill be exchangeable for definitive certificates registered in such names as the
Depositary shall direct. It is expected that suchthe instructions will be based upon
directions received by the Depositary from its Participants with respect
38
to ownership of beneficial interests in such global security.the Global Subordinated Debenture. In
the event that Junior Subordinated Debentures are issued in definitive form, suchthe
Junior Subordinated Debentures will be in denominations of $25$10 and integral
multiples thereof and may be transferred or exchanged at the offices described
below.
Payments on Junior Subordinated Debentures represented by a global securityGlobal
Subordinated Debenture will be made to the Depositary, as the depositary for the
Junior Subordinated Debentures. In the event Junior Subordinated Debentures will
be registrable, and Junior Subordinated Debentures will be exchangeable for Junior
Subordinated Debentures of other denominations of a like aggregate principal
amount, at the corporate office of the Debenture Trustee, or at the offices of
any paying agent or transfer agent appointed by the Corporation,us, provided that payment of
interest may be made at theour option of the Corporation by check mailed to the address of the persons
entitled thereto or by wire transfer. In addition, if the Junior Subordinated
Debentures are issued in certificated form, the record dates for payment of
interest will be the first day of the month in which such payment is to be made.
For a description of the Depositary and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Book-Entry Issuance."
The CorporationWe will appoint the Debenture Trustee as securities registrar under the
Indenture (the "Securities Registrar"). Junior Subordinated Debentures may be
presented for exchange as provided above, and may be presented for registration
of transfer (with the form of transfer endorsed thereon, or a satisfactory
written instrument of transfer, duly executed), at the office of the Securities
Registrar. The CorporationWe may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts, provided
that the Corporation
maintainswe maintain a transfer agent in the place of payment. The
60
CorporationWe may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Corporationwe nor the Debenture Trustee shall
be required to (i) issue, register the transfer of or exchange Junior
Subordinated Debentures during a period beginning at the opening of business
15 days before the day of selection for redemption of Junior Subordinated
Debentures and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debentures so selected for redemption, except, in the case of any
Junior Subordinated Debentures being redeemed in part, any portion thereof not
to be redeemed.
Global Subordinated DebenturesGLOBAL SUBORDINATED DEBENTURES
Upon the issuance of the Global Subordinated Debenture and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for suchthe Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by suchthe
Global Subordinated Debenture to the accounts of persons that have accounts with
such Depositary ("Participants"). Ownership of beneficial interests in a Global
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants). The laws of some states
require that certain purchasers of securities take physical delivery of suchthe
securities in definitive form. SuchThese limits and such laws may impair the ability to
transfer beneficial interests in a Global Subordinated Debenture.
39
So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of suchthe Global Subordinated Debenture, suchthe
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by suchthe Global
Subordinated Debenture for all purposes under the Indenture governing suchthe Junior
Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders thereof
under the
Indenture.
Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing suchthe Junior Subordinated Debentures. None of the Corporation,Neither we nor the Debenture
Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
61
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing suchthe Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to suchthe beneficial ownership interests.
The Corporation expects that the Depositary or its nominee, upon receipt of
any payment of principal or interest in respect of a permanent Global
Subordinated Debenture representing the Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
the Global Subordinated Debenture as shown on the records of such Depositary or
its nominee. The Corporation also expects that payments by Participants to
owners of beneficial interests in such Global Subordinated Debenture held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by the
Corporation withus within 90 days
after we receive notice or otherwise become aware of the Corporationsituation, we will
issue individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. In addition, the Corporationwe may at any time and in itsour sole
discretion, determine not to have the Junior Subordinated Debentures represented
by one or more Global Subordinated Debenture and, in such event, we will issue
individual Junior Subordinated Debentures in exchange for the Global
Subordinated Debenture. Further, the Corporationif we so specifiesspecify with respect to the Junior
Subordinated Debentures, an owner of a beneficial interest in a Global
Subordinated Debenture representing Junior Subordinated Debentures may, on terms
acceptable to the
Corporation,us, the Debenture Trustee and the Depositary for such Global
Subordinated Debenture, receive individual Junior Subordinated Debentures in
exchange for such beneficial interests. In any such instance, an owner of a
beneficial interest in a Global Subordinated Debenture will be entitled to
physical delivery of individual Junior Subordinated Debentures registered in its
name. Individual Junior Subordinated Debentures so issued will be issued in
denominations, unless otherwise specified by the Corporation,us, of $25$10 and integral multiples
thereof.
Payment and Paying AgentsPAYMENT AND PAYING AGENTS
Payment of principal of and any interest on Junior Subordinated Debentures
will be made at the office of the Debenture Trustee in the City of New York or
at the office of such Paying Agent or Paying Agents as the Corporationwe may designate from
time to time, except that at theour option, of the Corporation payment of any interest may be made,
except in the case of Junior Subordinated Debentures in global form, (i) by
check mailed to the address of the Person entitled thereto as suchthe address
shall appearappears in the register for Junior Subordinated Debentures or (ii) by transfer
to an account maintained by the Person entitled thereto as specified in suchthe register, provided
that proper transfer instructions have been received by the relevant Record
Date. Payment of any interest on any Junior Subordinated Debenture will be made
to the Person in whose name such Junior Subordinated Debenture is registered at
the close of business on the Record Date for such interest. The CorporationDate. We may at any time designate
additional Paying
62
Agents or rescind the designation of any Paying Agent; however
the Corporationwe will at all times be required to maintain a Paying Agent in each place of
payment for the Junior Subordinated Debentures.
We expect that the Depositary or its nominee, upon receipt of any payment of
principal or interest in respect of a permanent Global Subordinated Debenture
representing the Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to
40
their respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on the records of such Depositary or its
nominee. We also expect that payments by Participants to owners of beneficial
interests in such Global Subordinated Debenture 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." These payments will be the responsibility of such
Participants.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by the Corporationus in trust, for the payment of the principal of or interest on any
Junior Subordinated Debenture and remaining unclaimed for two years after such
principal or interest has become due and payable shall,will, at theour request, of the Corporation, be repaid
to the Corporationus and the holder of such Junior Subordinated Debenture shallwill thereafter look,
as a general unsecured creditor, only to the Corporationus for payment thereof.
Modification of IndentureMODIFICATION OF INDENTURE
From time to time the Corporationwe and the Debenture Trustee may, without the consent of
the holders of Junior Subordinated Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of Junior Subordinated Debentures),
and qualifying, or maintaining the qualification of, the Indenture under the
Trust Indenture Act. The Indenture contains provisions permitting the Corporationus and the
Debenture Trustee, with the consent of the holders of a majority in principal
amount of Junior Subordinated Debentures, to modify the Indenture in a manner
affecting the rights of the holders of Junior Subordinated Debentures; provided
that no such modification may, without the consent of the holders of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity Date, or reduce the principal amount of the Junior Subordinated
Debentures or reduce the rate or extend the time of payment of interest thereon except
pursuant to the Corporation'sour right under the Indenture to defer the payment of interest as provided therein (see "--Option to
Extend Interest Payment Date") or
make the principal of, or interest on, the Junior Subordinated Debentures
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Junior Subordinated Debentures to institute suit for the
payment thereof, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture,Indenture; provided that so long as any of the Trust
Preferred Securities remain outstanding, no such modification may be made that
adversely affects the holders of such Trust Preferred Securities, in any material respect, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the Trust Preferred Securities unless and until the
principal amount of the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied. If the consent of the Property Trustee, as holder of the Junior
Subordination Debentures, is required under the Indenture with respect to
amendments, waivers or supplements of the Indenture or the Junior Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendments, waivers or supplements and
shall vote as directed by a majority in Liquidation Amount of the Trust
Securities voting together as a single class. Where a consent under the
Indenture would require the consent of each holder of Junior Subordinated
Debentures, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Trust Preferred Securities. In addition, the Corporationwe and
the Debenture Trustee may execute, without the consent of any holder of Junior
Subordinated Debentures, any supplemental Indenture for the purpose of creating
any new series of Junior Subordinated Debentures.
6341
Debenture Events of DefaultDEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whateverDefault," regardless of the reason for such Debenture Event of
Default and whether it shall beis
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree, or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i)regulation:
- failure for 30 days to pay any interest on the Junior Subordinated
Debentures or any otherOther Debentures, when due (subject to the deferral of
any due date in the case of an ExtensionDeferral Period);
or
(ii)- failure to pay any principal on the Junior Subordinated Debentures or any
otherOther Debentures when due whether at maturity, upon redemption, by
declaration of acceleration of maturity or otherwise;
or
(iii)- failure to observe or perform in any material respect certain other covenants contained in the
Indenture for 9060 days after written notice to the
Corporationus from the Debenture
Trustee or the holders of at least 25% in aggregate outstanding principal
amount of Junior Subordinated Debentures;
or
(iv)- certain events of our bankruptcy, insolvency or reorganization of the
Corporation.reorganization.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee.Trustee or exercising any trust or power conferred on
the Debenture Trustee, with respect to the Junior Subordinated Debentures. The
Debenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures may declare the principal
amount of, and any interest on, the Junior Subordinated Debentures to be due and
payable immediately upon a Debenture Event of Default.Default; provided that, in the
case of certain events of bankruptcy, insolvency or reorganization, such amounts
shall automatically become due and payable. If the Debenture Trustee or such holders
of suchthe Junior Subordinated Debentures fail to make suchthe declaration, the Property
Trustee or the holders of at least 25% in the aggregate Liquidation Amount of
the Trust Preferred Securities shallwill have suchthe right. The holders of a majority in
aggregate outstanding principal amount of the Junior Subordinated Debentures may
annul suchthe declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee. Should the holders
of the Junior Subordinated Debentures fail to annul such declaration and waive
suchthe default, the holders of a majority in aggregate Liquidation Amount of the
Trust Preferred Securities shall have suchthe right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of all the Junior
Subordinated Debentures, waive any past default, except a default in the payment
of principal on or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
64
In case a Debenture Event of Default shall occuroccurs and beis continuing as to Junior
Subordinated Debentures, the Property Trustee will have the right to declare the
principal of and the interest on such Junior Subordinated Debentures, and any
other amounts payable under the Indenture, to be forthwith
due and payable and to enforce
its other rights as a creditor with respect to such Junior Subordinated
Debentures.
42
The Indenture requires the annual filing by the Corporationus with the Debenture Trustee of
a certificate as to the absence of certain defaults under the Indenture.
Enforcement of Certain Rights by Holders of Trust Preferred SecuritiesENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Debenture Event of Default shall havehas occurred and beis continuing and shall beis
attributable to theour failure of the Corporation to pay the principal of or interest on the Junior
Subordinated Debentures on the due date, a holder of Trust Preferred Securities
may institute a Direct Action. The CorporationWe may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Trust Preferred Securities. If the right to bring a Direct Action
is removed, the Trust may become subject to the reporting obligations under the
Exchange Act.Act and the rules and regulations thereunder. Notwithstanding any
payments made to a holder of Trust Preferred Securities by the Corporationus in connection with
a Direct Action, the Corporation shallwe will remain obligated to pay the principal of or interest on
the Junior Subordinated Debentures, and the Corporation shallwe will be subrogated to the rights of
the holder of such Trust Preferred Securities with respect to payments on the
Trust Preferred Securities to the extent of any payments made by the Corporationus to such
holder in any Direct Action.
The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures, other than those set forth in the preceding paragraph,
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Trust Preferred Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other TransactionsCONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shallwe will not consolidate with or merge into any
other Person or convey, transfer or lease its properties as an entirety, or
substantially as an entirety, to any Person, and nounless: (i) we are the surviving
Person, shall
consolidate with or merge into the CorporationPerson formed by or convey,surviving any consolidation or merger (if
other than us) or to which the sale, conveyance, transfer or lease its
properties as an entirety or substantially as an entirety to the Corporation,
unless: (i) in case the Corporation consolidates with or merges into anotherof property
is made is a Person or conveys or transfers its properties substantially as an entirety to
any Person, the successor Person is organized and existing under the laws of the United States
or any Statestate thereof or the District of Columbia,Columbia; (ii) upon any consolidation,
merger, sale, conveyance, transfer or lease, the due and such successor Person
expressly assumespunctual payment of the
Corporation's obligationsprincipal of and interest on the Junior Subordinated Debentures; (ii) immediatelyDebentures according to
their tenor and the due and punctual performance and observance of all the
covenants and conditions of the Indenture to be kept or performed by us will be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Debenture Trustee executed and delivered to the Debenture Trustee by the
Person formed by the consolidation, or into which we will have been merged, or
by the Person which will have acquired our property, as the case may be;
(iii) after giving effect thereto,to the consolidation, merger, sale, conveyance,
transfer or lease, no DebentureDefault or Event of Default, and noor any event which, after
notice or lapse of time or both, would become a DebentureDefault or an Event of Default,
shallwill have occurred and be continuing; (iv) the consolidation, merger, sale,
conveyance, transfer or lease does not cause the Junior Subordinated Debentures
to be downgraded by a nationally recognized statistical rating organization; and
(iii)(v) certain other conditions as prescribed in the Indenture are met.
65
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporationus that may adversely affect holders of the Junior
Subordinated Debentures.
Satisfaction and DischargeSATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and the Corporation
depositswe deposit or causescause to
be deposited with the Debenture Trustee funds, in trust, for the purpose and in
an amount
43
sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal and interest to the Stated Maturity Date, then
the Indenture will cease to be of further effect (except as to the Corporation'sour obligations
to pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Corporationwe will be deemed
to have satisfied and discharged the Indenture. CovenantsWe will only be permitted to
take such action if, among other things, we deliver to the Debenture Trustee an
opinion of counsel (who may be counsel for us) to the Corporation
The Corporation will covenant ineffect that the Indenture, as toholders of
the Junior Subordinated Debentures that if and so long as (i) the Trust is the holder of
all such Junior Subordinated Debentures, (ii) a Tax Event in respect of the
Trust has occurred and is continuing and (iii) the Corporation has elected, and
haswill not revoked such election, to pay Additional Sums (as defined under
"Description of the Trust Preferred Securities--Redemption") in respect of the
Trust Preferred Securities, the Corporation will pay to the Trust such
Additional Sums. The Corporation will also covenant, as to the Junior
Subordinated Debentures, (i) to maintain directlyrecognize income, gain or indirectly 100% ownership
of the Common Securities of the Trust to which Junior Subordinated Debentures
have been issued, provided that certain successors which are permitted pursuant
to the Indenture may succeed to the Corporation's ownership of the Common
Securities, (ii) not to voluntarily terminate, wind up or liquidate the Trust
except as prior approval of the Federal Reserve if then so required under
applicable capital guidelines or policies of the Federal Reserve, and except (a)
in connection with a distribution of Junior Subordinated Debentures to the
holders of the Trust Preferred Securities in liquidation of the Trust or (b) in
connection with certain mergers, consolidations, or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause the Trust to remain
classified as a grantor trust and not as an association taxable as a corporationloss for United States
federal income tax purposes.
66
Governing Lawpurposes as a result of our actions and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
Information Concerning the Debenture TrusteeINFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall havehas and will be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
6744
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the CorporationThe Bank of New York (the
"Guarantee Trustee") and us concurrently with the issuance by the Trust of the
Trust Preferred Securities for the benefit of the holders from time to time of
the Trust Preferred Securities. The Bank of New York will act as Guarantee Trustee under the
Guarantee for purposes of compliance with the Trust Indenture Act, and the Guarantee will be qualified as an Indenture
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Guarantee including the definitions therein of certain terms,
and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectusprospectus forms a part.
The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Trust Preferred Securities.
GeneralGENERAL
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
The CorporationWe will irrevocably agree to pay in full on a subordinated basis, to the extent set forth herein, the
Guarantee Payments (as defined below) to the holders of the Trust Preferred
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert other than the defense of
payment. The following payments with respect to the Trust Preferred Securities,
to the extent not paid by or on behalf of the Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accumulatedaccrued and unpaid Distributions
required to be paid on the Trust Preferred Securities, to the extent that the
Trust has funds on hand legally available therefor at such time, (ii) the
applicable redemption price with respect to the Trust Preferred Securities
called for redemption, to the extent that the Trust has funds on hand legally
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Trust (other than in connection
with the distribution of the Junior Subordinated Debentures to holders of the
Trust Preferred Securities or the redemption of all Trust Preferred Securities),
the lesser of (a) the Liquidation Distribution, to the extent the Trust has
funds legally available therefor at the time, and (b) the amount of assets of
the Trust remaining available for distribution to holders of Trust Preferred
Securities after satisfaction of liabilities to creditors of the Trust as
required by applicable law. The Corporation'sOur obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Corporationus to the holders of the
Trust Preferred Securities or by causing the Trust to pay such amounts to such
holders.
If the Corporation does not make interest payments on the Junior
Subordinated Debentures held by the Trust, the Trust will not be able to pay
Distributions on the Trust Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior and Subordinated Indebtedness to the extent provided
therein. See "--Status of the Guarantee." Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such
68
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Guarantee effectively will be subordinated
to all existing and future liabilities of the Corporation's subsidiary and all
liabilities of any future subsidiaries of the Corporation. Claimants should look
only to the assets of the Corporation for payments under the Guarantee. See
"Description of the Junior Subordinated Debentures--General." The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior and Subordinated Indebtedness, whether under the
Indenture, any other indenture that the Corporation may enter into in the future
or otherwise.
The CorporationWe will, through the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures and the Indenture, taken together, fully, irrevocably and
unconditionally guarantee all of the Trust's obligations under the Trust
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. See "Relationship
Among the Trust Preferred Securities, the Junior Subordinated Debentures and the
Guarantee."
Status ofSTATUS OF THE GUARANTEE
If we do not make interest payments on the GuaranteeJunior Subordinated Debentures
held by the Trust, the Trust will not be able to pay Distributions on the Trust
Preferred Securities and will not have funds legally available therefor. The
Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness in the same manner asIndebtedness. The Guarantee will rank equal to the Junior
Subordinated Debentures.Debentures, Other Debentures (including the junior subordinated
debentures issued in connection with the issuance of the trust preferred
securities of Trust I in May 1997), the guarantee on the Common Securities, any
other guarantee on future issuances of trust preferred securities and any senior
preferred stock which may be hereafter issued by the Company. Because we are a
holding company,
45
our right to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise is subject to the
prior claims of creditors of that subsidiary, except to the extent we may be
recognized as a creditor of that subsidiary. Accordingly, our obligations under
the Guarantee effectively will be subordinated to all existing and future
liabilities of our subsidiaries and all liabilities of any of our future
subsidiaries. Claimants should look only to our assets for payments under the
Guarantee. For more information, please refer to "Description of Junior
Subordinated Debentures--General."
The Guarantee will constitute a guarantee of payment and not of collection,
(i.e.,which means the guaranteed party may institute a legal proceeding directly
against the Corporationus to enforce its rights under the Guarantee without first instituting a
legal proceeding against any other person or entity).entity. The Guarantee will be held
for the benefit of the holders of the Trust Preferred Securities. 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 to the holders of the
Trust Preferred Securities of the Junior Subordinated Debentures. The Guarantee
does not place a limitation on the amount
of additionallimit our ability to incur or issue other secured or unsecured debt,
including Senior and Subordinated Indebtedness, whether under the Indenture, any
other indenture that we may be incurred byenter into in the Corporation.
Events of Defaultfuture or otherwise.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon theour failure of the
Corporation to
perform any of itsour payment or other obligations thereunder.obligations. The holders of not less than a majority in
aggregate Liquidation Amount of the Trust 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 or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee. 69
Any holder of the Trust Preferred Securities may institute
a legal proceeding directly against the Corporationus to enforce itsthe Guarantee Trustee's rights
under the Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. The Corporation,Notwithstanding the
foregoing, if we fail to make a payment under the Guarantee, a holder of Trust
Preferred Securities may directly institute a proceeding against us for
enforcement of the Guarantee for payment to the holder of the Trust Preferred
Securities of the holder's pro rata portion of the principal of or interest on
the Junior Subordinated Debentures on or after the due dates specified in the
Junior Subordinated Debentures.
We, as guarantor, will be required to file annually with the Guarantee
Trustee a certificate as to whether or not the Corporation iswe are in compliance with all the
conditions and covenants applicable to itus under the Guarantee.
Amendments and AssignmentAMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect the rights
of holders of the Trust Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of a majority of the aggregate Liquidation Amount of such outstanding
Trust Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Trust Preferred
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees and agreements contained in the
Guarantee Agreement shall bind theour successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders of the Trust
Preferred Securities then outstanding.
Termination of the GuaranteeTERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the redemption price of the Trust Preferred Securities, upon full
payment of the Liquidation Amount payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee will continue to be effective or will be
46
reinstated, as the case may be, if at any time any holder of the Trust Preferred
Securities must restore payment of any sums paid under the Trust Preferred
Securities or the Guarantee.
Information Concerning the Guarantee TrusteeINFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Corporationus in performance of the Guarantee, will undertake to perform only
such duties as are specifically set forth in the Guarantee and, in case a
default with respect to the Guarantee has occurred, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee will be under no obligation to exercise any of the powers vested in it
by the Guarantee at the request of any holder of the Trust Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Governing LawGOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
70
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Trust
Preferred Securities and the Junior Subordinated Debentures. The Trust Preferred
Securities and the Junior Subordinated Debentures will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global certificates will be
issued for the Trust Preferred Securities and the Junior Subordinated Debentures
and will be deposited with the Depositary.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, as a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary 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. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Commission.SEC.
Purchases of Trust Preferred Securities or Junior Subordinated Debentures
within the Depositary system must be made by or through Direct Participants,
which will receive a credit for the Trust Preferred Securities or Junior
Subordinated Debentures on the Depositary's records. The ownership interest of
each actual purchaser of each Trust Preferred Securities and each Subordinated
Debenture ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchases, but we expect that
Beneficial Owners are
expected towill 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 Trust
Preferred Securities or Junior Subordinated Debentures. Transfers
47
of ownership interests in the Trust Preferred Securities or Junior Subordinated
Debentures 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 interests in Trust Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for the Junior Subordinated Debentures is discontinued.
The Depositary has no knowledge of the actual Beneficial Owners of the Trust
Preferred Securities or Junior Subordinated Debentures; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust Preferred Securities or Junior
71
Subordinated Debentures are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Trust Preferred Securities or Junior Subordinated Debentures. If less than
all of the Trust Preferred Securities or the Junior Subordinated Debentures are
being redeemed, the DepositoryProperty Trustee will determine by lot or pro rataPRO RATA the
amount of the Trust Preferred Securities of each Direct Participant to be
redeemed.
Although voting with respect to the Trust Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Trust
Preferred Securities or Junior Subordinated Debentures, as applicable, in those
instances in which a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities or Junior
Subordinated Debentures. Under its usual procedures, the Depository would mail
an omnibus proxy (the "Omnibus Proxy") to the relevant Issuer Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts such
Trust Preferred Securities or Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Trust Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Issuer Trustee to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe that it
will not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of the
Depositary, the relevant Issuer Trustee, the Trust or the Corporation,us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the relevant
Issuer Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Trust Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Issuer Trustee and the Corporation.us. In the event that a successor securities depositary is
not obtained, definitive Trust Preferred Securities or Junior Subordinated
Debentures certificates representing such Trust Preferred Securities or Junior
Subordinated Debentures are required to be printed and delivered. The Corporation,We, at itsour
option,
72
may decide to discontinue use the system of book-entry transfers through
the Depositary (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Trust Preferred
Securities or aggregate principal amount of Junior Subordinated Debentures may
determine to discontinue the system of
48
book-entry transfers through the Depositary. In any such event, definitive
certificates for such Trust Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Trust and
the Corporationwe believe to be accurate but neither the Trust and the Corporationnor we assume noany responsibility
for the accuracy thereof. Neither the Trust nor the
Corporation haswe have any responsibility for
the performance by the Depositary or its Participants of their respective
obligations as described herein or under the rules and procedures governing
their respective operations.
73
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional GuaranteeFULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be irrevocably guaranteed by the Corporationus as and to
the extent set forth under "Description of Guarantee." Taken together, the Corporation'sour
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement and the Guarantee will provide, in the aggregate, a full, irrevocable
and unconditional guarantee of payments of Distributions and other amounts due
on the Trust Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Trust Preferred Securities. If and to the extent
that the Corporation doeswe do not make the required payments on the Junior Subordinated Debentures,
the Trust will not have sufficient funds to make the related payments, including
Distributions, on the Trust Preferred Securities. The Guarantee will not cover
any such payment when the Trust does not have sufficient funds on hand legally
available therefor. In such event, the remedy of a holder of Trust Preferred
Securities is to institute a Direct Action. TheOur obligations of the Corporation under the Guarantee
will be (i) subordinate and junior in right of payment to all Senior and
Subordinated Indebtedness.
SufficiencyIndebtedness, except for those liabilities made equal or
subordinate to the Guarantee by their terms, (ii) PARI PASSU to all other
guarantees issued or to be issued by us with respect to other similar trust
preferred securities, including the issuance of Payments$28.75 million of trust
preferred securities of Trust I in May 1997; (iii) senior to our capital stock
and (iv) effectively subordinated to the liabilities and obligations of our
subsidiaries.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Trust Preferred Securities,
primarily because:
(i) the aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate Liquidation Amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Junior
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Trust Securities; (iii) the
Corporation, as Sponsor,we shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under suchthe Trust Securities; and (iv) the Trust
Agreement will provide that the Trust is not authorized to engage in any
activity that is not consistent with the limited purposes thereof.
Enforcement Rights of Holders of Trust Preferred SecuritiesENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any Trust Preferred Security may institute a legal proceeding
directly against the Corporationus to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
49
A default or event of default under any Senior and Subordinated Indebtedness
would not constitute a default or Event of Default under the Trust Agreement.
However, in the event of 74
payment defaults under, or acceleration of, Senior and
Subordinated Indebtedness, the subordination provisions of the Indenture will
provide that no payments may be made in respect of the Junior Subordinated
Debentures until such Senior and Subordinated Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on Junior Subordinated Debentures would constitute an Event of
Default under the Trust Agreement.
Limited Purpose of the TrustLIMITED PURPOSE OF THE TRUST
The Trust Preferred Securities will represent preferred beneficial interests
in the Trust, and the Trust exists for the sole purpose of issuing and selling
the Trust Securities, using the proceeds from the sale of the Trust Securities
to acquire the Junior Subordinated Debentures and engaging in only those other activities
that are necessary advisable or incidental thereto. A principal difference between the
rights of a holder of a Trust Preferred Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture will
be entitled to receive from the Corporationus the principal amount of and interest on Junior
Subordinated Debentures held, while a holder of Trust Preferred Securities is
entitled to receive Distributions from the Trust (or, in certain circumstances,
from the Corporationus under the Guarantee) if and to the extent the Trust has funds on hand
legally available for the payment of such Distributions.
Rights Upon TerminationRIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Trust Securities, upon any voluntary or involuntary termination,dissolution, winding-up or
liquidation of the Trust, after satisfaction of the liabilities of creditors of
the Trust as required by applicable law, the holders of the Trust Preferred
Securities will be entitled to receive, out of assets held by the Trust, the
Liquidation Distribution in cash. See "Description of Trust Preferred
Securities
Liquidation of the Trust and DistributionSecurities--Distribution of Junior Subordinated Debentures." Upon anyour voluntary
or involuntary liquidation or bankruptcy, of the Corporation, the Property Trustee, as holder of the
Junior Subordinated Debentures, would be a subordinated creditor of the Corporation,ours,
subordinated in right of payment to all Senior and Subordinated Indebtedness as
set forth in the Indenture, but entitled to receive payment in full of principal
and interest, before any stockholders of the Corporationour stockholders receive payments or distributions.
Since the
Corporationwe will be the guarantor under the Guarantee and will agree to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's obligations
to the holders of its Trust Securities), the positions of a holder of Trust
Preferred Securities and a holder of Junior Subordinated Debentures relative to
other creditors and to our stockholders of the Corporation in the event of our liquidation or
bankruptcy of the Corporation are expected towill be substantially the same.
7550
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GeneralGENERAL
In the opinion of Elias, Matz, Tiernan & Herrick L.L.P., special federal
income tax counsel to the CorporationTrust and the Trustus ("Tax Counsel"), the following is a
summary of certain of the material United States federal income tax consequences
of the purchase, ownership and disposition of Trust Preferred Securities held as
capital assets by a holder who purchases such Trust Preferred Securities upon
initial issuance. It does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
United States Alien Holders (as defined below) engaged in a U.S. trade or
business or persons that will hold the Trust 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. This summary 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 Trust
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 that may be applicable to the Trust
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and the
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. An opinion of
Tax Counsel is not binding on the IRSInternal Revenue Service ("IRS") or the
courts. 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. Moreover, no assurance can
be given that the opinions expressed herein will not be challenged by the IRS
or, if challenged, that such a challenge would not be successful.
The United States federal income tax discussion set forth below is included
for general information only and may not be applicable depending upon a holder's
particular situation. Holders should consult their tax advisors with respect to
the tax consequences to them of the purchase, ownership and disposition of the
trust preferred securities, including the tax consequences under state, local,
foreign and other tax laws and the possible effects of changes in united states
federal or other tax laws.
Classification of the Junior Subordinated DebenturesTHE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures, Tax
Counsel will renderhas rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the Corporation. The Corporation,our indebtedness. We, the Trust and
the holders of the Trust Preferred Securities (by acceptance of a beneficial
interest in a Trust Preferred Security) will agree to treat the Junior
Subordinated Debentures as our indebtedness of the Corporation for all United States federal income
tax purposes.
76
Classification of the TrustCLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Tax
Counsel will renderhas rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Trust Agreement
and the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, 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, each holder of Trust Preferred Securities generally will be considered
the owner of an undivided interest in the Junior Subordinated Debentures, and
each
51
holder will be required to include in its gross income a pro rata share of any
interest (or OIDoriginal issue discount ("OID") accrued) with respect to its
allocable share of those Junior Subordinated Debentures.
Interest Income and Original Issue DiscountINTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issuedapplicable Treasury regulations (the "Regulations") applicable
to, if the terms and
conditions of a debt instruments issued on or after August 13, 1996, a "remote" contingencyinstrument make the likelihood that stated interest will
not be timely paid a "remote" contingency, such contingency will be ignored in
determining whether a debt instrument is issued with OID. The Corporation believesWe believe that the
likelihood of itsour exercising itsour option to defer payments of interest is "remote" sinceremote,
because exercising thatthe option would, among other things, prevent the
Corporationus from
declaring dividends on any class of itsour equity securities. Accordingly, the Corporation intends to take the position, basedBased on the advice
ofthis
conclusion by us, Tax Counsel has rendered its opinion that the Junior
Subordinated Debentures will not be considered to be issued with OID and,
accordingly, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder as ordinary income at the time it is paid or accrued
in accordance with such holder's method of tax accounting.
Under the Regulations, if the Corporationwe were to exercise itsour option to defer payments
of stated interest, the Junior Subordinated Debentures would, at thatsuch time, be
treated as issuedredeemed and reissued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
related thereto would not be reported as taxable income. Consequently, a holder
of Trust Preferred Securities would be required to include in gross income OID
even though the Corporationwe would not make actual cash payments during an Extensiona Deferral Period. Moreover, under the Regulations, if the option to defer the payment of
interest was determined not to be "remote," the Junior Subordinated Debentures
would be treated as having been originally issued with OID. In such event, all
of a holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
77
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein. If the option to defer
the payment of interest was determined not to be "remote," the Junior
Subordinated Debentures would be treated as having been originally issued with
OID. In that event, all of a holder's taxable interest income with respect to
the Junior Subordinated Debentures would be accounted for on an economic accrual
basis regardless of the holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
CHARACTERIZATION OF INCOME
Because income on the Trust Preferred Securities will constitute interest or
OID, corporate holders of the Trust Preferred Securities will not be entitled to
a dividends-received deduction with respect to any income recognized with
respect to the Trust Preferred Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
The CorporationDISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
We will have the right at any time to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Such aThe distribution, for United States federal income tax purposes,
would be treated as a nontaxable event to each holder, and each holder would
receive an aggregate tax basis in the Junior Subordinated Debentures equal to
suchthe holder's aggregate tax basis in its Trust Preferred Securities. AFor United
States federal income tax purposes, a holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Trust Preferred Securities were held by suchthe holder.
Under certain circumstances described herein, (see "Description of Trust
Preferred Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Trust Preferred Securities. Such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Trust Preferred Securities, and a holder
could recognize gain or loss as if it sold such redeemed Trust Preferred
Securities for cash.
See "--Sales of Trust
Preferred Securities."
Sales of Trust Preferred Securities52
SALES OF TRUST PREFERRED SECURITIES
A holder that sells Trust Preferred Securities (including a redemption of
the Trust Preferred Securities by the Corporation)us) will recognize gain or loss equal to the
difference between its adjusted tax basis in the Trust Preferred Securities and
the amount realized on the sale of such Trust Preferred Securities (other than
with respect to accrued and unpaid interest which has not yet been included in
income, which will be treated as ordinary income). A holder's adjusted tax basis
in the Trust Preferred Securities generally will be its initial purchase price
increased by OID (if any) previously includable in such holder's gross income to
the date of disposition and decreased by payments (if any) received on the Trust
Preferred Securities in respect of OID. SuchThe gain or loss generally will be a
capital gain or loss and generally will be a long-term capital gain or loss if
the Trust Preferred Securities have been held for more than one year.
A holder who disposes of the Trust Preferred Securities between record dates
for payments of distributions thereon will be required to include in income (to
the extent not previously included in income) as ordinary income amounts
attributable to accrued and unpaid interest on the Junior Subordinated
Debentures through the date of disposition and the amount realized on
disposition excludes the portion of the sales price treated as interest. To the
extent the selling price is less than the holder's adjusted tax basis, a holder
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.
The Trust Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debenture are deemed to have been issued with OID) 78
who disposes of
his Trust Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income (i.e., interest or, if applicable, OID), and to add suchthe amount
to his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest) a holder 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.
Proposed Tax Legislation
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that would,
among other things, deny an issuer a deduction for United States federal income
tax purposes for the payment of interest on instruments with characteristics
similar to the Junior Subordinated Debentures. If the proposed legislation were
enacted in its current form, it is not expected to apply to the Junior
Subordinated Debentures since the proposed effective date for this provision is
the date of first committee action. There can be no assurances, however, that
the proposed legislation, if enacted, or similar legislation enacted after the
date hereof would not adversely affect the tax treatment of the Junior
Subordinated Debentures, resulting in a Tax Event. The occurrence of a Tax Event
may result in the redemption of the Junior Subordinated Debentures for cash, in
which event the holders of the Trust Preferred Securities would receive cash in
redemption of their Trust Preferred Securities. See "Description of Trust
Preferred Securities--Redemption" and "Description of Junior Subordinated
Debentures--Special Event Prepayment."
United States Alien HoldersUNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Trust Preferred Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for federal income tax purposes, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includable in its gross income for federal income tax purposes
without regard to its source or (iv) a trust over which (A) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (B) one or more United States trusteespersons have the authority to
control all substantial decisions of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Trust Preferred Security
who or which is a United States Alien Holder will not be subject to United
States federal withholding tax; provided that, (a) the beneficial owner of the
Trust Preferred Security does not actually or constructively own 10 percent or
more of the total combined voting power of all of our classes of stock of the
Corporation
79
entitled
to vote, (b) the beneficial owner of the
53
Trust Preferred Security is not a controlled foreign corporation that is related
to the Corporationus through stock ownership, (c) the beneficial owner is not a bank whose
receipt of interest is described in Section 881(c)(3)(A) of the Code, and
(c)(d) either (A) the beneficial owner of the Trust Preferred Security certifies to
the Trust or its agent, under penalties of perjury, that it is not a United States holderU.S. Holder
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and holds
the Trust Preferred Security in such capacity, certifies to the Trust or its
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Trust Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Trust Preferred Security. Under Treasury
regulations finalized in 1997, the certification requirement referred to in
clause (i)(d) above may be satisfied with other documentary evidence for
interest paid after December 31, 2000 with respect to offshore accounts or
through certain foreign intermediaries.
POTENTIAL TAX LAW CHANGES
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect theour ability of the Corporation to deduct the interest payable on the
Junior Subordinated Debentures. Moreover, any such legislation could adversely
affect United States Alien Holders by characterizing income derived from the
Junior Subordinated Debentures as dividends, generally subject to a 30% income
tax (on a withholding basis) when paid to a United States Alien Holder, rather
than as interest which, as discussed above, is generally exempt from income tax
in the hands of a United States Alien Holder.
Information Reporting to HoldersINFORMATION REPORTING TO HOLDERS
Generally, income on the Trust Preferred Securities will be reported to
holders on FormsInternal Revenue Form 1099, which forms should be mailed to holders
of Trust Preferred Securities by January 31 following each calendar year.
BACKUP WITHHOLDING
Backup Withholdingwithholding of United States federal income tax at a rate of 31% may
apply to payments made in respect of the Trust Preferred Securities to
registered owners who are not "exempt recipients" and who fail to provide
certain identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are not
exempt recipients, whereas corporations and certain other entities generally are
exempt recipients. Payments made on, and proceedsin respect of the Trust Preferred Securities to
a U.S. Holder must be reported to the IRS, unless the U.S. Holder is an exempt
recipient or establishes an exemption. Compliance with the identification
procedures described in the "United States Alien Holders" section would
establish an exemption from backup withholding for those United States Alien
Holders who are not exempt recipients.
In addition, upon the sale of the Trust Preferred Securities to (or through)
a broker, the broker must withhold 31% of the entire purchase price, unless
either (i) the broker determines that the seller is a corporation or other
exempt recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a United States Alien Holder,
certifies that such seller is a United States Alien Holder (and certain other
conditions are met). Such a sale must also be reported by the broker to the IRS,
unless either (i) the broker determines that the seller is an exempt recipient
or (ii) the seller certifies its United States Alien Holder status (and certain
other conditions are met). Certification of the registered owner's United States
Alien Holder status would be made normally on an Internal Revenue Service
Form W-8 under penalties of perjury, although in certain cases it may be
subjectpossible to a "backup" withholding tax of 31 percent unless the
holder complies with certain identification requirements. Any withheld amounts
will be allowed as a credit against the holder's United States federal income
tax, provided the required information is provided to the IRS.
80submit other documentary evidence.
54
ERISA CONSIDERATIONS
Each ofWe, as the Corporation (the obligor with respect to the Junior Subordinated Debentures held
by the Trust),Trust, and itsour affiliates and the Property Trustee may be considered a
"party in interest" (within the meaning of ERISA)the Employment Retirement Income
Security Act of 1974, as amended ("ERISA")) or a "disqualified person" (within
the meaning of Section 4975 of the Code) with respect to many Plansemployee benefit
plans that are subject to ERISA andand/or certain employee benefit-related
provisions of the Code.Code ("Plans"). The purchase and/or holding of Trust Preferred
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975 of the Code
(including individual retirement arrangements and other plans described in
Section 4975(e)(1) of the Code) and with respect to which the Corporation,we, the Property
Trustee or any affiliate is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Trust Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTCE 96-23 (an exemption for certain transactions determined by an
in-house asset manager).
In addition, a Plan fiduciary
consideringorder to avoid prohibited transactions that may result from the purchase
and/or holding of the Trust Preferred Securities, shouldeach purchaser of a Trust
Preferred Security shall be awaredeemed to represent to us and the Property Trustee
that either (a) no part of the funds being used to pay the purchase price of the
Trust Preferred Security constitutes "plan assets," or (b) if the funds being
used to pay the purchase price of the Trust Preferred Security include "plan
assets," that its purchase and holding of the Trust Preferred Security will not
result in a prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code (or, in the case of a governmental plan, any substantially similar
Federal, State or local law) for which an exemption is not available.
The U.S. Department of Labor has promulgated a regulation, 29 C.F.R.
Section 2510.3-101 (the "Plan Asset Regulation"), describing what constitutes
the assets of a Plan with respect to the Plan's investment in an entity for
purposes of certain provisions of ERISA and the Code, including the fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests in an "equity interest" of an entity that is neither a "publicly offered
security" nor a security issued by an investment company registered under the
Investment Company Act, the Plan's assets include both the equity interest and
an undivided interest in each of the entity's underlying assets, unless it is
established that the entity is an "operating company" or that equity
participation in the entity by "benefit plan investors" is not "significant."
Because the Trust Preferred Securities will represent beneficial interests
in the Trust, the Trust Preferred Securities are likely to be considered equity
interests in the Trust for purposes of the Plan Asset Regulation, with the
result that the assets of the Trust are likely to be treated as "plan assets" of
the investing plans for purposes of ERISA and Section 4975 of the Code, unless
the Trust Preferred Securities qualify as "publicly offered securities."
A publicly-offered security is a security that is (a) freely transferable,
(b) part of a class of securities that is owned, immediately subsequent to the
initial offering, by 100 or more investors who were independent of the issuer
and of one another ("Independent Investors") and (c) either is (i) part of a
class of securities registered under section 12(b) or 12(g) of the Exchange Act,
or (ii) sold to the plan as part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act and the
class of securities of which such security is a part is registered under
55
the Exchange Act within 120 days (or such later time as may be considered "plan assets" for ERISA purposes. Inallowed by the
Commission) after the end of the fiscal year of the issuer during which the
offering of such event, any persons exercising discretion with respectsecurities to the Junior Subordinated
Debenturespublic occurred. For purposes of the 100
Independent Investor criterion, the Trust Preferred Securities should be deemed
to be a "class" of securities that would be tested separately from any other
securities that may become fiduciary parties in interest or disqualified persons with
respect to investing Plans. In order to avoid certain prohibited transactions
under ERISA andbe issued by the CodeTrust. It is anticipated that could thereby result, each investing Plan, by
purchasingthe Trust
Preferred Securities will meet the foregoing criteria for treatment as
"publicly-offered securities." No restrictions will be imposed on the transfer
of the Trust Preferred Securities. It is expected that the Trust Preferred
Securities will be deemed to have directedheld by at least 100 Independent Investors at the Trust to invest in the Junior Subordinated Debentures and to have consented to
the appointmentconclusion
of the Property Trustee. In this regard, it shouldinitial public offering although no assurance can be notedgiven, and no
monitoring or other measures will be taken to ensure, that in an Event of Default, the Corporation may not remove the Property
Trustee without the approval of a majority of the holders of the Trust Preferred
Securities. Further, prior to an Event of Default with respect to the Junior
Subordinated Debentures, the Property Trustee will have only limited custodial
and ministerial authority with respect to Trust assets.
A Plan fiduciary should consider whether the purchase of Trust Preferred
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authoritycondition is
permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of Section 3(38) of ERISA) for the purposes of delegation of
authority under ERISA.
The sale of investments to plans is in no respect a representation by the
trust, the corporation, the property trustee, the Underwriters or any other
person associated with the sale ofmet. Also, the Trust Preferred Securities will be sold as part of an offering
pursuant to an effective registration statement under the Act and then will be
timely registered under the Exchange Act. As a result the Trust Preferred
Securities should qualify as publicly-offered securities and therefore will be
eligible for purchase by Plans.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Trust Preferred Securities on behalf or with "plan assets" of any
Plan should consult their own counsel regarding whether the Trust assets
represented by the Trust Preferred Securities would be considered "plan assets,"
the consequences that would apply if the Trust's assets were considered "plan
assets," and the possibility of exemptive relief from the prohibited transaction
rules. In addition, based on the reasoning of the United States Supreme Court's
decision in JOHN HANCOCK MUT. LIFE. INS. CO. V. HARRIS TRUST AND SAV. BANK, 510
U.S. 86 (1993), under certain circumstances assets in the general account of an
insurance company may be deemed to be plan assets for certain purposes, and
under such securities meet all relevant legal requirements with respect to investments by
plans generally or any particular plan, or that such securities are otherwise
appropriate for plans generally or any particular plan. Any
81
purchaser proposing to acquirea reasoning a purchase of the Trust Preferred Securities with assets
of an insurance company's general account may subject the insurance company to
the prohibited transaction and other fiduciary responsibility rules of ERISA
with respect to such assets. Insurance company general account investors should
also consider the effect of the enactment of Section 401(c) of ERISA and any
planregulations issued under Section 401(c). Finally, Plan fiduciaries and other
Plan investors should consultconsider whether the investment (i) satisfies the
diversification requirement of ERISA or other applicable law, (ii) is in
accordance with its counsel.
82the Plan's governing instruments, and (iii) is prudent in light
of the "Risk Factors" and other factors discussed herein.
THE SALE OF TRUST PREFERRED SECURITIES TO PLANS IS IN NO RESPECT A
REPRESENTATION BY THE TRUST, US, THE PROPERTY TRUSTEE, THE UNDERWRITER OR ANY
OTHER PERSON ASSOCIATED WITH THE SALE OF THE TRUST PREFERRED SECURITIES THAT
SUCH SECURITIES MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS
BY PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE TRUST PREFERRED SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT
WITH ITS COUNSEL.
56
UNDERWRITING
Legg Mason Wood Walker, Incorporated, and Piper Jaffray Inc. (the
"Underwriters"), haveas underwriter, has agreed, subject to
the terms and conditions of an
Underwriting Agreement to be entered into by the Underwriters, the Corporationits underwriting agreement with Independent and the
Trust, to purchase from the Trust 1,000,000 Trust Preferred Securities.
The Underwriters have committed to purchase and pay for all such Trust Preferred Securities at the
initial public offering price less the underwriting discounts and commissions
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 Trust
Preferred Securities are purchased by the underwriter pursuant to the
underwriting agreement, all such securities must be so purchased. The
Underwritersunderwriter may reject orders in whole or in part and withdraw, cancel, or
modify the offer without notice. Each of Independent and the Trust has 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 made in respect
thereof.
The underwriter may also impose a penalty bid on certain selling group
members. This means that if the underwriter purchases Trust Preferred Securities
in the open market to reduce the underwriter's short position or to stabilize
the price of the Trust Preferred Securities, it may reclaim the amount of the
selling concession from the selling group members who sold those Trust Preferred
Securities as part of the offering.
The underwriter may create a "short position" in the Trust 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 Trust Preferred
Securities in the open market. The underwriter also may elect to reduce any
short position by exercising all or part of the over-allotment option. 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 the Corporationus and the Trust that they
proposeit proposes to offer the
Trust Preferred Securities directly to the public initially at the public
offering price set forth on the cover page of this Prospectusprospectus and to certain
dealers at such price less a concession not in excess of $ per Trust
Preferred Security. The Underwritersunderwriter may allow and such dealers may reallow a
concession not in excess of $ per Trust 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
Underwriters.underwriter.
In view of the fact that the proceeds from the sale of the Trust Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
us, the Corporation, the Underwriting Agreementunderwriting agreement provides that the Corporationwe will pay as compensation for the
Underwriters'underwriter's arranging the investment therein of such proceeds an amount of $
per Trust Preferred Security.
The Trust has granted to the Underwritersunderwriter an option, exercisable for 30 days
from the date of this Prospectus,prospectus, to purchase up to an additional 150,000 Trust
Preferred Securities at the public offering price set forth on the cover page
hereof less underwriting discounts. The Underwritersunderwriter may exercise such option to
purchase additional Trust Preferred Securities solely for the purpose of
covering over-allotments, if any, incurred in the sale of the Trust Preferred
Securities.
To the extent that the Underwriters exercise theirunderwriter exercises its option to purchase
additional Trust Preferred Securities, the Trust will issue and sell to the
Corporationus
additional Common Securities and the Corporationwe will issue and sell to the Trust Junior
Subordinated Debentures in an aggregate principal amount equal to the total
aggregate Liquidation Amount of the additional Trust Preferred Securities being
purchased pursuant to the option and the additional Common Securities.
57
Both the Trust and us have agreed in the underwriting agreement that,
subject to certain conditions, prior to days following the date of
issuance of the Trust Preferred Securities, neither of us will, directly or
indirectly, issue, sell, offer or agree to sell, grant any option for the sale
of, or otherwise dispose of, Trust Preferred securities, any securities
convertible into, exchangeable or exercisable for Trust Preferred Securities or
the Junior Subordinated Debentures or any debt securities substantially similar
to the Junior Subordinated Debentures or any equity security substantially
similar to the Trust Preferred Securities, except with the prior written consent
of the underwriter, and except for any disposal of Junior Subordinated
Debentures following a liquidation of the Trust.
Each of the CorporationTrust and the Trustus has agreed to indemnify the Underwritersunderwriter and their
controlling persons against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the Underwritersunderwriter may be required to
made in respect thereof.
The Underwriters haveunderwriter has advised the Trust that they doit does not intend to confirm
sales to any account over which they exercise discretionary authority in excess
of 5% of the number of Trust Preferred Securities offered hereby.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the Trust
Preferred Securities. Specifically, the Underwriters may overallot the offering,
creating a syndicate short position. In addition, the Underwriters may bid for
and purchase Trust Preferred Securities in the open market to stabilize
83
the price of the Trust Preferred Securities. These activities may stabilize or
maintain the market price of the Trust Preferred Securities above independent
market levels. The Underwriters are not required to engage in these activities,
and may end these activities at any time.
LEGAL MATTERS
Certain legal matters will be passed upon for the Corporationus by Elias, Matz, Tiernan &
Herrick L.L.P., Washington, D.C., and for the Underwritersunderwriter by Skadden, Arps, Slate, MeagherThacher Proffitt &
Flom LLP.Wood. Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities will be passed upon on behalf of the Trust by Skadden, Arps, Slate, MeagherRichards,
Layton & Flom (Delaware)Finger, P.A., special Delaware counsel to the Trust. Certain matters relating to United States
federal income tax considerations will be passed upon for the Corporation by
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTSTrust and us.
EXPERTS
The consolidated financial statements of Independent Bank Corp. and
subsidiary incorporated by reference in the Corporation'sour Annual Report on Form 10-K for the
year ended December 31, 19961998 and incorporated by reference in this Prospectusprospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
stated in their report appearing therein.
8458
================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with the offer made
by this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by the Corporation, the Trust
or the Underwriters. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the affairs of the Corporation or the Trust since the date
hereof. This Prospectus does not constitute an offer or solicitation by anyone
in any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer or solicitation.
___________
TABLE OF CONTENTS
Page
----
Available Information..............................................
Incorporation of Certain Documents by
Reference.........................................................
Summary............................................................
Risk Factors.......................................................
Independent Bank Corp..............................................
Use of Proceeds....................................................
Ratios of Earnings to Fixed Charges................................
Capitalization.....................................................
Accounting Treatment...............................................
Recent Developments................................................
Selected Consolidated Financial Data...............................
Management of Independent and the Bank.............................
Independent Capital Trust I........................................
Description of Trust Preferred Securities..........................
Description of Junior Subordinated Debentures......................
Description of Guarantee...........................................
Book-Entry Issuance................................................
Relationship Among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee......................................
Certain Federal Income Tax Consequences............................
ERISA Considerations...............................................
Underwriting.......................................................
Legal Matters......................................................
Independent Public Accountants.....................................
Until , 1997 (25 days after the date of this prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
================================================================================
1,000,000- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 TRUST PREFERRED
SECURITIES
INDEPENDENT CAPITAL TRUST I
_____% Trust Preferred Securities
fully and unconditionally guaranteed,
as described herein, by
Independent Bank Corp.
----------
Prospectus
----------II
% CUMULATIVE TRUST PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
INDEPENDENT BANK CORP.
------------------
PROSPECTUS
------------------------
Legg Mason Wood Walker
Incorporated
Piper Jaffray Inc.
______ __, 1997
================================================================================, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ItemITEM 14. Other Expenses of Issuance and Distribution.OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee.....................fee........................................ $ 8,7136,394
NASD fee.................................fee.................................................... 3,400
Nasdaq fees..............................fees................................................. 17,500
Trustees' fees and expenses..............expenses................................. 6,000
Legal fees and expenses.................. *
Blue Sky fees and expenses............... *expenses..................................... 110,000*
Accounting fees and expenses............. *expenses................................ 45,000*
Printing expenses........................ *expenses........................................... 60,000*
Miscellaneous expenses................... *expenses...................................... 26,706*
--------
Total.................................. $
--------
--------Total................................................... $275,000
========
_________________- ------------------------
* Estimated.
ItemITEM 15. Indemnification of Directors and Officers.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, officer, 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, II-1
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 relates
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
II-1
at the 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 TwelfthTwelve of the Company'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:
II-2
(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-3II-2
ItemITEM 16. Exhibits and Financial Statement SchedulesEXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. DescriptionEXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------
1 Form of Underwriting Agreement
4.1 Indenture of the Corporation relating to the Junior
Subordinated Debentures
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 III
4.4 Amended and Restated Declaration of Trust of Independent
Capital Trust III
4.5 Form of Trust Preferred Security Certificate for Independent
Capital Trust III (included as Exhibit A to Exhibit 4.4)
4.6 Form of Guarantee of the Corporation relating to the Trust
Preferred Securities
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
as to legality of the Junior Subordinated Debentures and the
Guarantee to be issued by the Corporation*Corporation
5.2 Opinion of Skadden, Arps, Slate, MeagherRichards, Layton & Flom LLPFinger P.A. as to legality of
the Trust Preferred Securities to be issued by Independent
Capital Trust I*II
8 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to
certain federal income tax matters*matters
10 Purchase and Assumption Agreement by and among Independent
Bank Corp., Rockland Trust Company, Fleet Financial Group,
Inc., Fleet National Bank and BankBoston, N.A., dated
September 27, 1999(1)
12.1 Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2 Computation of ratio of earnings to fixed charges (including
interest on deposits)
23.1 Consent of Arthur AndersonAndersen LLP
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included
in Exhibit 5.1)*
23.3 Consent of Skadden, Arps, Slate, MeagherRichards, Layton & Flom LLPFinger P.A. (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of the
Corporation (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Indenture
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 III
25.3 Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee for the benefit of the holders of the
Trust Preferred Securities
- ----------------
* To be------------------------
(1) Incorporated by reference from the current Report on Form 8-K filed by amendment.
II-4the
Corporation with the Securities and Exchange Commission on October 1, 1999.
II-3
ItemITEM 17. UndertakingsUNDERTAKINGS
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 controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
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-5II-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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockland, StateCommonwealth of Massachusetts on the 24th28th
day of April 1997.
INDEPENDENT BANK CORP.
By: /s/ John F. Spence, Jr.
-------------------------------
John F. Spence, Jr.
Chairman of the Board and
Chief Executive OfficerOctober 1999.
INDEPENDENT BANK CORP.
By: /s/ DOUGLAS H. PHILIPSEN
-----------------------------------------
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 John
F. Spence, Jr., Douglas H.
Philipsen and Richard J. Seaman, and each of them severally, as his or her
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, 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.
/s/ Richard S. Anderson
- ------------------------------ Date: April 24, 1997
Richard S. Anderson
Director
/s/ Donald K. Atkins
- ----------------------------- Date: April 24, 1997
Donald K. Atkins
Director
/s/ W. Paul Clark
- ----------------------------- Date: April 24, 1997
W. Paul Clark
Director
II-6
- ----------------------------- Date: April __, 1997
/s/ RICHARD S. ANDERSON Date: October 28, 1999
- --------------------------------------------
Richard S. Anderson
Director
/s/ DONALD K. ATKINS Date: October 28, 1999
- --------------------------------------------
Donald K. Atkins
Director
/s/ W. PAUL CLARK Date: October 28, 1999
- --------------------------------------------
W. Paul Clark
Director
/s/ ROBERT L. CUSHING Date: October 28, 1999
- --------------------------------------------
Robert L. Cushing
Director
- ----------------------------- Date: April __, 1997
Benjamin A. Gilmore, II
Director
/s/ Lawrence M. Levinson
- ----------------------------- Date: April 24, 1997
Lawrence M. Levinson
Director
/s/ Douglas H. Philipsen
- ----------------------------- Date: April 24, 1997
Douglas H. Philipsen
Director and President
/s/ Richard H. Sgarzi
- ----------------------------- Date: April 24, 1997
Richard H. Sgarzi
Director
/s/ John F. Spence, Jr.
- ----------------------------- Date: April 24, 1997
John F. Spence, Jr.
Chairman of the Board and
Chief Executive Officer
(principal executive officer)
/s/ Robert J. Spence
- ----------------------------- Date: April 24, 1997
Robert J. Spence
Director
/s/ William J. Spence
- ----------------------------- Date: April 24, 1997
William J. Spence
Director
/s/ Brian S. Tedeschi
- ----------------------------- Date: April 24, 1997
Brian S. Tedeschi
Director
/s/ Thomas J. Teuten
- ----------------------------- Date: April 24, 1997
Thomas J. Teuten
Director
II-7
II-5
/s/ Richard J. Seaman
- ----------------------------- Date: April 24, 1997
/s/ BENJAMIN A. GILMORE, II Date: October 28, 1999
- --------------------------------------------
Benjamin A. Gilmore, II
Director
/s/ LAWRENCE M. LEVINSON Date: October 28, 1999
- --------------------------------------------
Lawrence M. Levinson
Director
/s/ DOUGLAS H. PHILIPSEN Date: October 28, 1999
- --------------------------------------------
Douglas H. Philipsen
Chairman, Chief Executive Officer
and President
/s/ RICHARD H. SGARZI Date: October 28, 1999
- --------------------------------------------
Richard H. Sgarzi
Director
/s/ ROBERT J. SPENCE Date: October 28, 1999
- --------------------------------------------
Robert J. Spence
Director
/s/ WILLIAM J. SPENCE Date: October 28, 1999
- --------------------------------------------
William J. Spence
Director
/s/ BRIAN S. TEDESCHI Date: October 28, 1999
- --------------------------------------------
Brian S. Tedeschi
Director
/s/ THOMAS J. TEUTEN Date: October 28, 1999
- --------------------------------------------
Thomas J. Teuten
Director
/s/ RICHARD J. SEAMAN Date: October 28, 1999
- --------------------------------------------
Richard J. Seaman
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
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 the City of Rockland, StateCommonwealth of Massachusetts, on the
24th28th day of April 1997.
INDEPENDENT CAPITAL TRUST I
By: /s/ Douglas H. Philipsen
-----------------------------
Douglas H. Philipsen
Administrative Trustee
By: /s/ Richard J. Seaman
-----------------------------
Richard J. Seaman
Administrative Trustee
By: /s/ Russell N. Viau
-----------------------------
Russell N. Viau
Administrative Trustee
II-8
EXHIBIT INDEXOctober 1999.
Exhibit No. Description
- ----------- -----------
1 Form of Underwriting Agreement
4.1 Indenture of the Corporation relating to the Junior Subordinated
Debentures
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 I
4.4 Amended and Restated Declaration of Trust of Independent Capital
Trust I
4.5 Form of Trust Preferred Security Certificate for Independent
Capital Trust I (included as Exhibit A to Exhibit 4.4)
4.6 Form of Guarantee of the Corporation relating to the Trust
Preferred Securities
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P. as to
legality of the Junior Subordinated Debentures and the Guarantee to
be issued by the Corporation*
5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to legality
of the Trust Preferred Securities to be issued by Independent
Capital Trust I*
8 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to certain
federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2 Computation of ration of earnings to fixed charges (including
interest on deposits)
23.1 Consent of Arthur Anderson LLP
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in
Exhibit 5.1)*
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of the
Corporation (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Indenture
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 I
25.3 Form T-1 Statement of Eligibility of The Bank of New York under
the Guarantee for the benefit of the holders of the Trust
Preferred Securities
INDEPENDENT CAPITAL TRUST II
By: /s/ DOUGLAS H. PHILIPSEN
-----------------------------------------
Douglas H. Philipsen
ADMINISTRATIVE TRUSTEE
By: /s/ RICHARD J. SEAMAN
-----------------------------------------
Richard J. Seaman
ADMINISTRATIVE TRUSTEE
By: /s/ RUSSELL N. VIAU
-----------------------------------------
Russell N. Viau
ADMINISTRATIVE TRUSTEE
- ----------------
* To be filed by amendment.
II-7