1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRIANGLE BANCORP, INC.
(Exact name of registrant as specified in charter)
NORTH CAROLINA 6022 56-1764546
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
TRIANGLE CAPITAL TRUST
(Exact name of registrant as specified in charter)
DELAWARE 6719 APPLIED FOR
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. EMPLOYER
incorporation or organization) Classification Code Number) IDENTIFICATION NO.)
ALEXANDER M. DONALDSON, ESQ.
4300 GLENWOOD AVENUE 4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 27612 RALEIGH, NORTH CAROLINA 27612
(919) 881-0455 (919) 881-0455
(Address, including zip code, and telephone (Name, address, including zip code, and telephone
number, number, including area code, of agent for service)
including area code, of each registrant's
principal executive offices)
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COPIES TO:
BARNEY STEWART III, ESQ.
MOORE & VAN ALLEN, PLLC
100 NORTH TRYON STREET, FLOOR 47
CHARLOTTE, NORTH CAROLINA 28202
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- - -------------------------------------------------------------------------------------------------------------------------
Capital Securities of Triangle Capital
Trust................................ $20,000,000 100% $20,000,000(1) $6,060.61
- - -------------------------------------------------------------------------------------------------------------------------
Junior Subordinated Debentures of
Triangle Bancorp, Inc.(2)............ -- -- -- --
- - -------------------------------------------------------------------------------------------------------------------------
Triangle Bancorp, Inc. Guarantee with
respect to Capital Securities(3)..... -- -- -- --
- - -------------------------------------------------------------------------------------------------------------------------
Total(4)..................... $20,000,000(5) 100% $20,000,000(5) $6,060.61
=========================================================================================================================
(1) Estimated pursuant to Rule 457(a) of the Securities Act of 1933 solely for
the purpose of computing the registration fee.
(2) The Old Junior Subordinated Debentures were originally purchased by Triangle
Capital Trust with the proceeds of the sale of the Old Capital Securities by
Triangle Capital Trust. No separate consideration will be received for the
New Junior Subordinated Debentures distributed upon any liquidation of
Triangle Capital Trust.
(3) No separate consideration will be received for the Triangle Bancorp, Inc.
Guarantee.
(4) This Registration Statement is deemed to cover: the New Junior Subordinated
Debentures; the rights of holders of the New Junior Subordinated Debentures
under the Indenture; the rights of holders of the New Capital Securities
under the Trust Agreement; the rights of holders of the New Capital
Securities under the Guarantee; and certain backup undertakings as described
herein.
(5) Such amount represents the initial public offering price of the Capital
Securities to be exchanged hereunder and the principal amount of the
Subordinated Debentures that may be distributed to holders of the Capital
Securities upon any liquidation of Triangle Capital Trust.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
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TRIANGLE CAPITAL TRUST
OFFER TO EXCHANGE 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY
AND ALL OUTSTANDING 9.375% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
TRIANGLE BANCORP, INC.
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THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 PM, NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
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Triangle Capital Trust (the "Issuer Trust"), a statutory business trust
created under the laws of the State of Delaware, together with Triangle Bancorp,
Inc., a North Carolina corporation (the "Company"), as sponsor of the Issuer
Trust, hereby offer upon the terms and subject to the conditions set forth in
this Prospectus (as the same may be amended or supplemented from time to time,
the "Prospectus") and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $20,000,000 aggregate
liquidation amount of its 9.375% Capital Securities which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement (as defined herein) of which this Prospectus
constitutes a part, for a like liquidation amount of its outstanding 9.375%
Capital Securities, of which $20,000,000 aggregate liquidation amount is
outstanding. Pursuant to the Exchange Offer, the Company is also exchanging (i)
the Old Guarantee for the Guarantee and (ii) $20,000,000 aggregate principal
amount of the Old Junior Subordinated Debentures for $20,000,000 aggregate
principal amount of the New Junior Subordinated Debentures. The Guarantee and
the Subordinated Debentures have also been registered under the Securities Act.
See "Certain Defined Terms," "Summary," "Description of the New Capital
Securities," "Description of the New Junior Subordinated Debentures" and
"Description of the Guarantee."
The terms of the New Capital Securities are identical in all material
respects to the respective terms of the Old Capital Securities, except that (i)
the New Capital Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital Securities, (ii) the New Capital Securities will not provide for
any increase in the Distribution rate thereon and (iii) the New Junior
Subordinated Debentures will not provide for any increase in the interest rate
thereon. See "Description of the New Capital Securities" and "Description of the
New Junior Subordinated Debentures." The New Capital Securities are being
offered for exchange in order to satisfy certain obligations of the Company and
the Issuer Trust under the Registration Rights Agreement.
(continued on next page)
SEE "CERTAIN DEFINED TERMS" ON PAGE 4 FOR A GLOSSARY OF CERTAIN CAPITALIZED
TERMS USED IN THIS PROSPECTUS WITHOUT DEFINITION.
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SEE "RISK FACTORS" BEGINNING ON PAGE 14 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE
EXCHANGE OFFER.
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THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The New Capital Securities will be issued, and may be transferred, only in
blocks having a liquidation amount of not less than $100,000 (100 Capital
Securities). Any transfer, sale or other disposition of Capital Securities in a
block having a liquidation amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such Capital Securities for any purpose, including but not
limited to the receipt of distributions on such Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
The date of this Prospectus is , 1997.
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(cover page continued)
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, the Company and the Issuer Trust believe that the New Capital
Securities issued pursuant to the Exchange Offer may be offered for resale,
resold or otherwise transferred by holders thereof (other than any holder that
is an "affiliate" of the Company or the Issuer Trust as defined under Rule 405
of the Securities Act), provided that such New Capital Securities are acquired
in the ordinary course of such holders' business and such holders are not
engaged in, and do not intend to engage in, a distribution of such New Capital
Securities and have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities. However, the
staff of the Commission has not considered the Exchange Offer in the context of
a no-action letter, and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as in such other circumstances. By tendering the Old Capital Securities in
exchange for New Capital Securities, each holder, other than a broker-dealer,
will represent to the Company and the Issuer Trust that: (i) it is not an
affiliate of the Company or the Issuer Trust (as defined under Rule 405 of the
Securities Act); (ii) any New Capital Securities to be received by it were
acquired in the course of its ordinary business; and (iii) it is not engaged in,
and does not intend to engage in, a distribution of the New Capital Securities
and has no arrangement or understanding to participate in a distribution of the
New Capital Securities. See "Risk Factors--Consequences of a Failure to Exchange
Old Capital Securities" and "The Exchange Offer--Resales of New Capital
Securities."
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company and the Issuer Trust have agreed that, starting on the
date on which the Exchange Offer is consummated and ending on the close of
business one year after such date, they will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
In that regard, each Participating Broker-Dealer (as defined herein) who
surrenders Old Capital Securities pursuant to the Exchange Offer will be deemed
to have agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from the Company or the Issuer Trust of the occurrence of any event or
the discovery of any fact which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Capital Securities (or
the Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant
to this Prospectus until the Company or the Issuer Trust has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company or the Issuer Trust has given notice that the sale
of the New Capital Securities (or the Guarantee or the New Junior Subordinated
Debentures, as applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchaser (as defined herein) has informed the Company and
the Issuer Trust that it currently intends to make a market in the New Capital
Securities, it is not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the New Capital Securities.
Neither the Company nor the Issuer Trust currently intends to apply for listing
of the New Capital Securities on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
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(cover page continued)
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights which terminate upon consummation of the Exchange
Offer). Any Old Capital Securities which remain outstanding after consummation
of the Exchange Offer and the New Capital Securities issued in the Exchange
Offer will vote together as a single class for purposes of determining whether
holders of the requisite percentage in outstanding liquidation amount thereof
have taken certain actions or exercised certain rights under the Trust
Agreement. Following consummation of the Exchange Offer, the holder of Old
Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Company nor the Issuer Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act of
the Old Capital Securities held by them. To the extent that Old Capital
Securities are tendered and accepted in the Exchange Offer, a holder's ability
to sell untendered Old Capital Securities could be adversely affected. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities."
The New Capital Securities offered hereby represent undivided beneficial
interests in the assets of the Issuer Trust. The Company has acquired all the
Common Securities. The Issuer Trust exists for the sole purpose of issuing the
Trust Securities, investing the proceeds thereof in the Subordinated Debentures
of the Company, effecting the Exchange Offer, and certain other limited
activities described herein.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company and the Issuer Trust (in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer is extended).
Tenders of Old Capital Securities may be withdrawn at any time on or prior to
the Expiration Date. The Exchange Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Company or the Issuer Trust and to the terms and provisions
of the Registration Rights Agreement. The Company has agreed to pay all expenses
of the Exchange Offer. See "The Exchange Offer--Fees and Expenses." Each New
Capital Security will pay cumulative Distributions from the most recent
Distribution Payment Date of the Old Capital Securities surrendered in exchange
for such New Capital Securities or, if no Distributions have been paid on such
Old Capital Securities, from June 3, 1997. Holders of the Old Capital Securities
whose Old Capital Securities are accepted for exchange will not receive
accumulated Distributions on such Old Capital Securities for any period from and
after the last Distribution Payment Date on such Old Capital Securities prior to
the original issue date of the New Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after such Distribution Payment Date or, if no such Distributions have been paid
or duly provided for, from and after June 3, 1997. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of , 1997.
Neither the Company nor the Issuer Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF SUCH INFORMATION.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and in accordance therewith files reports and other information with the
Commission. Any reports and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices in
Chicago, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and in
New York, Seven World Trade Center, 13th Floor, New York, New York 10048. Copies
of such material may also be obtained by mail from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants who file electronically with the
Commission. In addition, such reports, proxy statements and other information
can be inspected at NASDAQ, 1735 K Street, N.W., Washington, D.C. 20006, on
whose National Market System the common stock, no par value per share, of the
Company is traded.
No separate financial statements of the Issuer Trust have been included
herein. The Company and the Issuer Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Issuer Trust has no independent operations and is not engaged in and does not
propose to engage in any activity other than holding as trust assets the
Subordinated Debentures, issuing the Trust Securities, effecting the Exchange
Offer and engaging in activities necessary or incidental thereto. All of the
Common Securities of the Issuer Trust are owned by the Company and the Company's
obligations described herein under the Indenture, the Trust Agreement (including
its obligations to pay costs, expenses, debts and other obligations of the
Issuer Trust, other than with respect to the Trust Securities), the Subordinated
Debentures and the Guarantee, taken together, constitute a full and
unconditional guarantee on a subordinated basis by the Company of amounts due on
the Capital Securities. See "Triangle Capital Trust," "Description of the New
Capital Securities," "Description of the New Junior Subordinated Debentures" and
"Description of the Guarantee." In addition, the Company does not expect that
the Issuer Trust will file reports under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all exhibits thereto, the "Registration Statement") filed by the
Company and the Issuer Trust with the Commission under the Securities Act. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and reference is hereby made to the Registration
Statement for further information with respect to the Company and the New
Capital Securities. Any statements contained herein concerning the provisions of
any document are not necessarily complete, and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
This Prospectus may contain or incorporate by reference statements which
may constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Prospective investors
are cautioned that any such forward-looking statements are not guarantees for
future performance and involve risks and uncertainties, and that actual results
may differ materially from those contemplated by such forward-looking
statements. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include significant fluctuations in interest rates, inflation, economic
recession, significant changes in the federal and state legal and regulatory
environment and tax laws, significant underperformance in the Company's
portfolio of outstanding loans, and competition in the Company's markets.
Neither the Company nor the Issuer Trust undertakes any obligation to update or
revise forward-looking statements to reflect changed assumptions, the occurrence
of unanticipated events or changes to future operating results over time.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and June
30, 1997, and the Company's Current Reports on Form 8-K dated April 1, 1997, May
16, 1997, May 23, 1997, September 22, 1997, October 17, 1997 and October 31,
1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of any offering of securities hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for all purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein or
in any subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus. 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE COMPANY AT 4300 GLENWOOD AVENUE, RALEIGH, NORTH CAROLINA 27612 (TELEPHONE
NUMBER (919) 881-0455), ATTENTION: SUSAN C. GILBERT, SECRETARY. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1997, FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
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TABLE OF CONTENTS
Available Information....................... 2
Incorporation of Certain Documents
by Reference.............................. 3
Certain Defined Terms....................... 4
Summary..................................... 5
Risk Factors................................ 14
Triangle Bancorp, Inc....................... 22
Consolidated Ratios of Earnings to Fixed
Charges................................... 23
Selected Consolidated Financial Data and
Other Information......................... 24
Triangle Capital Trust...................... 24
Accounting Treatment........................ 25
The Exchange Offer.......................... 25
Description of the New Capital Securities... 34
Description of the New Junior Subordinated
Debentures................................ 47
Description of the Guarantee................ 56
Relationship among the Capital Securities,
the Subordinated Debentures and the
Guarantee................................. 58
United States Federal Income Taxation....... 60
Plan of Distribution........................ 65
Benefit Plan Considerations................. 65
Supervision, Regulation and Other Matters... 67
Legal Matters............................... 69
Experts..................................... 69
CERTAIN DEFINED TERMS
As used in this Prospectus, the following terms have the meanings
indicated:
"Capital Securities" means the New Capital Securities and the Old Capital
Securities of the Issuer Trust.
"Common Securities" means the common securities of the Issuer Trust
representing undivided beneficial interests in the assets of the Issuer Trust.
"Distribution Payment Date" means the 1st day of June and December in each
year, beginning December 1, 1997.
"Guarantee" means the Guarantee Agreement, from the Company in favor of
Bankers Trust Company, as Guarantee Trustee for the benefit of the holders of
Capital Securities, to be issued in exchange for the Old Guarantee.
"Indenture" means the Junior Subordinated Indenture, dated as of June 3,
1997, between the Company and Bankers Trust Company, as Trustee for the benefit
of the holders of the Subordinated Debentures and any indenture supplemental
thereto pursuant to which the Subordinated Debentures are to be issued.
"Interest Payment Date" means the 1st day of June and December in each
year, beginning December 1, 1997.
"New Capital Securities" means the $20,000,000 aggregate liquidation amount
of 9.375% Capital Securities to be issued by the Issuer Trust in exchange for
Old Capital Securities.
"New Junior Subordinated Debentures" means the $20,000,000 aggregate
principal amount of 9.375% New Junior Subordinated Debentures due 2027 to be
issued by the Company to the Issuer Trust in exchange for $20,000,000 aggregate
principal amount of Old Junior Subordinated Debentures.
"Old Capital Securities" means the $20,000,000 aggregate liquidation amount
of 9.375% Capital Securities issued by the Issuer Trust on June 3, 1997 and
having a per annum distribution rate of 9.375%.
"Old Guarantee" means the Guarantee Agreement, dated as of June 3, 1997,
from the Company in favor of Bankers Trust Company, as Guarantee Trustee for the
benefit of the holders of Old Capital Securities.
"Old Junior Subordinated Debentures" means the $20,000,000 aggregate
principal amount of Old Junior Subordinated Debentures issued by the Company to
the Issuer Trust on June 3, 1997, and having a per annum distribution rate of
9.375%.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of June 3, 1997, among the Issuer Trust, the Company, and Wheat First
Securities, Inc. as Initial Purchaser (the "Initial Purchaser").
"Subordinated Debentures" means the New Junior Subordinated Debentures and
the Old Junior Subordinated Debentures.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated as
of June 3, 1997, among the Company, as Depositor, Bankers Trust Company, as
Property trustee (the "Property Trustee"), Bankers Trust (Delaware), as Delaware
trustee (the "Delaware Trustee"), and the Administrators appointed pursuant to
Section 8.20 thereof, pursuant to which Capital Securities were, and will be,
issued.
"Trust Securities" means the Common Securities and the Capital Securities.
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference
herein. Holders of Old Capital Securities should consider carefully the factors
set forth herein under "Risk Factors." As used in this Prospectus, the "Company"
includes Triangle Bancorp, Inc. and its respective predecessors and
subsidiaries, except as the context otherwise may require.
TRIANGLE BANCORP, INC.
The Company is a registered bank holding company, chartered under the laws
of North Carolina, and headquartered in Raleigh, North Carolina, with banking
offices located in various communities in North Carolina. The Company operates
through Triangle Bank, a North Carolina chartered commercial bank that began
operations on January 4, 1988 (the "Bank"). The Bank provides a wide variety of
retail and commercial banking products and services, but has focused on lending
to small- and medium-sized businesses and to individuals located in the
communities it serves. At June 30, 1997 the Company had total consolidated
assets of approximately $1.03 billion, total consolidated deposits of
approximately $852 million and total consolidated shareholders' equity of
approximately $92 million.
Since 1991, the Company has experienced significant growth, both internally
and through acquisitions of unaffiliated institutions. The Company recently
completed two acquisitions, as described further under "Triangle Bancorp,
Inc. -- Recent Acquisitions." While the Company has significantly expanded its
branch system, it has emphasized integrating the acquired operations in a manner
that maintains credit quality and promotes operational efficiency. At June 30,
1997, the Company had nonperforming assets of $6.2 million, or .88% of gross
loans and other real estate owned. Net charge-offs for 1996 were 0.16% of
average loans. Net charge-offs for the first half of 1997 were 0.01% of average
loans. The allowance for loan losses at June 30, 1997 was 1.54% of gross loans
and 175.58% of nonperforming loans. The efficiency ratios of the Company for the
1996 fiscal year and for the first half of 1997 were 60% and 51%, respectively.
The Company's returns on average assets and average equity for the 1996 fiscal
year and the first half of 1997 (annualized) were 1.22% and 1.56% and 13.63% and
17.64%, respectively.
The Company's strategy includes continuing to (i) develop its branch system
through acquisitions and de novo branch openings, including supermarket
branches, (ii) provide personalized, community-oriented banking services with a
focus on lending to small- and medium-sized businesses and to individuals within
the communities in which it operates and (iii) maintain its credit quality and
operational efficiency.
For additional information regarding the Company and its financial
condition and results of operations, see "Triangle Bancorp, Inc." and "Selected
Consolidated Financial Data and Other Information.
TRIANGLE CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
on May 28, 1997 pursuant to the Delaware Business Trust Act (the "Trust Act").
The Issuer Trust will be governed by the Amended and Restated Trust Agreement
among the Company, as Depositor, Bankers Trust (Delaware), as Delaware Trustee,
and Bankers Trust Company, as Property Trustee. The Issuer Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, (ii) using
the proceeds from the sale of the Trust Securities to acquire the Subordinated
Debentures and (iii) engaging in only those other activities necessary,
convenient or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, after the completion of the Exchange Offer the New
Junior Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the New Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust.
The principal executive offices of the Company are located at 4300 Glenwood
Avenue, Raleigh, North Carolina 27612 (telephone number (919) 881-0455).
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THE EXCHANGE OFFER
The Exchange Offer......... Up to $20,000,000 aggregate liquidation amount of
New Capital Securities are being offered in
exchange for a like aggregate liquidation amount
of Old Capital Securities. Old Capital Securities
may be tendered for exchange in whole or in part
in a liquidation amount of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in
excess thereof. The Company and the Issuer Trust
are making the Exchange Offer in order to satisfy
their obligations under the Registration Rights
Agreement relating to the Old Capital Securities.
For a description of the procedures for tendering
Old Capital Securities, see "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities."
Expiration Date............ 5:00 p.m., New York City time, on , 1997
(such time on such date being hereinafter called
the "Expiration Date") unless the Exchange Offer
is extended by the Company and the Issuer Trust
(in which case the term "Expiration Date" shall
mean the latest date and time to which the
Exchange Offer is extended). See "The Exchange
Offer -- Expiration Date; Extensions; Amendments."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company and
the Issuer Trust in their sole discretion. The
Exchange Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to
the Exchange Offer." The Company and the Issuer
Trust reserve the right in their sole and absolute
discretion, subject to applicable law, at any time
and from time to time, (i) to delay the acceptance
of the Old Capital Securities for exchange, (ii)
to terminate the Exchange Offer if certain
specified conditions have not been satisfied,
(iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of holders
of Old Capital Securities to withdraw their
tendered Old Capital Securities, or (iv) to waive
any condition or otherwise amend the terms of the
Exchange Offer in any respect. See "The Exchange
Offer -- Expiration Date; Extensions; Amendments."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent (as defined herein) in
conformity with certain procedures set forth below
under "The Exchange Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities..... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer
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including an Agent's Message in lieu of a Letter
of Transmittal. Holders of Old Capital Securities
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
are urged to contact such person promptly if they
wish to tender Old Capital Securities pursuant to
the Exchange Offer. See "The Exchange
Offer -- Procedures for Tendering Old Capital
Securities." Letters of Transmittal and
certificates representing Old Capital Securities
should not be sent to the Company or the Issuer
Trust. Such documents should only be sent to the
Exchange Agent. Questions regarding how to tender
and requests for information should be directed to
the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
Resales of New Capital
Securities................. Based on interpretations by the staff of the
Commission (the "Staff") as set forth in no-action
letters issued to third parties, the Company and
the Issuer Trust believe that holders of Old
Capital Securities (other than any holder that is
an "affiliate" of the Company or the Issuer Trust
as defined under Rule 405 of the Securities Act)
who exchange their Old Capital Securities for New
Capital Securities pursuant to the Exchange Offer
may offer such New Capital Securities for resale,
resell such New Capital Securities and otherwise
transfer such New Capital Securities without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such New Capital Securities are
acquired in the ordinary course of such holders'
business and such holders are not engaged in, and
do not intend to engage in, a distribution of such
New Capital Securities and have no arrangement or
understanding with any person to participate in
the distribution of such New Capital Securities.
However, the Staff has not considered the Exchange
Offer in the context of a no-action letter, and
there can be no assurance that the Staff would
make a similar determination with respect to the
Exchange Offer. However, any holder of Old Capital
Securities who is an "affiliate" of the Company or
the Issuer Trust or who intends to participate in
the Exchange Offer for the purpose of distributing
the New Capital Securities, or any broker-dealer
who purchased the Old Capital Securities from the
Issuer Trust to resell pursuant to Rule 144A or
any other available exemption under the Securities
Act, (a) will not be able to rely on the
interpretations of the Staff set forth in the
above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and (c)
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any sale or other transfer of such
Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements.
In addition, as described below, if any broker-
dealer holds Old Capital Securities acquired for
its own account as a result of market-making or
other trading activities and exchanges such Old
Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities (other than
certain specified holders) who wishes to exchange
Old Capital Securities for New Capital Securities
in the Exchange Offer will be required to
represent that (i) it
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is not an "affiliate" of the Company or the Issuer
Trust, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary
course of its business, and (iii) it is not
engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities
Act) of such New Capital Securities and has no
arrangement or understanding to participate in a
distribution of New Capital Securities. Each
broker-dealer that receives New Capital Securities
for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of such New Capital
Securities. The Letter of Transmittal states that
by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the
position taken by the Staff in the interpretive
letters referred to above, the Company and the
Issuer Trust believe that broker-dealers who
acquired Old Capital Securities for their own
accounts as a result of market-making activities
or other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New
Capital Securities received upon exchange of such
Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment
from the original sale of the Old Capital
Securities) with a prospectus meeting the
requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
distribution with respect to the resale of such
New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Capital Securities received in exchange for Old
Capital Securities where such Old Capital
Securities were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject
to certain provisions set forth in the
Registration Rights Agreement and to the
limitations described below under "The Exchange
Offer -- Resales of New Capital Securities," the
Company and the Issuer Trust have agreed to allow
the Participating Broker-Dealers to use this
Prospectus in connection with resales of such New
Capital Securities for a period of one year after
the Expiration Date, exclusive of any period when
a stop order is in effect. See "Plan of
Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company or the Issuer
Trust may not rely on such interpretive letters
and must comply with the registration and
prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See
"The Exchange Offer -- Resales of New Capital
Securities."
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is Bankers Trust Company (the "Exchange
Agent"). The addresses, and telephone and
facsimile numbers of the Exchange Agent are set
forth in "The Exchange Offer -- Exchange Agent"
and in the Letter of Transmittal.
United States Federal
Income Taxation, ERISA
Considerations............. Holders of Old Capital Securities should review
the information set forth under "United States
Federal Income Taxation" and "Benefit Plan
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Considerations" prior to tendering Old Capital
Securities in the Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered......... Up to $20,000,000 aggregate liquidation amount of
the Issuer Trust's 9.375% Capital Securities which
have been registered under the Securities Act
(liquidation amount $1,000 per Capital Security).
The New Capital Securities will be issued, and the
Old Capital Securities were issued, under the
Trust Agreement. The New Capital Securities and
any Old Capital Securities which remain
outstanding after consummation of the Exchange
Offer will constitute a single series of Capital
Securities under the Trust Agreement and,
accordingly, will vote together as a single class
for purposes of determining whether holders of the
requisite percentage in outstanding liquidation
amount thereof have taken certain actions or
exercised certain rights under the Trust
Agreement. See "Description of New Capital
Securities -- General." The terms of the New
Capital Securities are identical in all material
respects to the terms of the Old Capital
Securities, except that the New Capital Securities
have been registered under the Securities Act and
therefore are not subject to certain restrictions
on transfer applicable to the Old Capital
Securities and will not provide for any increase
in the Distribution rate thereon. See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer" and "Description of New Capital
Securities."
Distributions.............. Holders of the New Capital Securities are entitled
to receive cumulative cash distributions at an
annual rate of 9.375% on the liquidation amount of
$1,000 per New Capital Security, accruing from the
original date of issuance of the Old Capital
Securities, and (subject to the possible extension
of distribution payment periods described below)
will be payable semi-annually, in arrears, on the
first day of June and December of each year,
commencing December 1, 1997. See "Description of
the New Capital Securities -- Distributions."
Option to Extend Interest
Payment Period............. The Company has the right, at any time, subject to
certain conditions, to defer payments of interest
on the Subordinated Debentures, for Extension
Periods, each not exceeding 10 consecutive
semi-annual periods; provided that no Extension
Period may extend beyond the maturity date of the
Subordinated Debentures. As a consequence of the
Company's extension of the interest payment period
on the Subordinated Debentures, distributions on
the Capital Securities would be deferred but
interest would continue to accrue during any such
Extension Period to the extent permitted by law.
In the event the Company exercises its right to
extend an interest payment period, then during any
Extension Period, subject to certain exceptions,
(i) the Company shall not declare or pay any
dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its
capital stock or rights to acquire such capital
stock or make any guarantee payments (other than
payments on the Guarantee) with respect to the
foregoing and (ii) the Company shall not make any
payment of interest on or principal of (or
premium, if any, on), or repay,
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repurchase or redeem, any debt securities issued
by the Company which rank pari passu with or
junior to the Subordinated Debentures. Upon the
termination of any Extension Period and the
payment of all amounts then due, the Company may
commence a new Extension Period, subject to
certain requirements. See "Description of the New
Junior Subordinated Debentures -- Option to Extend
Interest Payment Period." Should an Extension
Period occur with respect to the Capital
Securities, holders of the Capital Securities will
continue to recognize interest income at an annual
rate of 9.375%, compounded semi-annually, for
United States federal income tax purposes
notwithstanding the deferred receipt of payments
which accrue during the Extension Period. As a
result, such holders will be required to include
such amounts in gross income for United States
federal income tax purposes in advance of the
receipt of cash, and such holders will not receive
the cash from the Issuer Trust related to such
income if such holders dispose of the Capital
Securities prior to the record date for payment of
distributions. See "United States Federal Income
Taxation -- US Holders -- Interest Income and
Original Issue Discount."
Liquidation................ The Company, as the holder of all of the Common
Securities, has the right at any time to dissolve
the Issuer Trust (including, without limitation,
upon the occurrence of a Tax Event, a Capital
Treatment Event or an Investment Company Event
(each as defined herein)), subject to certain
conditions (including the receipt of prior
approval by the Federal Reserve if then required
under applicable capital guidelines or policies of
the Federal Reserve), with the result that, after
satisfaction of liabilities to creditors of the
Issuer Trust (to the extent not satisfied by the
Company), the Company must cause the Subordinated
Debentures to be distributed to the holders of the
Trust Securities on a pro rata basis in accordance
with the respective liquidation amounts thereof,
in liquidation of the Issuer Trust. In addition,
the Issuer Trust will be dissolved and liquidated
under certain other circumstances. See
"Description of the New Capital
Securities -- Liquidation Distribution Upon
Dissolution."
Liquidation Amount......... In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or
termination of the Issuer Trust, after
satisfaction of liabilities to creditors of the
Issuer Trust (to the extent not satisfied by the
Company) holders of the Capital Securities will be
entitled to receive $1,000 per Capital Security
plus an amount equal to accrued and unpaid
distributions thereon to the date of payment,
unless the Subordinated Debentures are distributed
to holders of the Trust Securities in exchange
therefor. If such liquidation distribution can be
paid only in part because the Issuer Trust has
insufficient assets available to pay in full the
aggregate liquidation distribution, then the
amounts payable directly by the Issuer Trust on
the Capital Securities shall be paid on a pro rata
basis. The holders of the Common Securities will
be entitled to receive distributions upon any such
liquidation pro rata with the holders of the
Capital Securities, except that if a Trust
Agreement Event of Default as defined herein has
occurred and is continuing, the Capital Securities
shall have a priority over the Common Securities.
See "Description of the New Capital
Securities -- Liquidation Distribution Upon
Dissolution."
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Maturity................... Upon the repayment of the Subordinated Debentures,
whether at maturity or upon early redemption as
provided in the Indenture, the proceeds from such
repayment will be applied by the Property Trustee
to redeem a like amount of the Trust Securities,
upon the terms and conditions described herein.
See "Description of the New Capital
Securities -- Redemption."
Redemption................. The Trust Securities are subject to mandatory
redemption (i) in whole, but not in part, at the
Stated Maturity upon repayment of the Subordinated
Debentures, (ii) in whole, but not in part,
contemporaneously with the optional redemption at
any time by the Company of the New Junior
Subordinated Debentures at any time within 90 days
following the occurrence and during the
continuation of a Tax Event, Investment Company
Event or Capital Treatment Event in each case,
subject to possible regulatory approval and (iii)
in whole or in part, at any time on or after June
1, 2007, contemporaneously with the optional
redemption by the Company of the Subordinated
Debentures in whole or in part, in each case at
the applicable Redemption Price (as defined
herein). See "Description of New Capital
Securities -- Redemption."
Tax Event, Capital
Treatment Event and
Investment Company Event
Redemption................. If at any time a Tax Event, a Capital Treatment
Event or an Investment Company Event should occur
and be continuing, the Company may, within 90 days
of the occurrence of such Tax Event, Capital
Treatment Event or Investment Company Event,
redeem the Subordinated Debentures in whole or in
part in certain limited circumstances described
herein at a redemption price equal to par plus
accrued and unpaid interest to the redemption
date, subject to the Company having received prior
approval from the Federal Reserve if then required
under applicable capital guidelines or policies of
the Federal Reserve. Upon the redemption of the
Subordinated Debentures, the proceeds of such
redemption will be applied by the Property Trustee
to redeem a like amount of the Trust Securities on
a pro rata basis, upon the terms and conditions
described herein. See "Description of the New
Capital Securities -- Redemption."
The Guarantee.............. The payment of distributions out of moneys held by
the Issuer Trust, payments on liquidation of the
Issuer Trust and payment upon the redemption of
the Capital Securities are guaranteed by the
Company as described herein under "Description of
the Guarantee." The Guarantee covers payments of
distributions and other payments on the Capital
Securities only if and to the extent that the
Issuer Trust has funds available therefor, which
funds will not be available except to the extent
the Company has made payments of interest or
principal or other payments on the Subordinated
Debentures. The Guarantee, when taken together
with the Company's obligations under the
Subordinated Debentures, the Trust Agreement and
the Indenture (including its obligations to pay
costs, expenses, debts and other liabilities of
the Issuer Trust (other than with respect to the
Trust Securities)), provides a full and
unconditional guarantee on a subordinated basis by
the Company of amounts due on the Capital
Securities.
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Ranking.................... The Common Securities rank pari passu with, and
payments thereon will be made pro rata with, the
Capital Securities, except that upon the
occurrence and continuation of a Trust Agreement
Event of Default, the rights of the holders of the
Common Securities to receive payment of
distributions and payments upon liquidation,
redemption or otherwise will be subordinated to
the rights of the holders of the Capital
Securities. See "Description of the New Capital
Securities -- General." The Subordinated
Debentures are unsecured and subordinate and
junior in right of payment to the extent and in
the manner set forth in the Indenture to all
Senior Indebtedness of the Company. See
"Description of the New Junior Subordinated
Debentures." The Guarantee will constitute an
unsecured obligation of the Company and will rank
subordinate and junior in right of payment to the
extent and in the manner set forth in the
Guarantee to all Senior Indebtedness of the
Company. The Company's obligations under the
Guarantee and the Subordinated Debentures are also
effectively subordinate to claims of creditors of
the Company's subsidiaries. See "Description of
the Guarantee."
Voting Rights.............. Holders of the Capital Securities have limited
voting rights relating generally to the
modification of the Capital Securities and the
Guarantee and the exercise of the Issuer Trust's
rights as the holder of the Subordinated
Debentures. Holders of the Capital Securities are
not entitled to appoint, remove or replace the
Property Trustee or the Delaware Trustee except
upon the occurrence of an Indenture Event of
Default (as defined herein) described herein. See
"Description of the New Capital
Securities -- Voting Rights, Amendment of Trust
Agreement" and "-- Removal of Issuer Trustees;
Appointment of Successors."
Rating..................... The New Capital Securities will not be rated by
Standard & Poor's Ratings Services ("S&P") or
Moody's Investors Service, Inc. ("Moody's") or any
similar rating agency.
Transfer Restrictions...... The Old Capital Securities were, and the New
Capital Securities will be, issued and may be
transferred only in blocks having a liquidation
amount of not less than $100,000 (100 Old Capital
Securities or New Capital Securities, as the case
may be). Any such transfer of the Old Capital
Securities or the New Capital Securities in a
block having a liquidation amount of less than
$100,000 shall be deemed to be void and of no
legal effect whatsoever. See "Description of the
New Capital Securities -- Restrictions on
Transfer."
Subordinated Debentures.... The Issuer Trust invested the proceeds from the
issuance of the Old Capital Securities and Common
Securities in an equivalent amount of Old Junior
Subordinated Debentures of the Company, up to
$20,000,000 aggregate principal amount of which
will be exchanged for New Junior Subordinated
Debentures. The Subordinated Debentures mature on
June 1, 2027. The Subordinated Debentures rank
subordinate and junior in right of payment to all
Senior Indebtedness of the Company. In addition,
the Company's obligations under the Subordinated
Debentures are effectively subordinated to all
existing and future liabilities and obligations of
its subsidiaries. See "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantee and
the
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Subordinated Debentures", and "Description of the
New Junior Subordinated
Debentures -- Subordination."
Benefit Plan
Considerations............. Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Benefit
Plan Considerations."
Form of Capital
Securities................. The Old Capital Securities initially sold to
"qualified institutional buyers" (as defined in
Rule 144A under the Securities Act) in reliance on
Rule 144A under the Securities Act are represented
by a global certificate or certificates registered
in the name of Cede & Co., as nominee for DTC. The
Old Capital Securities initially sold to
institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) were issued only in fully
registered, certificated form. Beneficial
interests in the New Capital Securities
represented by a global certificate or
certificates will be evidenced by, and transfers
thereof will be effected only through, records
maintained by the participants in DTC. Except in
the limited circumstances described herein, the
New Capital Securities in certificated form will
not be issued in exchange for the global
certificate or certificates. See "Description of
the New Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
For additional information with respect to the New Capital Securities, see
"Description of the New Capital Securities," "Description of the New Junior
Subordinated Debentures," "Description of the Guarantee" and "United States
Federal Income Taxation."
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors."
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RISK FACTORS
Prior to deciding whether to participate in the Exchange Offer, holders of
Old Capital Securities should carefully review the information contained
elsewhere, or incorporated by reference, in this Prospectus and should
particularly consider the following matters:
ABSENCE OF PUBLIC TRADING MARKET
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Company or the Issuer Trust) without compliance
with the registration requirements under the Securities Act, they will
constitute a new issue of securities with no established trading market. Capital
Securities may be transferred by the holders thereof only in blocks having a
liquidation amount of not less than $100,000 (100 Capital Securities). The
Company and the Issuer Trust have been advised by the Initial Purchaser that the
Initial Purchaser presently intends to make a market in the New Capital
Securities. However, the Initial Purchaser is not obligated to do so and any
market-making activity with respect to the New Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Capital Securities or the Old Capital Securities or as to the liquidity
of or the trading market for the New Capital Securities or the Old Capital
Securities. If an active public market does not develop, the market price and
liquidity of the New Capital Securities may be adversely affected.
If a public trading market for the New Capital Securities develops, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, the Company's results of operations and
the market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company or the Issuer Trust may publicly offer for sale
or resell the New Capital Securities only in compliance with the provisions of
Rule 144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
STATUS OF THE COMPANY AS A BANK HOLDING COMPANY
The Company is a legal entity separate and distinct from the Bank, although
the principal source of the Company's cash revenues is dividends from the Bank.
The right of the Company to participate in the assets of any subsidiary upon the
latter's liquidation, reorganization or otherwise (and thus the ability of the
holders of Capital Securities to benefit indirectly from any such distribution)
will be subject to the claims of the subsidiary's creditors, which will take
priority except to the extent that the Company may itself be a creditor with a
recognized claim. As of June 30, 1997, the Company's subsidiaries had
indebtedness and other liabilities of approximately $936 million.
Payment of dividends by the Bank is restricted by various legal and
regulatory limitations. At June 30, 1997, approximately $27 million was
available for payment of dividends to the Company from the Bank without prior
regulatory approval.
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The Bank is also subject to restrictions under federal law which limit the
transfer of funds by the Bank to the Company, whether in the form of loans,
extensions of credit, investments, asset purchases or otherwise. Such transfers
by the Bank to the Company are limited in amount to 10% of the Bank's capital
and surplus and, with respect to the Company and any other affiliates, to an
aggregate of 20% of the Bank's capital and surplus. Furthermore, such loans and
extensions of credit are required to be secured in specified amounts.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES
The obligations of the Company under the Guarantee and the Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company. No payment of principal of (including
redemption payments, if any) or interest on the Subordinated Debentures may be
made if (i) any Senior Indebtedness of the Company is not paid when due and any
applicable grace period with respect to such default has ended with such default
not having been cured or waived or ceasing to exist or (ii) the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default. As
of June 30, 1997, the Company had $5.0 million of Senior Indebtedness. There are
no terms in the Capital Securities, the Subordinated Debentures or the Guarantee
that limit the ability of the Company or its subsidiaries to incur additional
indebtedness, liabilities and obligations, including such indebtedness that
ranks senior to the Subordinated Debentures and the Guarantee. See "Description
of the Guarantee -- Status of the Guarantee" and "Description of the New Junior
Subordinated Debentures."
Because the Company is a bank holding company, the Subordinated Debentures
and the Guarantee are effectively subordinated to all existing and future
liabilities, including trade payables, of the Company's subsidiaries, except to
the extent that the Company is a creditor of the subsidiaries recognized as
such. There are also various legal limitations on the extent to which the
Company's Banking Subsidiaries may extend credit, pay dividends or otherwise
supply funds to the Company or various of its affiliates.
RIGHTS UNDER THE GUARANTEE
The terms of the Guarantee will be those set forth in the Guarantee and
those made part of the Guarantee by the Trust Indenture Act of 1939 (the "Trust
Indenture Act"), under which Bankers Trust Company will act as the trustee (the
"Guarantee Trustee"). The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities. Bankers Trust Company will
also act as Debenture Trustee (the "Debenture Trustee") for the Subordinated
Debentures under the Indenture and as Property Trustee under the Trust
Agreement. Bankers Trust (Delaware) will act as Delaware Trustee under the Trust
Agreement. The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by or on behalf of the Issuer Trust:
(i) any accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at such time; (ii) the Redemption Price (as defined in "Description of
Capital Securities -- Redemption") with respect to any Capital Securities called
for redemption, to the extent that the Issuer Trust has funds on hand available
therefor at such time; and (iii) upon a voluntary or involuntary dissolution of
the Issuer Trust (unless the Subordinated Debentures are distributed to holders
of the Capital 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 Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Capital Securities on liquidation of the Issuer
Trust. The Guarantee is subordinated as described under "-- Ranking of
Subordinated Obligations Under the Guarantee and the Subordinated Debentures"
and "Description of Guarantee -- Status of the Guarantee." The holders of not
less than a majority in aggregate Liquidation Amount of the outstanding Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee. Any holder of the Capital Securities may
institute a legal proceeding directly against the Company to enforce its rights
under the Guarantee without first instituting a legal proceeding against the
Issuer Trust, the Guarantee Trustee or any other person or entity.
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If the Company were to default on its obligation to pay amounts payable
under the Subordinated Debentures, the Issuer Trust may lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Capital Securities may institute a
legal proceeding directly against the Company for enforcement of payment to such
holder of any amounts payable in respect of such Subordinated Debentures having
a principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such holder (a "Direct Action"). In connection with such Direct
Action, the Company will have a right of set-off under the Indenture to the
extent of any payment made by the Company to such holder of Capital Securities
in the Direct Action. Except as described herein, holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Subordinated Debentures or assert directly any other rights in respect of
the Subordinated Debentures. See "Description of New Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities,"
"-- Debenture Events of Default" and "Description of Guarantee." The Trust
Agreement provides that each holder of Capital Securities by acceptance thereof
agrees to the provisions of the Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Issuer Trust's rights as holder of Subordinated Debentures.
Holders of Capital Securities will not be entitled to appoint, remove or replace
the Property Trustee or the Delaware Trustee except upon the occurrence of
certain events specified in the Trust Agreement and described herein. The
Property Trustee and the holders of all the Common Securities may, subject to
certain conditions, amend the Trust Agreement without the consent of holders of
Capital Securities to cure any ambiguity or make other provisions not
inconsistent with the Trust Agreement or to ensure that the Issuer Trust (i)
will not be taxable as a corporation for United States federal income tax
purposes, or (ii) will not be required to register as an "investment company"
under the Investment Company Act. See "Description of the New Capital
Securities -- Voting Rights; Amendment of Trust Agreement" and "-- Removal of
Issuer Trustees; Appointment of Successors."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities,
or the market prices for Subordinated Debentures that may be distributed in
exchange for Capital Securities if a liquidation of the Issuer Trust occurs.
Accordingly, the Capital Securities or the Subordinated Debentures that a holder
of Capital Securities may receive on liquidation of the Issuer Trust may trade
at a discount to the price that the investor paid to purchase the Old Capital
Securities which are being exchanged hereby. Because holders of Capital
Securities may receive Subordinated Debentures on termination of the Issuer
Trust, purchasers electing to exchange their Old Capital Securities are also
making an investment decision with regard to the Subordinated Debentures and
should carefully review all the information regarding the Subordinated
Debentures contained herein. See "Description of the New Junior Subordinated
Debentures."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE CAPITAL SECURITIES
If a Trust Agreement Event of Default with respect to the Issuer Trust
occurs and is continuing, then the holders of the Capital Securities would,
except as provided below, rely on the enforcement by the Property Trustee of its
rights as holder of the Subordinated Debentures against the Company. The holders
of a majority in liquidation amount of the Capital Securities will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee with respect to the Capital Securities
or to direct the exercise of any trust or power conferred upon the Property
Trustee under the Trust Agreement, including the right to direct the Property
Trustee to exercise the remedies available to it as holder of the Subordinated
Debentures. If the Property Trustee fails to enforce its rights under the
Subordinated
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Debentures after the holders of a majority in liquidation amount of the Capital
Securities have so directed the Property Trustee, a holder of record of the
Capital Securities may, to the fullest extent permitted by law, institute a
legal proceeding directly against the Company to enforce the rights of the
Property Trustee under the Subordinated Debentures, without first instituting
any legal proceeding against such Property Trustee or any other person.
Notwithstanding the foregoing, if a Trust Agreement Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Subordinated Debentures on the
respective dates such interest or principal is payable, after giving effect to
any Extension Period (or in the case of redemption, on the redemption date),
then a holder of record of the Capital Securities may institute directly against
the Company a proceeding for enforcement of payment, on or after the respective
due dates specified in the Subordinated Debentures, to such holder directly of
the principal of or interest on the Subordinated Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder (a "Direct Action"). In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of the
Capital Securities under the Trust Agreement to the extent of any payment made
by the Company to such holder of the Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as a
Trust Agreement Event of Default has occurred and is continuing. The holders of
the Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debentures. See "Description of the
New Capital Securities -- Events of Default; Notice."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON THE CAPITAL SECURITIES
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debentures by extending the interest payment period, at any
time and from time to time, subject to certain conditions, for Extension
Periods, each not exceeding 10 consecutive semi-annual periods, provided that no
Extension Period may extend beyond the stated maturity of the Subordinated
Debentures. During each such Extension Period, distributions on the Capital
Securities would also be deferred (but would continue to accrue at an annual
rate of 9.375%, despite such deferral, with interest thereon compounded
semi-annually to the fullest extent permitted by law) by the Issuer Trust. In
the event that the Company exercises this right to defer interest payments on
the Subordinated Debentures, and such deferral is continuing, or if there shall
have occurred and be continuing any Indenture Event of Default or if the Company
shall be in default with respect to the payment of its obligations under the
Guarantee, (a) the Company shall not declare or pay dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (other
than (i) purchases or acquisitions of shares of any such capital stock or rights
to acquire such capital stock in connection with the satisfaction by the Company
of its obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of capital
stock of the Company or rights to acquire such capital stock for another class
or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make guarantee payments (other than payments under the
Guarantee) in respect of the foregoing; and (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company that rank pari passu with or
junior to the Subordinated Debentures. Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period,
provided that each such Extension Period, together with all such previous and
further extensions thereof, may not exceed 10 consecutive semi-annual periods or
extend beyond the maturity of the Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the terms set forth
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herein. See "Description of the New Capital Securities" and "Description of the
New Junior Subordinated Debentures."
During each Extension Period, if any, each holder of the Capital Securities
will continue to accrue income (as original issue discount ("OID")) in respect
of the deferred interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed. In
such event, each holder of the Capital Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash, and
will not receive cash related to such income from the Issuer Trust if such
holder disposes of its Capital Securities prior to the record date for payment
of such deferred interest. See "United States Federal Income Taxation -- US
Holders -- Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest on the Subordinated Debentures. However, should the Company
determine to exercise such right in the future, the market price of the Capital
Securities is likely to be affected. Accordingly, a holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of the Company's right to
defer interest payments, the market price of the Capital Securities (which
represent undivided beneficial interests in the Subordinated Debentures) may be
more volatile than the market price of other similar securities where the issuer
does not have such right to defer interest payments.
TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT REDEMPTION;
PROPOSED TAX LAW CHANGES
Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event, the Company has the right to redeem
the Subordinated Debentures in whole, but not in part, at any time within 90
days following the occurrence of such Tax Event, Investment Company Event or
Capital Treatment Event and thereby cause a mandatory redemption of the Capital
Securities and Common Securities. Any such redemption shall be at a price equal
to the liquidation amount of the Capital Securities and Common Securities,
respectively, together with accumulated Distributions to but excluding the date
fixed for redemption. The ability of the Company to exercise its rights to
redeem the Subordinated Debentures prior to the stated maturity may be subject
to prior regulatory approval by the Federal Reserve, if then required under
applicable Federal Reserve capital guidelines or policies. See "Description of
the New Junior Subordinated Debentures -- Redemption" and "Description of
Capital Securities -- Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Capital Securities, there is more than an insubstantial risk
that (i) the Issuer Trust is, or will be within 90 days of the delivery of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Old Junior Subordinated Debentures or New Junior
Subordinated Debentures, (ii) interest payable by the Company on the Old Junior
Subordinated Debentures or New Junior Subordinated Debentures is not, or within
90 days of the delivery of such opinion will not be, deductible by the Company,
in whole or in part, for United States federal income tax purposes or (iii) the
Issuer Trust is, or will be within 90 days of the delivery of the opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more
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than an insubstantial risk that the Issuer Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Capital Securities.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Capital
Securities, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the Liquidation Amount of the Capital
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the risk-based capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company.
FUTURE CHANGES IN TAX LAW
The Company knows of no legislation actively under consideration by
Congress which could affect the Subordinated Debentures in such a manner so as
to constitute a Tax Event. It is possible, however, that Congress could pass
such legislation in the future. For instance, President Clinton's budget
proposals for fiscal year 1998 contained a provision that would generally deny
corporate issuers a deduction for interest on certain debt obligations that have
a maximum term in excess of 15 years and are not shown as indebtedness on the
separate balance sheet of the issuer, or, where the instrument is issued to a
related party (other than a corporation), where the holder or some other related
party issues a related instrument that is not shown as indebtedness on the
issuer's consolidated balance sheet. This proposal was not enacted. There can be
no assurance, however, that a similar proposal will not be enacted in the future
and, if enacted, that it will not be enacted with retroactive effect with
respect to the Subordinated Debentures. Accordingly, there can be no assurance
that a Tax Event will not occur.
REDEMPTION; DISTRIBUTION
The Company, as the holder of all of the outstanding Common Securities, has
the right at any time (including, without limitation, upon the occurrence of a
Tax Event, a Capital Treatment Event or an Investment Company Event) to dissolve
the Issuer Trust, and, after satisfaction of liabilities to creditors of the
Issuer Trust (to the extent not paid by the Company), cause the Subordinated
Debentures to be distributed to the holders of the Trust Securities on a pro
rata basis in accordance with the respective liquidation amounts thereof, in
liquidation of the Issuer Trust. See "Description of the New Capital
Securities -- Liquidation Distribution Upon Dissolution." In certain
circumstances described herein, the Company will have the right to redeem the
Subordinated Debentures, in whole or in part, in which event the Issuer Trust
will redeem the Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debentures redeemed by the
Company on a pro rata basis. The exercise of such rights is subject to the
Company having received prior approval from the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal Reserve.
See "Description of the New Capital Securities -- Redemption" and
"-- Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law, a distribution of the
Subordinated Debentures upon the dissolution of the Issuer Trust generally would
not be a taxable event to holders of the Capital Securities. However, a
dissolution of the Issuer Trust in which holders of the Capital Securities
receive cash would be a taxable event to such holders. See "United States
Federal Income Taxation -- US Holders -- Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Issuer Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debentures that may be distributed in exchange
for the Capital Securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the Capital Securities that an investor may receive pursuant
to the Exchange Offer, or in a secondary purchase, or the Subordinated
Debentures that a holder of the Capital
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Securities may receive on dissolution and liquidation of the Issuer Trust, may
trade at a discount to the price paid to purchase such Capital Securities.
Because the ability of the Issuer Trust to pay amounts due on the Capital
Securities is wholly dependent upon the Company's making payments on the
Subordinated Debentures as and when required, and because holders of the Capital
Securities may receive the Subordinated Debentures upon dissolution and
liquidation of the Issuer Trust, purchasers electing to exchange their Old
Capital Securities for New Capital Securities are also making an investment
decision with regard to the Subordinated Debentures and should carefully review
all the information regarding the Subordinated Debentures contained herein and
evaluate the credit risk of the Company. See "Description of the New Capital
Securities" and "Description of the New Junior Subordinated Debentures."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving the Company that may adversely affect such holders. See "Description
of the New Junior Subordinated Debentures."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to limited
exceptions, if applicable). The Company and the Issuer Trust do not intend to
register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to limited
exceptions, if applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of the New Capital Securities -- General."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of the Old Capital Securities desiring to tender
such Old Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Trust is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
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GROWTH
The Company has grown and may seek to grow by acquiring other financial
institutions and branches. However, competition for acquisitions in the
Company's market area is highly competitive. Moreover, any acquisitions will be
subject to regulatory approval and there can be no assurance that the Company
will obtain such approvals. The Company may not be as successful in the future
as it has been in the past in identifying further acquisition candidates,
integrating acquired institutions or preventing deposit erosion at acquired
institutions or branches. Furthermore, the Company's ability to grow through
acquisitions will depend on its maintaining sufficient regulatory capital levels
and on economic conditions.
COMPETITION
The banking business is highly competitive. In its primary market areas,
the Bank competes with other commercial banks, savings and loan associations,
credit unions, finance companies, mutual funds, insurance companies, and
brokerage and investment banking firms operating locally and elsewhere. The
Bank's primary competitors have substantially greater resources and lending
limits than the Bank and may offer certain services, such as trust services,
that the Bank does not provide at this time. The profitability of the Company
depends upon the Bank's ability to continue to compete in its primary market
areas.
DEVELOPMENTS IN TECHNOLOGY
The market for financial services, including banking services, is
increasingly affected by advances in technology, including developments in
telecommunications, data processing, computers, automation, Internet-based
banking, telebanking, debit cards and so-called "smart" cards. The ability of
the Company to compete successfully in its markets may depend on the extent to
which it is able to implement and exploit such technological changes. However,
there can be no assurance that the development of these or any other new
technologies, or the Company's success or failure in anticipating or responding
to such developments, will materially affect the Company's business, financial
condition and operating results.
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TRIANGLE BANCORP, INC.
GENERAL
The Company is a registered bank holding company, chartered under the laws
of North Carolina, and headquartered in Raleigh, North Carolina, with banking
offices located in various communities in North Carolina. At June 30, 1997, the
Company had total consolidated assets of approximately $1.03 billion, total
consolidated deposits of approximately $852 million and total consolidated
shareholders' equity of approximately $92 million.
The Company operates primarily through the Bank, a North Carolina chartered
commercial bank that began operations on January 4, 1988. The Bank provides a
wide variety of retail and commercial banking products and services, but has
focused on lending to small- and medium-sized businesses and to individuals
located in the communities it serves.
Since 1991, the Company has experienced significant growth, both internally
and through acquisitions of unaffiliated institutions, increasing in size from
four branch offices and approximately $85 million in total assets in December
1990, to 46 branch offices and approximately $1.0 billion in total assets at
year-end 1996. During this time period, the Company acquired a total of
approximately $700 million in assets and 34 branch offices (net of certain sales
to rationalize the branch system) in ten transactions involving the acquisition
of whole institutions or the purchase of various branch offices. As described
further under "-- Recent Acquisitions," the Company recently completed the
acquisition of a bank in Charlotte, North Carolina, and the acquisition of ten
branch offices from Branch Banking & Trust Company and United Carolina Bank.
While the Company has significantly expanded its branch system, it has
emphasized integrating the acquired operations in a manner that maintains credit
quality and promotes operational efficiency. At June 30, 1997, the Company had
nonperforming assets of $6.2 million, or .88% of gross loans and other real
estate owned. Net charge-offs for 1996 were 0.16% of average loans. Net
charge-offs for the first half of 1997 were 0.01% of average loans. The
allowance for loan losses at June 30, 1997 was 1.54% of gross loans and 175.58%
of nonperforming loans. The efficiency ratios of the Company for the 1996 fiscal
year and for the first half of 1997 were 60% and 51%, respectively. The
Company's returns on average assets and average equity for the 1996 fiscal year
and the first half of 1997 (annualized) were 1.22% and 1.56% and 13.63% and
17.64%, respectively.
The Company's strategy includes continuing to (i) develop its branch system
through acquisitions and de novo branch openings, including supermarket
branches, (ii) provide personalized, community-oriented banking services with a
focus on lending to small- and medium-sized businesses and to individuals within
the communities in which it operates and (iii) maintain its credit quality and
operational efficiency.
The Company continually evaluates business combination opportunities. As a
result, business combination discussions and, in some cases, negotiations
frequently take place and future business combinations involving cash, debt or
equity securities can be expected. Any future business combination or series of
business combinations that the Company may undertake may be material, in terms
of assets acquired or liabilities assumed to the Company's financial condition.
The Company was organized under the laws of the State of North Carolina on
November 27, 1991, for the purposes of acquiring the Bank, which acquisition was
completed in August 1992. The Company's principal executive offices are located
at 4300 Glenwood Avenue, Raleigh, North Carolina 27612, and its telephone number
at such address is (919) 881-0455.
For additional information regarding the Company's financial condition and
results of operations, see "Selected Consolidated Financial Data and Other
Information."
RECENT ACQUISITIONS
On October 2, 1997, the Company consummated a merger with Bank of
Mecklenburg, Charlotte, North Carolina ("Mecklenburg"), pursuant to which the
Company acquired all of the outstanding shares of
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Mecklenburg by exchanging one share of the Company's common stock for each
outstanding share of Mecklenburg's common stock. The Company currently is
operating Mecklenburg as a wholly-owned subsidiary of the Company. As of June
30, 1997, Mecklenburg had approximately $197 million in deposit liabilities,
$134 million in loans and $306 million in total assets and operated three
branches in Charlotte, North Carolina. This acquisition will be accounted for as
a pooling of interests.
On August 15, 1997, the Bank acquired ten branch offices from Branch
Banking & Trust Company and United Carolina Bank which were being divested in
connection with the merger of these two companies. The ten branches are located
in the North Carolina counties of Duplin, Lee, Richmond, Robeson, Washington and
Wayne. In the transaction, the Bank assumed approximately $195 million in
deposits and approximately $62 million aggregate principal amount in loans
associated with the ten branches. The Bank paid a premium of approximately $15.8
million for the assumption of the deposits. This branch purchase will be
accounted for as a purchase.
If the Recent Acquisitions had been consummated on June 30, 1997, the
Company's total consolidated assets would have increased by approximately $501
million, to approximately $1.53 billion; its total consolidated deposits would
have increased by approximately $392 million to approximately $1.24 billion; its
total consolidated liabilities would have increased by approximately $481
million to approximately $1.42 billion; and its total consolidated shareholders'
equity would have increased by approximately $20 million to approximately $112
million.
PENDING LITIGATION
The Bank has been named as a defendant in a lender liability suit currently
pending in state court in North Carolina in which the plaintiff claims that the
Bank breached an oral commitment to make a $100,000 loan to plaintiff. The
plaintiff is asserting that he is entitled to $5 million in damages and is
seeking to have these damages trebled and an award of attorneys fees. This suit
is scheduled to go to trial in November 1997. The Bank disputes the plaintiff's
theories of liability and damages and intends to continue to defend the suit
vigorously.
NEITHER THE CAPITAL SECURITIES NOR THE SUBORDINATED DEBENTURES ARE
OBLIGATIONS OF OR GUARANTEED BY THE BANK.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following unaudited table presents the consolidated ratios of earnings
to fixed charges of the Company. The consolidated ratio of earnings to fixed
charges has been computed by dividing income before income taxes and fixed
charges by fixed charges. Fixed charges represent all interest expense (ratios
are presented both excluding and including interest on deposits). Interest
expense (other than on deposits) includes interest on borrowed funds, federal
funds purchased and securities sold under agreements to repurchase, and other
funds borrowed.
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------- -------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ----- ---- ---- ---- ----
Earnings to Fixed Charges:
Excluding Interest on Deposits...... 11.83x 8.78x 10.34x 9.15x 4.98x 7.66x 7.13x
Including Interest on Deposits...... 1.69 1.55 1.54 1.44 1.32 1.35 1.25
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SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
Presented below is selected consolidated financial information for the
Company for the periods specified. The consolidated financial information is not
necessarily indicative of the results for any future period and is qualified in
its entirety, and should be read in conjunction with, the Company's consolidated
financial statements, including the notes thereto, and other detailed financial
information included in the documents incorporated by reference in this
Prospectus. See "Incorporation of Certain Documents by Reference."
AS OF AND FOR
THE SIX MONTHS ENDED
JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SELECTED BALANCE SHEET DATA
Loans....................... $ 698,906 $625,175 $639,718 $559,707 $467,842 $395,398 $274,895
Securities Available for
Sale...................... 140,214 145,653 146,086 127,904 102,427 -- --
Securities Held to
Maturity.................. 103,526 81,617 97,112 76,285 75,899 173,198 127,951
Total Assets................ 1,027,208 940,613 971,105 853,926 742,438 681,131 470,615
Total Deposits.............. 852,346 809,446 847,764 714,590 636,276 583,571 407,890
Advances from the Federal
Home Loan Bank............ 30,000 23,500 10,000 19,500 10,500 5,500 --
Corporation-Obligated
Mandatorily Redeemable
Capital Securities........ 19,950 -- -- -- -- -- --
Subordinated Debentures..... -- -- -- -- 2,000 6,720 2,000
Shareholders' Equity........ 91,642 81,796 86,896 79,407 68,306 65,304 50,487
SELECTED RESULTS OF
OPERATION
Net Interest Income......... 21,666 19,318 40,256 35,101 30,601 21,213 18,990
Provision for Loan Losses... 1,330 1,035 2,100 428 1,250 2,147 1,905
Noninterest Income.......... 6,101 4,576 8,494 8,066 5,758 6,278 4,558
Noninterest Expense......... 14,151 14,243 29,169 30,719 25,719 20,492 18,035
Net Income.................. 7,751 5,448 11,301 7,858 4,182 3,855 3,122
Per Share Data
Primary Earnings Per
Share................... 0.72 0.51 1.05 0.74 0.41 0.47 0.38
Fully Diluted Earnings Per
Share................... 0.71 0.51 1.04 0.73 0.41 0.47 0.38
Book Value................ 8.75 7.84 8.30 7.62 6.70 6.62 6.27
Cash Dividends............ $ 0.21 $ 0.15 $ 0.31 $ 0.17 $ 0.07 $ 0.02 $ 0.01
SELECTED RATIOS
Return on Average
Assets.................. 1.56%(1) 1.23%(1) 1.22% 1.00% 0.60% 0.78% 0.69%
Return on Average
Equity.................. 17.64(1) 13.51(1) 13.63 10.63 6.21 7.25 6.33
Shareholders' Equity to
Total Assets............ 8.92(1) 8.70(1) 8.95 9.30 9.20 9.59 10.73
ASSET QUALITY RATIOS
Non-performing Loans and
Other Real Estate Owned
to Total Gross Loans.... 0.88 0.54 0.66 0.54 0.75 1.45 1.62
Net Charge-offs to Average
Loans................... 0.01 0.03 0.16 0.20 0.68 0.27 0.63
Total Allowance for Loan
Losses to Total Non-
performing Loans........ 175.58% 276.70% 257.49% 338.60% 334.82% 268.17% 257.28%
- - ---------------
(1) Annualized
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SUPPLEMENTAL SELECTED CONSOLIDATED FINANCIAL DATA AND
OTHER INFORMATION
Presented below is supplemental selected consolidated financial information
for the Company for the periods presented, giving retroactive effect to the
acquisition of Mecklenburg by the Company on October 2, 1997. The supplemental
consolidated financial information is not necessarily indicative of the results
for any future period and is qualified in its entirety, and should be read in
conjunction with, the Company's supplemental consolidated financial statements,
including the notes thereto, and other detailed financial information included
in the documents incorporated by reference in this Prospectus. See
"Incorporation of Certain Documents by Reference".
SIX MONTHS ENDED
JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SELECTED BALANCE SHEET DATA
Loans....................... $ 833,060 $714,397 $752,399 $639,557 $526,104 $449,738 $322,164
Securities Available for
Sale...................... 232,574 298,255 286,510 216,523 156,745 0 0
Securities Held to
Maturity.................. 104,526 81,617 98,112 89,452 86,427 213,371 160,195
Trading Assets.............. 53,440 0 0 0 0 0 0
Total Assets................ 1,332,846 1,200,940 1,241,394 1,054,157 877,983 791,900 560,500
Total Deposits.............. 1,049,184 986,607 1,025,752 844,878 737,388 674,302 478,926
Advances from the Federal
Home Loan Bank............ 55,000 63,500 58,000 59,500 20,500 5,500 0
Subordinated Debt........... 0 0 0 0 2,000 6,700 2,000
Corporation-Obligated
Mandatorily Redeemable
Capital Securities........ 19,950 0 0 0 0 0 0
Shareholders' Equity........ 111,551 99,956 105,736 96,870 82,887 80,360 64,863
SELECTED RESULTS OF
OPERATION
Net Interest Income......... 24,437 21,912 45,637 39,456 34,411 24,407 21,580
Provision for Loan Losses... 1,479 1,154 2,330 523 1,299 2,272 2,120
Noninterest Income.......... 7,197 5,577 9,902 8,445 5,856 6,438 4,649
Noninterest Expense......... 15,935 16,080 32,721 33,602 31,123 22,753 20,111
Net Income.................. 8,914 6,634 13,220 9,114 5,184 4,535 3,466
Per Share Data
Primary Earnings Per
Share................... 0.68 0.51 1.02 0.72 0.42 0.44 0.34
Fully Diluted Earnings Per
Share................... 0.67 0.51 1.01 0.71 0.42 0.44 0.34
Book Value................ 8.86 7.96 8.40 7.73 6.75 6.98 6.92
Cash Dividends............ 0.18 0.13 0.28 0.16 0.07 0.02 0.01
SELECTED RATIOS
Return on Average
Assets.................. 1.41% 1.16% 1.13% 0.97% 0.63% 0.77% 0.65%
Return on Average
Equity.................. 16.52 13.46 13.16 10.12 6.31 6.68 5.46%
Shareholders' Equity to
Total Assets............ 8.37 8.32 8.52 9.19 9.44 10.15 11.57%
ASSET QUALITY RATIOS
Non-performing Loans and
Other Real Estate Owned
to Total Gross Loans.... 0.74 0.47 0.82 0.47 0.65 1.31 1.47
Net Charge-offs to Average
Loans................... 0.01 0.03 0.10 0.18 0.60 0.24 0.57
Total Allowance for Loan
Losses to Total Non-
performing Loans........ 197.26% 308.79% 173.41% 315.21% 293.59% 195.27% 113.62%
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TRIANGLE CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State. The Issuer Trust is governed by an Amended and Restated Trust Agreement
among the Company, as Depositor, Bankers Trust (Delaware), as Delaware Trustee,
and Bankers Trust Company, as Property Trustee. Two individuals were appointed
by the holders of the Common Securities to act as administrators with respect to
the Issuer Trust (the "Administrators"). The Company appointed two individuals
who are employees and officers of the Company to serve as the Administrators.
See "Description of the New Capital Securities -- Miscellaneous." The Issuer
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) investing the gross proceeds of such Trust Securities in the
Subordinated Debentures, (iii) effecting the Exchange Offer, including
exchanging up to $20,000,000 aggregate principal amount of the Old Junior
Subordinated Debentures for up to $20,000,000 of the New Junior Subordinated
Debentures, and (iv) engaging in only those other activities necessary,
convenient or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, the New Junior Subordinated Debentures will be the
sole assets of the Issuer Trust, and payments under the New Junior Subordinated
Debentures will be the sole source of revenue of the Issuer Trust.
The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Capital Securities, except that upon the occurrence
and during the continuation of a Debenture Event of Default arising as a result
of any failure by the Company to pay any amounts in respect of the New Junior
Subordinated Debentures when due, the rights of the holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Capital Securities. See "Description of the New Capital
Securities -- Subordination of Common Securities." The Company acquired Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Issuer Trust. The Issuer Trust has a term of 31 years but may terminate
earlier as provided in the Trust Agreement. The address of the Delaware Trustee
is Bankers Trust (Delaware), 1001 Jefferson Street, Wilmington, Delaware 19801,
telephone number (302) 576-3301. The address of the Property Trustee, the
Guarantee Trustee and the Debenture Trustee is Banker's Trust Company, Four
Albany Street, 4th Floor, New York, New York 10006, telephone number (212)
250-2500.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included as a liability in the consolidated financial statements of the
Company. The Capital Securities will be included in the consolidated balance
sheets of the Company and appropriate disclosures about the Capital Securities,
the Guarantee and the New Junior Subordinated Debentures will be included in the
notes to the consolidated financial statements of the Company. For financial
reporting purposes, Distributions on the Capital Securities will be recorded as
interest expense in the consolidated statements of income of the Company.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company and
the Issuer Trust entered into the Registration Rights Agreement with the Initial
Purchaser, pursuant to which the Company and the Issuer Trust agreed, among
other things, to file and to use their best efforts to cause to become effective
with the Commission a registration statement with respect to the exchange of the
Old Capital Securities for capital securities which have been registered under
the Securities Act with terms identical in all material respects to the terms of
the Old Capital Securities. A copy of the Registration Rights Agreement has been
filed as an Exhibit to the Registration Statement of which this Prospectus is a
part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Issuer Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the
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same as the form and terms of the Old Capital Securities, except that the New
Capital Securities have been registered under the Securities Act and therefore
will not be subject to certain restrictions on transfer applicable to the Old
Capital Securities and subject to certain limited exceptions specified in the
Registration Rights Agreement, will not provide for any increase in the
Distribution rate thereon.
In this regard, under certain circumstances set forth in the Registration
Rights Agreement, additional interest will accrue on the Capital Securities in
addition to the stated interest thereon. The Registration Rights Agreement
provides that the Company and the Issuer Trust shall use their respective best
efforts to (a) to cause this Registration Statement to be declared effective by
the Commission on or prior to 180 days after the date of original issuance of
the Trust Securities, (b) keep this Registration Statement effective for not
less than 30 business days (or longer if required by applicable law) after the
date notice of the Exchange Offer is made to the holders, (c) unless the
Exchange Offer will not be permitted by applicable law or Commission policy, the
Issuer Trust will commence the Exchange Offer and use its best efforts to
consummate the Exchange Offer within 30 business days after the effective date
of this Registration Statement and (d) if obligated to file the Shelf
Registration Statement (as defined in the Registration Rights Agreement), the
Company and Issuer Trust will use their best efforts to file the Shelf
Registration Statement with the Commission as promptly as practicable, but in
any event, within 45 days after such filing obligations arises and to cause the
Shelf Registration Statement to be declared effective by the Commission on or
prior to 180 days after such obligation arises.
If (a) the Company and the Issuer Trust fail to file, if appropriate, the
Shelf Registration Statement on or before the dates specified for such filing,
(b) this Registration Statement or the Shelf Registration Statement, if
applicable, are not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company and Issuer Trust fail to consummate the Exchange Offer within 30
business days of the Effectiveness Target Date with respect to this Registration
Statement or (d) this Registration Statement or the Shelf Registration
Statement, if applicable, is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the period specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above, a "Registration Default"),
then liquidated damages shall accrue on the principal amount ("Additional
Interest") of the Old Junior Subordinated Debentures and, if the Exchange Offer
has been consummated, the New Junior Subordinated Debentures, and additional
distribution shall accumulate on the liquidation amount ("Additional
Distributions") of the Old Capital Securities and, if the Exchange Offer has
been consummated, the New Capital Securities, immediately following the
occurrence of such Registration Default, each at a rate of 0.25% per annum.
Notwithstanding the foregoing, neither the liquidated damages on the
Subordinated Debentures nor the additional distribution rate on the liquidation
amount of the Capital Securities may exceed in the aggregate 0.25% per annum.
Such Additional Interest and Additional Distributions shall cease to accrue and
accumulate upon the curing of the respective Registration default.
For the purposes of the preceding paragraph, "Transfer Restricted Security'
means each Old Capital Security, the Old Guarantee or Old Junior Subordinated
Debenture until (i) the date on which such Old Capital Security, the Old
Guarantee or Old Junior Subordinated Debenture has been exchanged for a New
Capital Security, New Guarantee or New Junior Subordinated Debenture in the
Exchange Offer and are thereafter freely tradable by the holder thereof (other
than an affiliate of the Company), (ii) such Old Capital Security, Old Guarantee
or Old Junior Subordinated Debenture, as the case may be, shall have ceased to
be outstanding, (iii) the date on which such Old Capital Security, Old Guarantee
or Old Junior Subordinated Debenture has been effectively registered under the
Securities Act and disposed of in accordance with this Registration Statement or
the Shelf Registration Statement, if applicable, or (iv) the date on which such
Old Capital Security, Old Guarantee or Old Junior Subordinated Debenture is
distributed to the public pursuant to Rule 144 (or any similar provision then in
force, but not Rule 144A) under the Securities Act.
The Exchange Offer is not being made to, nor will the Company or the Issuer
Trust accept tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
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31
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Issuer Trust or any other person who has obtained
a properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC. Pursuant to the Exchange Offer, the Company will exchange as
soon as practicable after the date hereof, the Old Guarantee for the Guarantee
and $20 million aggregate principal amount of the Old Junior Subordinated
Debentures for a like aggregate principal amount of the New Junior Subordinated
Debentures. The Guarantee and the New Junior Subordinated Debentures have also
been registered under the Securities Act.
TERMS OF THE EXCHANGE
The Company and the Issuer Trust hereby offer, upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $20,000,000 aggregate liquidation amount of New
Capital Securities for a like aggregate liquidation amount of Old Capital
Securities properly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn in accordance with the procedures described
below. The Issuer Trust will issue, promptly after the Expiration Date, an
aggregate liquidation amount of up to $20,000,000 of New Capital Securities in
exchange for a like principal amount of outstanding Old Capital Securities
tendered and accepted in connection with the Exchange Offer. Holders may tender
their Old Capital Securities in whole or in part in a liquidation amount of not
less than $100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$20,000,000 aggregate liquidation amount of the Old Capital Securities is
outstanding. Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital Securities
which are not tendered for or are tendered but not accepted in connection with
the Exchange Offer will remain outstanding and be entitled to the benefits of
the Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE ADMINISTRATORS OR TRUSTEES
OF THE ISSUER TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Company and
the Issuer Trust (in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended). The Company and the
Issuer Trust expressly reserve the right in their sole and absolute discretion,
subject to applicable law, at any time and from time to time, (i) to delay the
acceptance of the Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) if the Company and the Issuer Trust determine, in their
sole and absolute discretion, that any of the events or conditions referred to
under "-- Conditions to the Exchange Offer" have occurred or exist or have not
been satisfied, (iii) to extend the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to withdraw
their tendered Old Capital Securities as described under "-- Withdrawal Rights,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Company and the Issuer Trust to constitute a material change, or if the
Company and the Issuer Trust waive a material condition of the Exchange Offer,
the Company or the Issuer Trust will promptly disclose such amendment or waiver
by means of a prospectus supplement that will be distributed to the registered
holders of the Old Capital Securities, and the Company and the Issuer Trust will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company or the Issuer Trust may choose to make any
public announcement and subject to applicable law, neither the Company nor the
Issuer Trust shall have any obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to an
appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company and the Issuer Trust will exchange, and will issue to the Exchange
Agent, New Capital Securities for Old Capital Securities validly tendered and
not withdrawn (pursuant to the withdrawal rights described below under
"-- Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof) or an Agent's Message (as defined herein),
properly completed and duly executed, with any required signature guarantees,
and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Issuer Trust will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and
when the Company or the Issuer Trust gives oral or written notice to the
Exchange Agent of the Company's and the Issuer Trust's acceptance of such Old
Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Company and the Issuer Trust for the purpose of
receiving tenders of Old Capital Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving Old
Capital Securities, Letters of Transmittal and related documents and
transmitting New Capital Securities to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Capital Securities tendered
pursuant to the Exchange Offer is delayed (whether before or after the Company's
and the Issuer Trust's acceptance for exchange of Old Capital Securities) or the
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33
Company or the Issuer Trust extends the Exchange Offer or is unable to accept
for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's or the Issuer Trust's
rights set forth herein, the Exchange Agent may, nevertheless, on behalf of the
Company and the Issuer Trust and subject to Rule 14e-1(c) under the Exchange
Act, retain tendered Old Capital Securities and such Old Capital Securities may
not be withdrawn except to the extent tendering holders are entitled to
withdrawal rights as described below under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Issuer Trust will acquire good, marketable and unencumbered title to
the tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Old Capital Securities tendered for exchange
are not subject to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any additional
documents deemed by the Company, the Issuer Trust or the Exchange Agent to be
necessary or desirable to complete the exchange, sale, assignment, and transfer
of the Old Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or an
Agent's Message (as defined herein), with any required signature guarantees and
any other required documents, must be received by the Exchange Agent at its
address set forth below under "-- Exchange Agent," and either (i) tendered Old
Capital Securities must be received by the Exchange Agent on or prior to the
Expiration Date, or (ii) such Old Capital Securities must be tendered pursuant
to the procedures for book-entry transfer set forth below and a book-entry
confirmation must be received by the Exchange Agent, in each case on or prior to
the Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of a tendering holder's Old Capital Securities are
tendered, the tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
The entire amount of Old Capital Securities delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth below under
"-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
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Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Delivery. The method of delivery of the book-entry confirmation of
certificates representing tendered Old Capital Securities, the Letter of
Transmittal, and all other required documents is at the option and sole risk of
the tendering holder, and "delivery" will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail, return
receipt requested, properly insured, or an overnight delivery service is
recommended. In all such cases, sufficient time should be allowed to ensure
timely delivery.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of (i) a book-entry confirmation with
respect to such Old Capital Securities or (ii) certificates representing Old
Capital Securities and a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when book-entry
confirmations with respect to Old Capital Securities or certificates
representing Old Capital Securities and other required documents are received by
the Exchange Agent.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with: (i) such tenders are
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form accompanying
the Letter of Transmittal or an Agent's Message, is received by the Exchange
Agent, as provided below, on or prior to the Expiration Date; and (iii) the
certificates (or a book-entry confirmation) representing all tendered Old
Capital Securities, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or an
Agent's Message, with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
five New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be
delivered by hand, or transmitted by facsimile or mail, to the Exchange Agent
and must include a guarantee by an Eligible Institution in the form set forth in
such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
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The acceptance by the Company and the Issuer Trust for exchange of Old
Capital Securities tendered pursuant to any of the procedures described above
will constitute a binding agreement among the tendering holder, the Company and
the Issuer Trust upon the terms and subject to the conditions of the Exchange
Offer.
The Company understands that the Exchange Agent has confirmed with DTC that
any financial institution that is a participant in DTC's system may utilize
DTC's Automated Tender Offer Program ("ATOP") to tender Old Capital Securities.
The Company further understands that the Exchange Agent will request, within two
business days after the date the Exchange Offer commences, that DTC establish an
account with respect to the Old Capital Securities for the purpose of
facilitating the Exchange Offer, and any participant may make book-entry
delivery of Old Capital Securities by causing DTC to transfer such Old Capital
Securities in the Exchange Agent's account in accordance with DTC's ATOP
procedures for transfer. However, the exchange of Old Capital Securities so
tendered will only be made after timely confirmation of such book-entry transfer
and timely receipt by the Exchange Agent of an Agent's Message (as defined in
the next sentence), and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by DTC and
received by the Exchange Agent and forming part of book-entry confirmation,
which states that DTC has received an express acknowledgment from a participant
tendering Old Capital Securities which are the subject of such book-entry
confirmation and that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal and that the Company may enforce such
agreement against such participant.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Company and the
Issuer Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Company and the Issuer Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the view of counsel to the Company and the Issuer Trust,
be unlawful. The Company and the Issuer Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth below under "-- Conditions to the Exchange Offer" or any condition
or irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The Company's and the Issuer Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Company, the
Issuer Trust, any affiliates or assigns of the Company or the Issuer Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company or
the Issuer Trust, proper evidence satisfactory to the Company or the Issuer
Trust, in their sole discretion, of such person's authority to so act must be
submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
Based on interpretations by the Staff as set forth in no-action letters
issued to third parties, the Company and the Issuer Trust believe that holders
of Old Capital Securities (other than any holder that is an "affiliate" of the
Company or the Issuer Trust as defined under Rule 405 of the Securities Act) who
exchange their Old Capital Securities for New Capital Securities pursuant to the
Exchange Offer may offer such New Capital Securities for resale, resell such New
Capital Securities and otherwise transfer such New Capital Securities
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without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Capital Securities are acquired in
the ordinary course of such holders' business and such holders are not engaged
in, and do not intend to engage in, a distribution of such New Capital
Securities and have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities. However, the
Staff has not considered the Exchange Offer in the context of a no-action
letter, and there can be no assurance that the Staff would make a similar
determination with respect to the Exchange Offer. However, any holder of Old
Capital Securities who is an "affiliate" of the Company or the Issuer Trust or
who intends to participate in the Exchange Offer for the purpose of distributing
New Capital Securities, or any broker-dealer who purchased Old Capital
Securities from the Issuer Trust to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the Staff set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to tender such Old Capital
Securities in the Exchange Offer and (c) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital Securities acquired for its own
account as a result of market-making or other trading activities and exchanges
such Old Capital Securities for New Capital Securities, then such broker-dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities (other than certain specified
holders) who wishes to exchange them for New Capital Securities in the Exchange
Offer will be required to represent that: (i) it is not an "affiliate" of the
Company or the Issuer Trust; (ii) any New Capital Securities to be received by
it are being acquired in the ordinary course of its business; and (iii) it is
not engaged in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such New Capital Securities and has no
arrangement or understanding to participate in a distribution of New Capital
Securities. In addition, the Company and the Issuer Trust may require such
holder, as a condition to such holder's eligibility to participate in the
Exchange Offer, to furnish to the Company and the Issuer Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder
holds the Old Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Capital Securities for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Capital Securities. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Based on the
position taken by the Staff in the interpretive letters referred to above, the
Company and the Issuer Trust believe that broker-dealers who acquired Old
Capital Securities for their own accounts as a result of market-making
activities or other trading activities may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
and the Issuer Trust have agreed to allow the Participating Broker-Dealers to
use this Prospectus, as it may be amended or supplemented from time to time, in
connection with resales of such New Capital Securities for a period of ninety
(90) days after the Expiration Date. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of the Company or the Issuer
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
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In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Issuer Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained or incorporated by reference in
this Prospectus untrue in any material respect or which causes this Prospectus
to omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading, such Participating Broker-Dealer
will suspend the sale of New Capital Securities (or the Guarantee or the New
Junior Subordinated Debentures, as applicable) pursuant to this Prospectus until
the Company or the Issuer Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Company or
the Issuer Trust has given notice that the sale of the New Capital Securities
(or the Guarantee or the New Junior Subordinated Debentures, as applicable) may
be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective, a written or facsimile transmission of such notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth below under "-- Exchange Agent" on or prior to the Expiration Date. Any
such notice of withdrawal must specify the name of the person who tendered the
Old Capital Securities to be withdrawn, the aggregate liquidation amount of Old
Capital Securities to be withdrawn, and (if certificates for such Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth on the Old Capital Securities, if different from
that of the person who tendered such Old Capital Securities. If Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Old Capital Securities, the tendering
holder must submit the serial numbers shown on the particular Old Capital
Securities to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Capital
Securities tendered for the account of an Eligible Institution. If Old Capital
Securities have been tendered pursuant to the procedures for book-entry transfer
set forth above under "-- Procedures for Tendering Old Capital Securities," then
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Old Capital Securities, in which case a
notice of withdrawal will be effective if delivered to the Exchange Agent by
written or facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn will
not be deemed validly tendered for purposes of the Exchange Offer, but may be
re-tendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "-- Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Issuer Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Company, the Issuer Trust, any affiliates or
assigns of the Company or the Issuer Trust, the Exchange Agent nor any other
person shall be under any duty to give any notification of any irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Payment Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such Distributions have been made, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Payment Date or,
if no such Distributions have been made, from and after June 3, 1997. However,
because Distributions on the New Capital Securities
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will accumulate from such date, the amount of the Distributions received by
holders whose Old Capital Securities are accepted for exchange will not be
affected by the exchange.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company and the Issuer Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if
there shall occur a change in the current interpretation by the Staff which
permits the New Capital Securities issued pursuant to the Exchange Offer in
exchange for Old Capital Securities to be offered for resale, resold and
otherwise transferred by holders thereof (other than broker-dealers and any such
holder which is an "affiliate" of the Company or the Issuer Trust within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Capital Securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement or understanding with any
person to participate in the distribution of such New Capital Securities.
If the Company and the Issuer Trust determine in their sole and absolute
discretion that the foregoing event has occurred, the Company and the Issuer
Trust may, subject to applicable law, terminate the Exchange Offer (whether or
not any Old Capital Securities have theretofore been accepted for exchange) or
may waive any such condition or otherwise amend the terms of the Exchange Offer
in any respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company and the Issuer Trust will promptly disclose such
amendment or waiver by means of a prospectus supplement that will be distributed
to the registered holders of the Old Capital Securities, and the Company and the
Issuer Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Requests for additional copies of this Prospectus or the Letter of
Transmittal and any other required documents, questions or requests for
assistance should be directed to the Exchange Agent as follows:
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attn: Corporate Trust and Agency Group
Telephone: (212) 250-6161
Facsimile: (212) 250-6392/6961
Delivery of the Letter of Transmittal and any other required documents
should be directed to:
By Mail: By Hand: By Overnight Mail:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Corporate Trust and Agency Corporate Trust and Agency Corporate Trust and Agency
Group Group Group
Reorganization Unit Receipt and Delivery Window Reorganization Unit
P.O. Box 292737 123 Washington Street, 1st 648 Grassmere Park Road
Nashville, TN 37229-2737 Floor Nashville, TN 37211
New York, NY 10006
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay
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brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Issuer Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE NEW CAPITAL SECURITIES
The Old Capital Securities have been issued and the New Capital Securities
will be issued pursuant to the terms of the Trust Agreement. The Property
Trustee, Bankers Trust Company, acts as trustee for the Capital Securities under
the Trust Agreement. The terms of the Capital Securities include those stated in
the Trust Agreement and those made part of the Trust Agreement by the Trust
Indenture Act and the Trust Act. The Trust Agreement will be qualified under the
Trust Indenture Act upon effectiveness of the Registration Statement with
respect to the Capital Securities. See "The Exchange Offer." Wherever particular
defined terms of the Trust Agreement are referred to herein, such defined terms
are incorporated herein by reference. The following summary of the material
terms and provisions of the Capital Securities does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Trust
Agreement (a copy of which may be obtained from the Company or the Issuer
Trust), the Trust Act and the Trust Indenture Act.
GENERAL
The New Capital Securities will be limited to $20,000,000 aggregate
Liquidation Amount outstanding. The New Capital Securities will rank pari passu,
and payments will be made thereon pro rata, with the Common Securities except as
described under "-- Subordination of Common Securities." The New Junior
Subordinated Debentures will be registered in the name of the Issuer Trust and
held by the Property Trustee in trust for the benefit of the holders of the
Capital Securities and Common Securities. The Guarantee will be a guarantee on a
subordinated basis with respect to the New Capital Securities but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of such New Capital Securities when the Issuer Trust does not have
funds on hand available to make such payments. See "Description of Guarantee."
DISTRIBUTIONS
The New Capital Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and Distributions on each New
Capital Security will be payable at an annual rate equal to 9.375% on the stated
Liquidation Amount of $1,000, payable semi-annually in arrears on the
Distribution Date to the holders of the New Capital Securities at the close of
business on the May 15 or November 15 (whether or not a Business Day (as defined
below)) next preceding the relevant Distribution Date. Distributions on the New
Capital Securities will be cumulative. Distributions will accumulate from the
date of original issuance. The first Distribution Date for the New Capital
Securities will be December 1, 1997. The amount of Distributions payable for any
period less than a full Distribution period will be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by two. If any date on which
Distributions are payable on the New Capital Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (without
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any additional Distributions or other payment in respect of any such delay),
with the same force and effect as if made on the date such payment was
originally payable.
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
on the Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Subordinated Debentures. As a consequence of any such deferral,
semi-annual Distributions on the New Capital Securities by the Issuer Trust will
be deferred during any such Extension Period. Distributions to which holders of
the New Capital Securities are entitled will accumulate additional Distributions
thereon at a rate equal to 9.375% per annum, compounded semi-annually from the
relevant payment date for such Distributions, computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period. Additional Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by two. The term "Distributions"
as used herein shall include any such additional Distributions. During any such
Extension Period, the Company 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 Company's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company that rank pari passu in all respects with or
junior in interest to the Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any shareholder's rights
plan, or the issuance of rights, stock or other property under any shareholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity of the Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall be
due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees and the Property Trustee notice of its
election of such Extension Period at least one Business Day prior to the earlier
of (i) the date the Distributions on the New Capital Securities would have been
payable but for the election to begin such Extension Period and (ii) the date
the Property Trustee is required to give notice to holders of the New Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the New Capital Securities. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of the New Junior Subordinated
Debentures -- Option To Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of
the New Capital Securities will be limited to payments under the Subordinated
Debentures. See "Description of the New Junior Subordinated
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Debentures." If the Company does not make payments on the Subordinated
Debentures, the Issuer Trust may not have funds available to pay Distributions
or other amounts payable on the New Capital Securities. The payment of
Distributions and other amounts payable on the New Capital Securities (if and to
the extent the Issuer Trust has funds legally available for and cash sufficient
to make such payments) is guaranteed by the Company on a limited basis as set
forth herein under "Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Subordinated
Debentures, whether at maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the Trust
Securities, upon not less than 30 nor more than 60 days' notice, at a redemption
price (the "Redemption Price") equal to the aggregate Liquidation Amount of such
Capital Securities plus accumulated but unpaid Distributions thereon to the date
of redemption (the "Redemption Date") and the related amount of the premium, if
any, paid by the Company upon the concurrent redemption of such Subordinated
Debentures. See "Description of the New Junior Subordinated
Debentures -- Redemption." If less than all the Subordinated Debentures are to
be repaid or redeemed on a Redemption Date, then the proceeds from such
repayment or redemption shall be allocated to the redemption pro rata of the
Capital Securities and the Common Securities. The amount of premium, if any,
paid by the Company upon the redemption of all or any part of the Subordinated
Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the Capital Securities and the Common Securities.
The Company has the right to redeem the Subordinated Debentures (i) on or
after June 1, 2007, in whole at any time or in part from time to time, or (ii)
in whole, but not in part, at any time within 90 days following the occurrence
and during the continuation of a Tax Event, Investment Company Event or Capital
Treatment Event (each as defined below), in each case subject to possible
regulatory approval. See "-- Liquidation Distribution Upon Dissolution." A
redemption of the Subordinated Debentures would cause a mandatory redemption of
a Like Amount of the New Capital Securities and Common Securities at the
Redemption Price.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated Distributions to but excluding the
date fixed for redemption, if redeemed during the 12-month period beginning June
1:
YEAR REDEMPTION PRICE
- - ---- ----------------
2007........................................................ 104.69%
2008........................................................ 104.22
2009........................................................ 103.75
2010........................................................ 103.28
2011........................................................ 102.81
2012........................................................ 102.34
2013........................................................ 101.88
2014........................................................ 101.41
2015........................................................ 100.94
2016........................................................ 100.47
and at 100% on or after June 1, 2017.
The Redemption Price, in the case of a redemption on or after June 1, 2007
following a Tax Event, Investment Company Event or Capital Treatment Event shall
equal the Redemption Price then applicable to a redemption under (i) above. The
Redemption Price, in the case of a redemption prior to June 1, 2007 following a
Tax Event, Investment Company Event or Capital Treatment Event as described
under (ii) above, will equal for each Capital Security the Make-Whole Amount for
a corresponding $1,000 principal amount of Subordinated Debentures together with
accumulated Distributions to but excluding the date fixed for redemption. The
"Make-Whole Amount" will be equal to the greater of (i) 100% of the principal
amount of
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such Subordinated Debentures and (ii) as determined by a Quotation Agent (as
defined below), the sum of the present values of the principal amount and
premium payable as part of the Redemption Price with respect to an optional
redemption of such Subordinated Debentures on June 1, 2007, together with the
present values of scheduled payments of interest (not including the portion of
any such payments of interest accrued as of the Redemption Date) from the
Redemption Date to June 1, 2007 (the "Remaining Life"), in each case discounted
to the Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of 30-day months) at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 185 basis points if such Redemption Date occurs on or
before June 1, 1998 or (ii) 125 basis points if such Redemption Date occurs
after June 1, 1998.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated "H.15 (519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York or the City of Raleigh,
North Carolina are authorized or required by law or executive order to remain
closed, or (c) a day on which the Property Trustee's Corporate Trust Office or
the Corporate Trust Office of the Debenture Trustee is closed for business.
"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 Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and (ii) with respect to a distribution of
Subordinated Debentures to holders of Trust Securities in connection with a
dissolution or liquidation of the Issuer Trust, Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Capital Securities, there is more than an insubstantial risk
that (i) the Issuer Trust is, or will be within 90 days of the delivery of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Subordinated Debentures, (ii) interest payable by the
Company on the Subordinated Debentures is not, or within 90 days of the delivery
of such opinion, will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes or (iii) the Issuer Trust is, or
will be within 90 days of the delivery of such opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges.
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"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective 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 Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Capital Securities.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Capital Securities, there
is more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the Liquidation Amount of the Capital Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the risk-based
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company.
Payment of Additional Sums. If a Tax Event described in clause (i) or
(iii) of the definition of Tax Event above has occurred and is continuing and
the Issuer Trust is the holder of all the Subordinated Debentures, the Company
will pay Additional Sums (as defined below), if any, on the Subordinated
Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Capital Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Capital Securities
shall be made and the Redemption Price shall be payable on each Redemption Date
only to the extent that the Issuer Trust has funds on hand available for the
payment of such Redemption Price. See also "-- Subordination of Common
Securities."
If the Issuer Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. With respect to Capital Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Capital Securities funds sufficient to pay
the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Securities called for redemption shall be
payable to the holders of the Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit all
rights of the holders of such Capital Securities so called for redemption will
cease, except the right of the holders of such Capital Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. If any date fixed for
redemption of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the
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immediately preceding Business Day. In the event that payment of the Redemption
Price in respect of Capital Securities called for redemption is improperly
withheld or refused and not paid either by the Issuer Trust or by the Company
pursuant to the Guarantee as described under "Description of Guarantee,"
Distributions on such Capital Securities will continue to accumulate at the then
applicable rate, from the Redemption Date originally established by the Issuer
Trust for such Capital Securities to the date such Redemption Price is actually
paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and from
time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated pro
rata to the Capital Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be selected on a pro rata basis not more than 60 days prior to
the Redemption Date by the Property Trustee from the outstanding Capital
Securities not previously called for redemption, or if the Capital Securities
are then held in the form of a Global Capital Security (as defined below), in
accordance with DTC's customary procedures. The Property Trustee shall promptly
notify the securities registrar for the Trust Securities in writing of the
Capital Securities selected for redemption and, in the case of any Capital
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Capital Securities shall
relate, in the case of any Capital Securities redeemed or to be redeemed only in
part, to the portion of the aggregate Liquidation Amount of Capital 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 before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on the Subordinated Debentures or portions
thereof (and, unless payment of the Redemption Price in respect of the Capital
Securities is withheld or refused and not paid either by the Issuer Trust or the
Company pursuant to the Guarantee, Distributions will cease to accumulate on the
Capital Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by the Company
to pay any amounts in respect of the Subordinated Debentures when due, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all the outstanding
Capital Securities for all Distribution periods terminating on or prior thereto,
or in the case of payment of the Redemption Price the full amount of such
Redemption Price on all the outstanding Capital Securities then called for
redemption, shall have been made or provided for, and all funds available to the
Property Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Capital Securities then due and
payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effects of all such Events of Default with respect
to such Capital Securities have been cured, waived or otherwise eliminated. See
"-- Events of Default; Notice" and "Description of the New Junior Subordinated
Debentures -- Debenture Events of Default." Until all such
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Events of Default under the Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee will act solely on behalf of the holders of the Capital Securities and
not on behalf of the holders of the Common Securities, and only the holders of
the Capital Securities will have the right to direct the Property Trustee to act
on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Capital Securities in the event of any
liquidation of the Issuer Trust is $1,000 per Capital Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption should
consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect on
the level or composition of the organization's capital base (unless the equity
or capital instrument were redeemed with the proceeds of, or replaced by, a like
amount of a similar or higher quality capital instrument and the Federal Reserve
considers the organization's capital position to be fully adequate after the
redemption).
In the event the Company, while a holder of Common Securities, dissolves
the Issuer Trust prior to the Stated Maturity of the Capital Securities and the
dissolution of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the Federal Reserve under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the Federal Reserve. Moreover, any changes
in applicable law or changes in the Federal Reserve's risk-based capital
guidelines or policies could impose a requirement on the Company that it obtain
the prior approval of the Federal Reserve to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Subordinated Debentures to the holders of the Trust Securities, if
the holders of Common Securities have given written direction to the Property
Trustee to dissolve the Issuer Trust (which direction, subject to the foregoing
restrictions, is optional and wholly within the discretion of the holders of
Common Securities), (iii) the repayment of all the Capital Securities in
connection with the redemption of all the Trust Securities as described under
"-- Redemption Procedures" and (iv) the entry of an order for the dissolution of
the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to the holders of such Trust Securities a Like Amount of the
Subordinated Debentures, unless such distribution is not practical, in which
event such holders will be entitled to receive out of the assets of the Issuer
Trust available for distribution to holders, after satisfaction of liabilities
to creditors of the Issuer Trust as provided by applicable law, an amount equal
to, in the case of holders of Capital Securities, 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 Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer Trust on its
Capital Securities shall be paid on a pro rata basis. The holders of the Common
Securities will be entitled to receive distributions upon any such liquidation
pro rata with the holders of the Capital Securities, except that if a Debenture
Event of Default has occurred and is
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continuing as a result of any failure by the Company to pay any amounts in
respect of the Subordinated Debentures when due, the Capital Securities shall
have a priority over the Common Securities. See "-- Subordination of Common
Securities."
After the liquidation date fixed for any distribution of Subordinated
Debentures (i) the Capital Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of Capital
Securities, will receive a registered global certificate or certificates
representing the Subordinated Debentures to be delivered upon such distribution
with respect to Capital Securities held by DTC or its nominee and (iii) any
certificates representing the Capital Securities not held by DTC or its nominee
will be deemed to represent the Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of the Capital Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on the Capital Securities until such certificates are
presented to the security registrar for the Trust Securities for transfer or
reissuance.
If the Company does not redeem the Subordinated Debentures prior to the
Stated Maturity and the Issuer Trust is not liquidated and the Subordinated
Debentures are not distributed to holders of the Capital Securities, the Capital
Securities will remain outstanding until the repayment of the Subordinated
Debentures and the distribution of the Liquidation Distribution to the holders
of the Capital Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debentures that may be distributed in exchange
for Capital Securities if a dissolution and liquidation of the Issuer Trust were
to occur. Accordingly, the Capital Securities that an investor may purchase,
whether pursuant to the offer made hereby or in the secondary market, or the
Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (a "Trust Agreement Event of Default" or an "Event of Default")
with respect to the Capital Securities (whatever the reason for such Trust
Agreement Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i) the occurrence of an "Event of Default" under the Indenture (a
"Debenture Event of Default") (see "Description of New Junior Subordinated
Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Company by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Capital Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor,
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and the Administrators are required to file annually with the Property Trustee a
certificate as to whether or not they are in compliance with all the conditions
and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Company to pay any amounts in respect of the Subordinated
Debentures when due, the Capital Securities will have a preference over the
Common Securities with respect to payments of any amounts in respect of the
Capital Securities as described above. See "-- Subordination of Common
Securities," "-- Liquidation Distribution Upon Dissolution" and "Description of
New Junior Subordinated Debentures -- Debenture Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Capital Securities may remove an Issuer Trustee for cause or, if an
Indenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding Capital
Securities, the successor may be appointed by the holders of at least 25% in
Liquidation Amount of Capital Securities. If an Issuer Trustee resigns, such
Issuer Trustee will appoint its successor. If an Issuer Trustee fails to appoint
a successor, the holders of at least 25% in Liquidation Amount of the
outstanding Capital Securities may appoint a successor. If a successor has not
been appointed by the holders, any holder of Capital Securities or Common
Securities or the other Issuer Trustee may petition a court in the State of
Delaware to appoint a successor. Any Delaware Trustee must meet the applicable
requirements of Delaware law. Any Property Trustee must be a national or
state-chartered bank, and at the time of appointment have securities rated in
one of the three highest rating categories by a nationally recognized
statistical rating organization and have capital and surplus of at least
$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all of the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
Trust with respect to the Capital Securities or (b) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities have
the same priority as the Capital Securities with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) a trustee of such
successor entity, possessing the same powers and duties as the Property Trustee,
is appointed to hold the Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect, (v) such successor entity has a purpose substantially
identical to that of the Issuer Trust, (vi) prior to such merger, consolidation,
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amalgamation, replacement, conveyance, transfer or lease, the Issuer Trust has
received an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (vii) the Company or
any permitted successor or assignee owns all the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer Trust may not, except with the consent
of holders of 100% in aggregate Liquidation Amount of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Modification of the
Guarantee; Assignment" and as otherwise required by law and the Trust Agreement,
the holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Capital 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, provided that any such amendment
does not adversely affect in any material respect the interests of any holder of
Trust Securities, or (ii) to modify, eliminate or add to any provisions of the
Trust Agreement to such extent as may be necessary to ensure that the Issuer
Trust will not be taxable as a corporation for United States federal income tax
purposes at any time that any Trust Securities are outstanding or to ensure that
the Issuer Trust will not be required to register as an "investment company"
under the Investment Company Act, and any amendments of the Trust Agreement will
become effective when notice of such amendment is given to the holders of Trust
Securities. The Trust Agreement may be amended by the holders of a majority of
the Common Securities and the Property Trustee with (i) the consent of holders
representing not less than a majority in aggregate Liquidation Amount of the
outstanding Capital Securities and (ii) receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Issuer Trust's not being taxable as a corporation for United States
federal income tax purposes or the Issuer Trust's exemption from status as an
"investment company" under the Investment Company Act, except that, without the
consent of each holder of Trust Securities affected thereby, the Trust Agreement
may not be amended to (x) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(y) restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Subordinated Debentures are held by the Issuer Trust, the
Property Trustee will not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under
Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the Subordinated Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of at least a majority in
aggregate Liquidation Amount of the outstanding Capital Securities, except that,
if a consent under the Indenture would require the consent of each holder of
Subordinated Debentures affected
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thereby, no such consent will be given by the Property Trustee without the prior
consent of each holder of the Capital Securities. The Property Trustee may not
revoke any action previously authorized or approved by a vote of the holders of
the Capital Securities except by subsequent vote of the holders of the Capital
Securities. The Property Trustee will notify each holder of Capital Securities
of any notice of default with respect to the Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Capital
Securities, before taking any of the foregoing actions, the Property Trustee
will obtain an opinion of counsel experienced in such matters to the effect that
the Issuer Trust will not be taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Capital 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 registered holder of Capital Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Capital Securities will be required to
redeem and cancel Capital Securities in accordance with the Trust Agreement.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Certificates"). The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a Global Certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of the Capital Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased the
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Capital Securities, except in the
event that use of the book-entry system for the Capital Securities is
discontinued.
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To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of the Capital Securities with DTC and their registration in the
name of Cede & Co. will effect no change in beneficial ownership. DTC will have
no knowledge of the actual Beneficial Owners of the Capital Securities. DTC's
records will reflect only the identity of the Direct Participants to whose
accounts such Capital Securities are credited, which may or may not be the
Beneficial Owners. The Direct Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate in respect of the Capital Securities, DTC or such nominee, as
the case may be, will be considered the sole owner or holder of the Capital
Securities represented thereby for all purposes under the Trust Agreement and
such Capital Securities. No Beneficial Owner of an interest in a Global
Certificate will be able to transfer that interest except in accordance with
DTC's applicable procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of the Capital Securities (including the presentation of the
Capital Securities for exchange as described below) only at the direction of one
or more Participants to whose accounts the DTC interest in the Global
Certificates is credited and only in respect of such portion of the aggregate
liquidation amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is a Trust
Agreement Event of Default with respect to the Capital Securities, DTC will,
upon notice, exchange the Global Certificates in respect of such Capital
Securities for Certificated Securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners 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 in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, the Capital Securities will be redeemed on a pro rata basis.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the Capital Securities. Under its usual procedures, DTC
would mail an omnibus proxy to the Issuer Trust as soon as possible after the
record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights
to those Direct Participants to whose accounts the Capital Securities are
credited on the record date (identified in a listing attached to the omnibus
proxy).
Payments in respect of the Capital Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Direct Participants and Indirect Participants and not of
DTC, the Issuer Trust or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments in respect of the
Capital Securities held in book-entry form to DTC are the responsibility of the
Issuer Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of the Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
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Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Company, the Issuer
Trust, the Property Trustee, or the Delaware Trustee will have any
responsibility for the performance by DTC or its Direct Participants or Indirect
Participants under the rules and procedures governing DTC. DTC may discontinue
providing its services as a securities depositary with respect to the Capital
Securities at any time by giving notice to the Company and the Issuer Trust.
Under such circumstances, in the event that a successor securities depositary is
not obtained, the Capital Security certificates will be required to be printed
and delivered. Additionally, the Issuer Trust (with the consent of the Company)
may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor depositary) with respect to the Capital Securities of the Issuer
Trust. In that event, certificates for such Capital Securities will be printed
and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Issuer Trust believe to
be reliable, but neither the Company nor the Issuer Trust takes responsibility
for the accuracy thereof.
RESTRICTIONS ON TRANSFER
The Old Capital Securities were, and the New Capital Securities will be,
issued and may be transferred only in blocks having a liquidation amount of not
less than $100,000 (100 Old Capital Securities or New Capital Securities, as the
case may be). Any such transfer of the Old Capital Securities or the New Capital
Securities in a block having a liquidation amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such transferee shall
be deemed not to be the holder of such Old Capital Securities or New Capital
Securities for any purpose, including but not limited to, the receipt of
distributions on such Old Capital Securities or New Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Old Capital
Securities or New Capital Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution payment dates or, in the case of Certificated
Securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the books and records of
the Issuer Trust or by wire transfer. The paying agent for the Trust Securities
(the "Paying Agent") shall initially be the Property Trustee. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Administrators. In the event that the Property Trustee
shall no longer be the Paying Agent, the Property Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
REGISTRAR AND TRANSFER AGENT
The Property Trustee is acting as registrar and transfer agent for the
Capital Securities of the Issuer Trust.
Registration of transfers or exchanges of the Capital Securities will be
effected without charge by or on behalf of the Issuer Trust, but upon payment
(with the giving of such indemnity as the Issuer Trust or the Company may
require) in respect of any tax or other government charges which may be imposed
in relation to it.
The Issuer Trust will not be required to register or cause to be registered
the transfer or exchange of the Capital Securities after such Capital Securities
have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such
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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 Capital Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Company, see "Description of the New Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance with
the laws of the State of Delaware.
DESCRIPTION OF THE NEW JUNIOR SUBORDINATED DEBENTURES
The New Junior Subordinated Debentures are to be issued under the
Indenture, under which Bankers Trust Company is acting as Debenture Trustee.
This summary of certain terms and provisions of the New Junior Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Whenever
particular defined terms of the Indenture (as amended or supplemented from time
to time) are referred to herein, such defined terms are incorporated herein by
reference. A copy of the form of Indenture is available from the Debenture
Trustee upon request.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Issuer
Trust invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Old Junior Subordinated Debentures
issued by the Company. Pursuant to the Exchange Offer, the Company will Exchange
$20 million aggregate principal amount of Old Junior Subordinated Debentures for
a like amount of New Junior Subordinated Debentures as soon as practicable after
the date of this Prospectus. The New Junior Subordinated Debentures will bear
interest, accruing from the date of original issuance, at a rate equal to 9.375%
per annum on the principal amount thereof, payable semi-annually in arrears on
the 1st day of June and December of each year (each, an "Interest Payment
Date"), commencing December 1, 1997, to the person in whose name each New Junior
Subordinated Debenture is registered at the close of business on the May 15 or
November 15 (whether or not a Business Day) next preceding such Interest Payment
Date. It is anticipated that, until the liquidation, if any, of the Issuer
Trust, each New Junior Subordinated Debenture will be registered in the name of
the Issuer Trust and held by the Property Trustee in trust for the benefit of
the holders of the Trust Securities. The amount of interest payable for any
period less than a full interest
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period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. The amount of
interest payable for any full interest period will be computed by dividing the
rate per annum by two. If any date on which interest is payable on the New
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 (without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at a rate equal to 9.375% per annum, compounded semi-annually
and computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of additional
interest payable for any full interest period will be computed by dividing the
rate per annum by two. The term "interest" as used herein includes semi-annually
interest payments, interest on semi-annually interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The New Junior Subordinated Debentures will mature on June 1, 2027.
The New Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Indebtedness of the
Company. The New Junior Subordinated Debentures will not be subject to a sinking
fund and will not be eligible as collateral for any loan made by the Company.
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt by the Company, including Senior Indebtedness, whether under the
Indenture or any existing or other indenture or agreement that the Company may
enter into in the future or otherwise. See "-- Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right at any time during the term of the New Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the New Junior Subordinated Debentures. At the end
of such Extension Period, the Company must pay all interest then accrued and
unpaid (together with interest thereon at a rate equal to 9.375% per annum,
compounded semi-annually and computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period, to
the extent permitted by applicable law). The amount of additional interest
payable for any full interest period will be computed by dividing the rate per
annum by two. During an Extension Period, interest will continue to accrue and
holders of New Junior Subordinated Debentures (or holders of Capital Securities
while outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "United States Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Company 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 Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the New Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any shareholder's rights plan, or the issuance of rights, stock
or other property
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under any shareholders rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the New
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Company may elect to begin a
new Extension Period subject to the above conditions. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Capital Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. The Property Trustee will give notice of the Company's
election to begin a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.
REDEMPTION
The New Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after June 1, 2007, in whole at any time or
in part from time to time, or (ii) in whole, but not in part, at any time within
90 days following the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event (each as defined under
"Description of the New Capital Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Capital Securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the New Junior Subordinated Debentures by the Company
prior to their Stated Maturity would constitute the redemption of capital
instruments under the Federal Reserve's current risk-based capital guidelines
and may be subject to the prior approval of the Federal Reserve. The redemption
of the New Junior Subordinated Debentures also could be subject to the
additional prior approval of the Federal Reserve under its current risk-based
capital guidelines.
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The Redemption Price for New Junior Subordinated Debentures in the case of
a redemption under (i) above shall equal the following prices, expressed in
percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption. If redeemed during the 12-month period
beginning June 1:
REDEMPTION
YEAR PRICE
- - ---- ----------
2007........................................................ 104.69%
2008........................................................ 104.22
2009........................................................ 103.75
2010........................................................ 103.28
2011........................................................ 102.81
2012........................................................ 102.34
2013........................................................ 101.88
2014........................................................ 101.41
2015........................................................ 100.94
2016........................................................ 100.47
and at 100% on or after June 1, 2017.
The Redemption Price in the case of a redemption on or after June 1, 2007
following a Tax Event, Investment Company Event or Capital Treatment Event shall
equal the Redemption Price then applicable to a redemption under (i) above. The
Redemption Price for New Junior Subordinated Debentures, in the case of a
redemption prior to June 1, 2007 following a Tax Event, Investment Company Event
or Capital Treatment Event as described under (ii) above, will equal the
Make-Whole Amount (as defined under "Description of the New Capital
Securities -- Redemption"), together with accrued interest to but excluding the
date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Indenture that, if and for so long as (i)
the Issuer Trust is the holder of all New Junior Subordinated Debentures and
(ii) the Issuer Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional sums on the New Junior Subordinated Debentures such amounts as may be
required so that the Distributions payable by the Issuer Trust will not be
reduced as a result of any such additional taxes, duties or other governmental
charges. See "Description of the New Capital Securities -- Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The New Junior Subordinated Debentures will initially be registered in the
name of the Issuer Trust. If the New Junior Subordinated Debentures are
distributed to holders of Capital Securities, it is anticipated that the
depositary arrangements for the New Junior Subordinated Debentures will be
substantially identical to those in effect for the Capital Securities. See
"Description of the New Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company."
Payments on New Junior Subordinated Debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the New Junior Subordinated Debentures, as described under
"Description of the New Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." If New Junior Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
New Junior Subordinated Debentures will be registrable, and New Junior
Subordinated Debentures will be exchangeable for New Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee in New York, New
York or at the offices of any Paying Agent or transfer agent appointed by the
Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto. However,
a holder of $1 million or more in aggregate principal amount of New Junior
Subordinated Debentures may receive payments of interest (other than interest
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payable at the Stated Maturity) by wire transfer of immediately available funds
upon written request to the Debenture Trustee not later than 15 calendar days
prior to the date on which the interest is payable.
The New Junior Subordinated Debentures will be issuable only in registered
form without coupons in integral multiples of $1,000. The minimum purchase
requirement will be $100,000 (100 Capital Securities). New Junior Subordinated
Debentures will be exchangeable for other New Junior Subordinated Debentures of
like tenor, of any authorized denominations, and of a like aggregate principal
amount.
New 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 appointed under the
Indenture or at the office of any transfer agent designated by the Company for
such purpose without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. The Company will appoint the
Property Trustee as securities registrar under the Indenture. The Company may at
any time designate additional transfer agents with respect to the New Junior
Subordinated Debentures.
In the event of any redemption, neither the Company nor the Property
Trustee shall be required to (i) issue, register the transfer of or exchange New
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the New Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any New Junior Subordinated Debentures so selected for redemption,
except, in the case of any New Junior Subordinated Debentures being redeemed in
part, any portion thereof not to be redeemed.
Any monies deposited with the Property Trustee or any paying agent, or then
held by the Company in trust, for the payment of the principal of (and premium,
if any) or interest on any New Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such New Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted in the Indenture that it 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 Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the New Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or shareholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any shareholder's rights plan, or
the issuance of rights, stock or other property under any shareholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (x) there has
occurred any event (1) of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default and (2) that the Company has not taken
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reasonable steps to cure, (y) if the New Junior Subordinated Debentures are held
by the Issuer Trust, the Company is in default with respect to its payment of
any obligations under the Guarantee or (z) the Company has given notice of its
election of an Extension Period as provided in the Indenture and has not
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
The Company has covenanted in the Indenture (i) to continue to hold,
directly or indirectly, 100% of the Common Securities, provided that certain
successors that are permitted pursuant to the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) as holder of the Common
Securities, not to voluntarily terminate, windup or liquidate the Issuer Trust,
other than (a) in connection with a distribution of New Junior Subordinated
Debentures to the holders of the Capital Securities in liquidation of the Issuer
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
Issuer Trust to continue not to be taxable as a corporation for United States
federal income tax purposes.
MODIFICATION OF INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of any of the holders of the outstanding New Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Indenture to: (i)
evidence succession of another corporation or association to the Company and the
assumption by such person of the obligations of the Company under the New Junior
Subordinated Debentures; (ii) add further covenants, restrictions or conditions
for the protection of holders of the New Junior Subordinated Debentures; (iii)
cure ambiguities or correct the New Junior Subordinated Debentures in the case
of defects or inconsistencies in the provisions thereof, so long as any such
cure or correction does not adversely affect the interest of the holders of the
New Junior Subordinated Debentures in any material respect; (iv) change the
terms of the New Junior Subordinated Debentures to facilitate the issuance of
the New Junior Subordinated Debentures in certificated or other definitive form;
(v) evidence or provide for the appointment of a successor Debenture Trustee; or
(vi) qualify, or maintain the qualification of, the Indenture under the Trust
Indenture Act. The Indenture contains provisions permitting the Company and the
Debenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the New Junior Subordinated Debentures, to modify the
Indenture in a manner affecting the rights of the holders of the New Junior
Subordinated Debentures, except that no such modification may, without the
consent of the holder of each outstanding New Junior Subordinated Debenture so
affected, (i) change the Stated Maturity of the New Junior Subordinated
Debentures, or reduce the principal amount thereof, the rate of interest thereon
or any premium payable upon the redemption thereof, or change the place of
payment where, or the currency in which, any such amount is payable or impair
the right to institute suit for the enforcement of any New Junior Subordinated
Debenture or (ii) reduce the percentage of principal amount of New Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture. Furthermore, so long as any of the Capital
Securities remain outstanding, no such modification may be made that adversely
affects the holders of such Capital 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 outstanding Capital Securities unless and until the
principal of (and premium, if any, on) the New Junior Subordinated Debentures
and all accrued and unpaid interest thereon have been paid in full and certain
other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the New Junior Subordinated Debentures that has occurred
and is continuing constitutes an "Event of Default" with respect to the New
Junior Subordinated Debentures:
(i) failure to pay any interest on the New Junior Subordinated
Debentures when due and payable, and continuance of such default for a
period of 30 days (subject to the deferral of any due date in the case of
an Extension Period); or
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(ii) failure to pay any principal of or premium, if any, on the New
Junior Subordinated Debentures when due whether at maturity, upon
redemption, by declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the New Junior Subordinated Indenture for 90
days after written notice to the Company from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of the
outstanding New Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the New Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of the New Capital
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding New Junior Subordinated Debentures have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate principal amount of outstanding New Junior Subordinated Debentures
may declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of New Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Capital Securities shall
have such right. The holders of a majority in aggregate principal amount of
outstanding New Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of New Junior Subordinated Debentures which has become due solely by such
acceleration) have 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 New Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Capital Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding New Junior Subordinated Debentures affected thereby may, on behalf
of the holders of all the New Junior Subordinated Debentures, waive any past
default, except a default in the payment of principal (or premium, if any) 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 New Junior
Subordinated Debenture affected thereby. See "-- Modification of Indenture." The
Company is required to file annually with the Debenture Trustee a certificate as
to whether or not the Company is in compliance with all the conditions and
covenants applicable to it under the Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
New 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 the New Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the New Junior Subordinated Debentures on the date such amounts
are otherwise payable, a registered holder of Capital Securities may institute a
legal proceeding directly against the Company for enforcement of payment to such
holder of an amount equal to the amount payable in respect of New Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Capital Securities held by such holder (a "Direct
Action"). The Company 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
the Capital Securities. The Company will have the right under the
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Indenture to set-off any payment made to such holder of Capital Securities by
the Company in connection with a Direct Action.
The holders of the Capital Securities would not be able to exercise
directly any remedies available to the holders of the New Junior Subordinated
Debentures except under the circumstances described in the preceding paragraph.
See "Description of the New Capital Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company may not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person may consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless (i) if the Company
consolidates with or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any state or the
District of Columbia, and such successor Person expressly assumes the Company's
obligations in respect of the New Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would constitute a Debenture
Event of Default, has occurred and is continuing; and (iii) certain other
conditions as prescribed in the Indenture are satisfied.
The provisions of the Indenture do not afford holders of the New Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the New
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all New 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 the Stated Maturity within one year, and the Company deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the New Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity, as the case may be, then the Indenture
will cease to be of further effect (except as to the Company's 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 Company will be
deemed to have satisfied and discharged the Indenture.
SUBORDINATION
The New Junior Subordinated Debentures will be subordinate and junior in
right of payment, to the extent set forth in the Indenture, to all Senior
Indebtedness (as defined below) of the Company. If the Company defaults in the
payment of any principal, premium, if any, or interest, if any, or any other
amount payable on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for redemption or by declaration of
acceleration or otherwise, then, unless and until such default has been cured or
waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by setoff or
otherwise) may be made or agreed to be made on the New Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the New Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all or
a portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company 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 the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property services (but excluding trade
accounts payable or accrued liabilities arising
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in the ordinary course of business); (v) every capital lease obligation of the
Company; (vi) every obligation of the Company for claims (as defined in Section
101(4) of the United States Bankruptcy Code of 1978, as amended) in respect of
derivative products such as interest and foreign exchange rate contracts,
commodity contracts 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, the Company has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise; without limiting the generality of the foregoing, Senior Indebtedness
shall include indebtedness incurred pursuant to the Short-Term Borrowing
Agreement dated February 3, 1997 between the Company and the Bank. "Senior
Indebtedness" shall not include (i) any obligations which, by their terms, are
expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the New Junior Subordinated Debentures, (ii)
any Senior Indebtedness of the Company which when incurred and without respect
to any election under Section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to the Company, (iii) any Senior
Indebtedness of the Company to any of its subsidiaries, (iv) Senior Indebtedness
to any executive officer or director of the Company, or (v) any indebtedness in
respect of debt securities issued to any trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
entity of the Company in connection with the issuance of such financing entity
of securities that are similar to the Capital Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
New Junior Subordinated Debentures. In such event, any payment or distribution
on account of the New Junior Subordinated Debentures, whether in cash,
securities or other property, that would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the New Junior Subordinated
Debentures will be paid or delivered directly to the holders of Senior
Indebtedness in accordance with the priorities then existing among such holders
until all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of New Junior
Subordinated Debentures, together with the holders of any obligations of the
Company ranking on a parity with the New Junior Subordinated Debentures, will be
entitled to be paid from the remaining assets of the Company the amounts at the
time due and owing on the New Junior Subordinated Debentures and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, will be made on account of any capital stock or obligations of the
Company ranking junior to the New Junior Subordinated Debentures and such other
obligations. If any payment or distribution on account of the New Junior
Subordinated Debentures of any character or any security, whether in cash,
securities or other property is received by any holder of any New Junior
Subordinated Debentures in contravention of any of the terms hereof and before
all the Senior Indebtedness has been paid in full, such payment or distribution
or security will be received in trust for the benefit of, and must be paid over
or delivered and transferred to, the holders of the Senior Indebtedness at the
time outstanding in accordance with the priorities then existing among such
holders for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness in full. By
reason of such subordination, in the event of the insolvency of the Company,
holders of Senior Indebtedness may receive more, ratably, and holders of the New
Junior Subordinated Debentures may receive less, ratably, than the other
creditors of the Company. Such subordination will not prevent the occurrence of
any Event of Default in respect of the New Junior Subordinated Debentures.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Indebtedness.
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INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and continuance of
a default by the Company in performance of its obligations under the New Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of New Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities that might be incurred thereby. The
Debenture Trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
Debenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to time
as trustee under other indentures or trust agreements with the Company or its
subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
RESTRICTIONS ON TRANSFER
The New Junior Subordinated Debentures will be issued, and may be
transferred only, in blocks having an aggregate principal amount of not less
than $100,000 (100 New Junior Subordinated Debentures). Any such transfer of New
Junior Subordinated Debentures in a block having an aggregate principal amount
of less than $100,000 shall be deemed to be void and of no legal effect
whatsoever. Any such transferee shall be deemed not to be the holder of such New
Junior Subordinated Debentures for any purpose, including but not limited to the
receipt of payments on such New Junior Subordinated Debentures, and such
transferee shall be deemed to have no interest whatsoever in such New Junior
Subordinated Debentures.
GOVERNING LAW
The Indenture and the New Junior Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF THE GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Capital Securities. As soon as is
practicable after the date hereof, the Company will exchange the Old Guarantee
for the Guarantee. This summary of the material 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. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities.
GENERAL
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
Capital Securities, the Guarantee Payments (as defined herein) (except to the
extent paid by the Issuer Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer Trust may have or assert. The
following payments with respect to the Capital Securities, to the extent not
paid by the Issuer Trust (the "Guarantee Payments"), will be subject to the
Guarantee (without duplication): (i) any accrued and unpaid distributions which
are required to be paid on the Capital Securities, to the extent the Issuer
Trust shall have funds available therefor; (ii) the Redemption Price, to the
extent the Issuer Trust has funds available therefor, with respect to any
Capital Securities called for redemption by the Issuer Trust and (iii) upon
Liquidation of the Issuer Trust (other than in connection with the distribution
of the Subordinated Debentures to the holders of the Capital Securities in
exchange therefor), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on such Capital Securities to the date
of payment, to the extent the Issuer Trust has funds available therefor, and (b)
the amount of assets of the Issuer Trust remaining available for distribution to
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holders of such Capital Securities in liquidation of the Issuer Trust. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Capital
Securities or by causing the Issuer Trust to pay such amounts to such holders.
The Guarantee will not apply to any payment of distributions except to the
extent the Issuer Trust shall have funds available therefor, which funds will
not be available except to the extent the Company has made payments of interest
or principal or other payments on the Subordinated Debentures purchased by the
Issuer Trust. See "Description of the New Junior Subordinated
Debentures -- Restrictions on Certain Payments; Certain Covenants of the
Company." The Guarantee, when taken together with the Company's obligations
under the Subordinated Debentures, the Trust Agreement and the Indenture,
including its obligations to pay costs, expenses, debts and other obligations of
the Issuer Trust (other than with respect to the Trust Securities), will provide
a full and unconditional guarantee on a subordinated basis by the Company of
payments due on the Capital Securities.
Because the Guarantee is a guarantee of payment and not of collection,
holders of the Capital Securities may proceed directly against the Company,
rather than having to proceed against the Issuer Trust before attempting to
collect from the Company, and the Company waives any right or remedy to require
that any action be brought against the Issuer Trust or any other person or
entity before proceeding against the Company. Such obligations will not be
discharged except by payment of the Guarantee Payments in full. The Guarantee
will be deposited with the Guarantee Trustee to be held for the benefit of the
holders of Capital Securities. Except as otherwise noted herein, the Guarantee
Trustee has the right to enforce the Guarantee on behalf of the holders of the
Capital Securities.
CERTAIN COVENANTS OF THE COMPANY UNDER THE GUARANTEE
In the Guarantee, the Company will covenant that, so long as any Capital
Securities remain outstanding, if the Company shall be in default under the
Guarantee or there shall have occurred and be continuing any event that would
constitute a Trust Agreement Event of Default, then (a) the Company shall not
declare or pay any dividend on, make a distribution with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of the Company's
capital stock or rights to acquire such capital stock (other than (i) purchases
or acquisitions of shares of the Company's capital stock or rights to acquire
such capital stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make any guarantee payments (other than payments under the
Guarantee) with respect to the foregoing and (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company that rank pari passu with or
junior to the Subordinated Debentures.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of the Capital Securities in any material respect (in which case no
vote of such holders will be required), the Guarantee may be amended only with
the prior approval of the holders of not less than a majority in liquidation
amount of the outstanding Capital Securities. All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Capital Securities then outstanding.
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TERMINATION
The Guarantee will terminate as to the Capital Securities (a) upon full
payment of the Redemption Price of all Capital Securities, (b) upon distribution
of the Subordinated Debentures to the holders of the Capital Securities or (c)
upon full payment of the amounts payable in accordance with the Trust Agreement
upon liquidation of the Issuer Trust. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the Capital Securities must restore payment of any sums paid under such
Capital Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. A holder of record of the Capital Securities may
institute a legal proceeding directly against the Company to enforce the
Guarantee Trustee's rights under the Guarantee, without first instituting a
legal proceeding against the Issuer Trust, the Guarantee Trustee or any other
person or entity. Pursuant to the Guarantee, the Company will waive any right or
remedy to require that any action be brought first against the Issuer Trust or
any other person or entity before proceeding directly against the Company.
STATUS OF THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all present and future Senior Indebtedness of the Company
and are also effectively subordinated to claims of creditors of the Company's
subsidiaries. The terms of the Capital Securities provide that each holder of
the Capital Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto. Because the
Company is a bank holding company, the right of the Company to participate in
any distribution of assets of any of its subsidiaries upon such subsidiary's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent the Company may itself be
recognized as a creditor of that subsidiary. Accordingly, the Company's
obligations under the Guarantee will be effectively subordinated to all existing
and future liabilities of the Company's subsidiaries, and claimants should look
only to the assets of the Company for payments thereunder. The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Indebtedness of the Company, under any indenture that
the Company may enter into in the future or otherwise.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in such Guarantee and, after default, shall exercise such of the rights
and powers vested in it by such Guarantee, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Trustee is
under no obligation to exercise any of the powers vested in it by the Guarantee
at the request of any holder of Capital Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
The Company and certain of its affiliates maintain a banking relationship
with the Guarantee Trustee and its affiliates.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of laws principles.
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RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed by the Company as and to the extent set forth under
"Description of Guarantee." Taken together, the Company's obligations under the
Subordinated Debentures, the Indenture, the Trust Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Capital Securities. No
single document standing alone or operating in conjunction with fewer than all
the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer Trust's obligations in
respect of the Capital Securities. If and to the extent that the Company does
not make payments on the Junior Subordinated Debentures, the Issuer Trust will
not have sufficient funds to pay Distributions or other amounts due on the
Capital Securities. The Guarantee does not cover payment of amounts payable with
respect to the Capital Securities when the Issuer Trust does not have sufficient
funds to pay such amounts. In such event, the remedy of a holder of the Capital
Securities is to institute a legal proceeding directly against the Company for
enforcement of payment of the Company's obligations under Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Capital Securities held by such holder.
The obligations of the Company under the Subordinated Debentures and the
Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Subordinated Debentures, such
payments will be sufficient to cover Distributions and other payments
distributable on the Capital Securities, primarily because: (i) the aggregate
principal amount of the Junior Subordinated Debentures will be equal to the sum
of the aggregate stated Liquidation Amount of the Capital Securities and Common
Securities; (ii) the interest rate and interest and other payment dates on the
Subordinated Debentures will match the Distribution rate, Distribution Dates and
other payment dates for the Capital Securities; (iii) the Company will pay for
all and any costs, expenses and liabilities of the Issuer Trust except the
Issuer Trust's obligations to holders of the Trust Securities; and (iv) the
Trust Agreement further provides that the Issuer Trust will not engage in any
activity that is not consistent with the limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
against and to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default in respect of the Capital
Securities. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Company, the subordination provisions of the
Subordinated Indenture provide that no payments may be made in respect of the
Subordinated Debentures until such Senior Indebtedness has been paid in full or
any payment default thereunder has been cured or waived. See "Description of the
New Subordinated Debentures -- Subordination."
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LIMITED PURPOSE OF ISSUER TRUST
The Capital Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and the Issuer Trust exists for the sole
purpose of issuing its Capital Securities and Common Securities and investing
the proceeds thereof in Subordinated Debentures. A principal difference between
the rights of a holder of a Capital Security and a holder of a Subordinated
Debenture is that a holder of a Subordinated Debenture is entitled to receive
from the Company payments on Subordinated Debentures held, while a holder of
Capital Securities is entitled to receive Distributions or other amounts
distributable with respect to the Capital Securities from the Issuer Trust (or
from the Company under the Guarantee) only if and to the extent the Issuer Trust
has funds available for the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer Trust
as required by applicable law, the holders of the Capital Securities will be
entitled to receive, out of assets held by the Issuer Trust, the Liquidation
Distribution in cash. See "Description of Capital Securities -- Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Issuer Trust, as registered holder of the
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated and in right of payment to all Senior Indebtedness as set forth in
the Junior Subordinated Indenture, but entitled to receive payment in full of
all amounts payable with respect to the Junior Subordinated Debentures before
any shareholders of the Company receive payments or distributions. Since the
Company is the guarantor under the Guarantee and has agreed under the Indenture
to pay for all costs, expenses and liabilities of the Issuer Trust (other than
the Issuer Trust's obligations to the holders of the Trust Securities), the
positions of a holder of the Capital Securities and a holder of such
Subordinated Debentures relative to other creditors and to shareholders of the
Company in the event of liquidation or bankruptcy of the Company are expected to
be substantially the same.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Arnold & Porter, in its capacity as special tax counsel
to the Company ("Tax Counsel"), the discussion of United States federal income
taxation which follows summarizes the principal material United States federal
income tax consequences of the Exchange Offer and of the ownership and
disposition of the Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the Internal Revenue Service ("IRS") or the courts, either of
which could take a contrary position. Moreover, no rulings have been or will be
sought from the IRS with respect to the transactions described herein.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the Capital
Securities held as a capital asset by a holder who or which (i) purchased the
Old Capital Securities upon original issuance at their original offering price
and (ii) is a US Holder (as defined below). This summary does not address all
the tax consequences that may be relevant to a US Holder, nor does it address
the tax consequences, except as stated below, to holders that are not US Holders
or to holders that may be subject to special tax treatment (such as banks,
thrift institutions, real estate investment trusts, regulated investment
companies, insurance companies, brokers and dealers in securities or currencies,
certain securities traders, other financial institutions, tax-exempt
organizations, persons holding the Capital Securities as a position in a
"straddle," as part of a "hedging," "conversion" or other integrated investment,
persons having a functional currency other than the U.S. Dollar
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and certain United States expatriates). Further, this summary does not address
(a) the income tax consequences to shareholders in, or partners or beneficiaries
of, a holder of the Capital Securities, (b) the United States federal
alternative minimum tax consequences of the purchase, ownership or disposition
of the Capital Securities, or (c) any state, local or foreign tax consequences
of the purchase, ownership and disposition of Capital Securities.
A "US Holder" generally is a holder of the Capital 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 income tax purposes, (ii) a
corporation or partnership created or organized (or treated as created or
organized for income tax purposes) in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
includible in its gross income for United States federal income tax purposes
without regard to its source, or (iv) a trust if (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 trustees have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE EXCHANGE OFFER AND OF THE OWNERSHIP AND DISPOSITION
OF THE CAPITAL 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. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE
CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF
THE NEW CAPITAL SECURITIES -- REDEMPTION."
US HOLDERS
CHARACTERIZATION OF THE ISSUER TRUST
In connection with the Exchange Offer, Tax Counsel has rendered its opinion
that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Trust Agreement (and other documents), and based on certain
assumptions and qualifications referenced in such counsel's written opinion, the
Issuer Trust will be characterized for United States federal income tax purposes
as a grantor trust and will not be characterized as an association taxable as a
corporation for such purposes. Accordingly, for United States federal income tax
purposes, each holder of Capital Securities generally will be considered the
owner of an undivided interest in the Subordinated Debentures owned by the
Issuer Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Subordinated Debentures on its own income tax return.
THE EXCHANGE
An exchange of Old Capital Securities for New Capital Securities pursuant
to the Exchange Offer will not constitute a taxable event for federal income tax
purposes. As a result, US Holders who exchange their Old Capital Securities for
New Capital Securities should not recognize any income, gain or loss for federal
income tax purposes with respect to such exchange. An exchanging US Holder will
have the same adjusted basis and holding period in the New Capital Securities as
it had in the Old Capital Securities immediately before the exchange.
CHARACTERIZATION OF THE SUBORDINATED DEBENTURES
In connection with the Exchange Offer, Tax Counsel has rendered its opinion
that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Indenture (and other documents), and based on certain assumptions
and qualifications referenced in such counsel's written opinion, the New Junior
Subordinated Debentures will be characterized for United States federal income
tax purposes as debt of the Company. The Company and the
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Issuer Trust have agreed to treat the New Junior Subordinated Debentures as
indebtedness for all United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debentures, the Company has the option
to defer payments of interest from time to time by extending the interest
payment period for a period not exceeding 10 consecutive semi-annual periods,
but not beyond the maturity of the Subordinated Debentures. Recently issued
Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Subordinated Debentures will not be considered issued with
OID by reason of the Company's option to defer payments of interest if the
likelihood of deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of original issue of the Old Junior Subordinated Debentures, the likelihood
of exercise of that option was "remote" within the meaning of the applicable
regulations, in part because exercising that option would prevent the Company
from declaring dividends on its stock and would prevent the Company from making
any payments with respect to debt securities that rank pari passu with or junior
to the Subordinated Debentures. Therefore, the Subordinated Debentures should
not be treated as issued with OID by reason of the Company's deferral option.
Moreover, the Company has determined that the Old Junior Subordinated Debentures
were not otherwise issued with OID. Consequently, stated interest on the
Subordinated Debentures will generally be taxable to a US Holder as ordinary
income when paid or accrued in accordance with that holder's method of
accounting for income tax purposes. It should be noted, however, that these
regulations may in the future be analyzed and interpreted by the Service in
rulings or other published documents. Accordingly, it is possible that the
Service could take a position contrary to the interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Subordinated Debentures would be treated as reissued for OID
purposes and the sum of the remaining interest payments (and any de minimis OID)
on the Subordinated Debentures would thereafter be treated as OID, which would
accrue, and be includible in a US Holder's taxable income, on an economic
accrual basis (regardless of the US Holder's method of accounting for income tax
purposes) over the remaining term of the Subordinated Debentures (including any
period of interest deferral), without regard to the timing of payments under the
Subordinated Debentures. (Subsequent distributions of interest on the
Subordinated Debentures generally would not be taxable.) The amount of OID that
would accrue in any period would generally equal the amount of interest that
accrued on the Subordinated Debentures in that period at the stated interest
rate. Consequently, during any period of interest deferral, US Holders will
include OID in gross income in advance of the receipt of cash, and a US Holder
which disposes of a Capital Security prior to the record date for payment of
distributions on the Subordinated Debentures following that period will be
subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Issuer Trust
with respect to that OID.
If the Company's option to defer payments of interest were not treated as
remote, the Subordinated Debentures would be treated as initially issued with
OID in an amount equal to the aggregate stated interest (plus any de minimis
OID) over the term of the Subordinated Debentures. That OID would generally be
includible in a US Holder's taxable income, over the term of the Subordinated
Debentures, on an economic accrual basis.
CHARACTERIZATION OF INCOME
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of the
Capital Securities will not be entitled to a dividends-received deduction for
any income recognized with respect to the Capital Securities.
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MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities may be considered to have acquired their
undivided interests in the Subordinated Debentures with market discount, premium
or acquisition premium (as each phase is defined for United States federal
income tax purposes).
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances described herein (See "Description of the New
Capital Securities -- Liquidation Distribution Upon Dissolution"), the Company
will have the right to distribute the Subordinated Debentures to holders in
exchange for the Capital Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event for
United States federal income tax purposes, and each US Holder would have an
aggregate adjusted basis in its Subordinated Debentures for United States
federal income tax purposes equal to such holder's aggregate adjusted basis in
its Capital Securities. For United States federal income tax purposes, a US
Holder's holding period in the Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Capital Securities were held by the holder. If, however, the relevant event is a
Tax Event which results in the Issuer Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Capital Securities for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description of the New
Capital Securities" and "Description of the New Junior Subordinated
Debentures -- Redemption"), the Subordinated Debentures may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder would recognize gain or loss as if
it had sold the Capital Securities for cash. See "-- Sales of Capital
Securities" below.
SALES OF CAPITAL SECURITIES
A US Holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted basis in the Capital Securities and the
amount realized on the sale of such Capital Securities. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition, and decreased by payments received on
the Capital Securities (other than any interest received with respect to the
period prior to the effective date of the Company's first exercise of its option
to defer payments of interest). Any such gain or loss generally will be capital
gain or loss, and generally will be a long-term capital gain or loss if the
Capital Securities have been held for more than one year.
Tax rates on long-term capital gains received by individual US Holders vary
depending on each US Holder's income and holding period for the Capital
Securities. US Holders that are individuals should contact their own tax
advisors for more information or for the capital gains rate applicable to a
specific Capital Security.
A holder who disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Subordinated Debentures through the date of disposition
in its taxable income for United States federal income tax purposes
(notwithstanding that the holder may receive a separate payment from the
purchaser with respect to accrued interest), and to deduct that amount from the
sales proceeds received (including the separate payment, if any, with respect to
accrued interest) for the Capital Securities (or as to OID only, to add such
amount to such holder's adjusted tax basis in its Capital Securities). To the
extent the selling price is less than the holder's adjusted tax basis (which
will include accrued but unpaid OID, if any), 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.
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NON-US HOLDERS
The following discussion applies to a Holder who is not a US Holder (a
"Non-US Holder").
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Capital Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Capital Securities certifies to the Issuer Trust or its
agent, under penalties of perjury, that it is a Non-US Holder and provides its
name and address, or (ii) 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 Capital
Security in such capacity, certifies to the Issuer Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Issuer Trust or
its agent with a copy thereof.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
A Non-US Holder which holds the Capital Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Subordinated Debentures.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Capital Securities held by a noncorporate
US Holder within the United States. In addition, payments made on, and payments
of the proceeds from the sale of, the Capital Securities to or through the
United States office of a broker are subject to information reporting unless the
holder thereof certifies as to its non-United States status or otherwise
establishes an exemption from information reporting and backup withholding. See
"-- Backup Withholding." Taxable income on the Capital Securities for a calendar
year should be reported to US Holders on Forms 1099 by the following January
31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's income tax liability, or refunded,
provided the required information is provided to the Service.
* * *
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE EXCHANGE OFFER, AND OF THE OWNERSHIP
AND DISPOSITION OF THE CAPITAL SECURITIES. HOLDERS OF THE CAPITAL SECURITIES ARE
URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company and the Issuer Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales
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of such New Capital Securities for a period of ninety (90) days after the
Expiration Date (subject to extension under certain limited circumstances
described herein). See "The Exchange Offer -- Resales of New Capital
Securities." Neither the Company nor the Issuer Trust will receive any cash
proceeds from the issuance of the New Capital Securities offered hereby. New
Capital Securities received by broker-dealers for their own accounts in
connection with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Capital Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such New Capital Securities. Any
broker-dealer that resells New Capital Securities that were received by it for
its own account in connection with the Exchange Offer and any broker or dealer
that participates in a distribution of such New Capital Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of ninety (90) days after the date on which the Exchange Offer
is consummated, the Company and the Issuer Trust will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The
Company and the Trust have agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Old Capital
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Old Capital Securities (including any broker-
dealers) against certain liabilities, including liabilities under the Securities
Act.
BENEFIT PLAN CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities (including Old and New Capital Securities).
Accordingly, among other factors, the fiduciary should consider whether the
investment would satisfy the prudence and diversification requirements of ERISA
and would be consistent with the documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Issuer Trust would be deemed
to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code
if "plan assets" of the Plan were used to acquire an equity interest in such
Issuer Trust and no exception were applicable under the Plan Assets Regulation.
An "equity interest" is defined under the Plan Assets Regulation as any interest
in an entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Issuer Trust would not be deemed to be "plan assets" of investing
Plans if, immediately after the most recent acquisition of any
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equity interest in the Issuer Trust, less than 25% of the value of each class of
equity interests in the Issuer Trust were held by Plans, other employee benefit
plans not subject to ERISA or Section 4975 of the Code (such as governmental,
church and foreign plans), and entities holding assets deemed to be "plan
assets" of any Plan (collectively, "Benefit Plan Investors"). No assurance can
be given that the value of the Capital Securities held by Benefit Plan Investors
will be less than 25% of the total value of such Capital Securities, and no
monitoring or other measures will be taken with respect to the satisfaction of
the conditions to this exception. All of the Common Securities will be purchased
and held by the Company.
Under another exception contained in the Plan Assets Regulation, if New
Capital Securities received as a result of the Exchange Offer were to qualify as
"publicly offered securities" under the Plan Assets Regulation, the assets of
the Issuer Trust would not be deemed to be "plan assets" by reason of a Plan's
acquisition or holding of such securities. The New Capital Securities would
qualify as "publicly offered securities" if, among other things, they are
offered pursuant to an effective registration statement, are owned by 100 or
more investors independent of the issuer and each other at the time of the
offering, and are subsequently registered under the Exchange Act. It is expected
that the 100 investor requirement will not be satisfied and that the New Capital
Securities will not be registered under the Exchange Act.
Certain transactions involving the Issuer Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Capital Securities were acquired
with "plan assets" of such Plan and assets of the Issuer Trust were deemed to be
"plan assets" of Plans investing in the Issuer Trust. For example, if the
Company is a Party in Interest with respect to an investing Plan (either
directly or by reason of its ownership of its subsidiaries), extensions of
credit between the Company and the Issuer Trust (as represented by the
Subordinated Debentures and the Guarantees) would likely be prohibited by
Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless
exemptive relief were available under an applicable exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Issuer Trust were deemed to be "plan assets" of Plans investing in
the Issuer Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts), and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of any
Plan, unless such purchase or holding is covered by the exemptive relief
provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption. If a purchaser or holder of the Capital Securities that is a Plan or
a Plan Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60,
91-38, 90-1 or 84-14, the Company and the Issuer Trust may require a
satisfactory opinion of counsel or other evidence with respect to the
availability of such exemption for such purchase and holding. Any purchaser or
holder of the Capital Securities or any interest therein will be deemed to have
represented by its purchase and holding thereof that either (a) it is not a Plan
or a Plan Asset Entity and is not purchasing such securities on behalf of or
with "plan assets" of any Plan or (b) (i) it is covered by the exemptive relief
provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption with respect to such purchase or holding, (ii) the Company and the
Administrators are not "fiduciaries," within the meaning of Section 3(21) of
ERISA and the regulations thereunder, with respect to its interest in the
Capital Securities or the Subordinated Debentures, and (iii) in purchasing the
Capital Securities it approves the purchase and holding of the Subordinated
Debentures and the appointment and retention of the Issuer Trustees.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering
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purchasing the Capital Securities on behalf of or with "plan assets" of any Plan
consult with their counsel regarding the potential consequences if the assets of
the Issuer Trust were deemed to be "plan assets" and the availability of
exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Governmental plans and certain church plans are not subject to ERISA and
are also not subject to the prohibited transaction provisions of Section 4975 of
the Code. However, state laws or regulations governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and the Code discussed
above. Accordingly, fiduciaries of governmental plans and church plans, in
consultation with their advisers, should consider the impact of their respective
state laws on investments in the Capital Securities, and the considerations
discussed above, to the extent applicable.
SUPERVISION, REGULATION AND OTHER MATTERS
The following information is not intended to be an exhaustive description
of the statutes and regulations applicable to the Company. The discussion is
qualified in its entirety by reference to all particular statutory or regulatory
provisions. Additional information regarding supervision and regulation is
included in the documents incorporated herein by reference. See "Available
Information."
The business of the Company is influenced by prevailing economic conditions
and governmental policies, both foreign and domestic. The actions and policy
directives of the Federal Reserve determine to a significant degree the cost and
the availability of funds obtained from money market sources for lending and
investing. The Federal Reserve's policies and regulations also influence,
directly and indirectly, the rates of interest paid by commercial banks on their
time and savings deposits. The nature and impact on the Company of future
changes in economic conditions and monetary and fiscal policies, both foreign
and domestic, are not predictable.
The Company is subject to supervision and examination by federal bank
regulatory authorities. As a bank holding company regulated under the BHC Act,
the Company's primary bank regulatory authority is the Federal Reserve. Bank
holding companies are expected to serve as a source of strength to their
subsidiary banks under the Federal Reserve's regulations and policies. As a
state-chartered bank that is a member of the Federal Reserve System, the Bank's
primary federal bank regulator is the Federal Reserve.
The federal bank regulatory authorities have each adopted risk-based
capital guidelines to which the Company and the Bank are subject. These
guidelines are based on an international agreement developed by the Basle
Committee on Banking Regulations and Supervisory Practices, which consists of
representatives of central banks and supervisory authorities in 12 countries
including the United States of America. The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations, takes off-balance
sheet exposures into explicit account in assessing capital adequacy and
minimizes disincentives to holding liquid, low-risk assets. Risk-based assets
are determined by allocating assets and specified off-balance sheet commitments
and exposures into four weighted categories, with higher levels of capital being
required for the categories perceived as representing greater risk.
The Bank is required to maintain a minimum total risk-based ratio of 8%, of
which half (4%) must be Tier 1 capital. In addition, the federal bank regulators
established leverage ratio (Tier 1 capital to total adjusted average assets)
guidelines providing for a minimum leverage ratio of 3% for banks meeting
certain specified criteria, including excellent asset quality, high liquidity,
low interest rate exposure and the highest regulatory rating. Institutions not
meeting these criteria are expected to maintain a ratio which exceeds the 3%
minimum by at least 100 to 200 basis points. The federal bank regulatory
authorities may, however, set higher capital requirements when a bank's
particular circumstances warrant.
From time to time, the federal bank regulatory authorities, including the
Federal Reserve, propose amendments to and issue interpretations of their
risk-based capital guidelines and reporting instructions, which can affect
reported capital ratios and net risk-adjusted assets. Effective June 26, 1996,
the Federal Reserve, the Office of the Comptroller of the Currency and the
Federal Deposit Insurance Corporation
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("FDIC") issued a joint policy statement that provides guidance on sound
practices for interest rate risk management and describes critical factors
affecting the agencies' evaluation of a bank's interest rate risk when making a
determination of capital adequacy.
The federal banking agencies possess broad powers to take corrective action
as deemed appropriate for an insured depository institution and its holding
companies. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase. The
agencies' corrective powers can include, among other things, requiring an
insured financial institution to adopt a capital restoration plan which cannot
be approved unless guaranteed by the institution's parent holding company;
placing limits on asset growth and restrictions on activities; placing
restrictions on transactions with affiliates; restricting the interest rates the
institution may pay on deposits; prohibiting the institution from accepting
deposits from correspondent banks; prohibiting the payment of principal or
interest on subordinated debt; prohibiting the holding company from making
capital distributions without prior regulatory approval; and, ultimately,
appointing a receiver for the institution. Business activities may also be
influenced by an institution's capital classification. For instance, only a
"well capitalized" depository institution may accept brokered deposits without
prior regulatory approval and only an "adequately capitalized" depository
institution may accept brokered deposits with prior regulatory approval. At June
30, 1997, the Bank exceeded the required capital ratios for classification as a
"well capitalized" bank.
The deposits of the Bank are insured by the FDIC and are subject to FDIC
insurance assessments. The amount of FDIC assessments paid by individual insured
depository institutions is based on their relative risk as measured by
regulatory capital ratios and certain other factors. Currently, the Bank is not
assessed any premiums for deposits insured by either the Bank Insurance Fund or
the Savings Association Insurance Fund ("SAIF"). The Bank, however, continues to
pay premiums based on deposit levels to service debt on Financing Corporation
bonds.
Under federal law, a financial institution insured by the FDIC under common
ownership with a failed institution can be required to indemnify the FDIC for
its losses resulting from the insolvency of the failed institution, even if such
indemnification causes the affiliated institution also to become insolvent. As a
result, the Company could, under certain circumstances, be obligated for the
liabilities of its affiliates that are FDIC-insured institutions. In addition,
if any insured depository institution becomes insolvent and the FDIC is
appointed its conservator or receiver, the FDIC may disaffirm or repudiate any
contract or lease to which such institution is a party, the performance of which
is determined to be burdensome and the disaffirmance or repudiation of which is
determined to promote the orderly administration of the institution's affairs.
If Federal law were construed to permit the FDIC to apply these provisions to
debt obligations of an insured depository institution, the result could be that
such obligations would be prepaid without premium. Federal law also accords the
claims of a receiver of an insured depository institution for administrative
expenses and the claims of holders of deposit liabilities of such an institution
priority over the claims of general unsecured creditors of such an institution
in the event of a liquidation or other resolution of such institution.
The BHC Act currently permits adequately capitalized and adequately managed
bank holding companies from any state to acquire banks and bank holding
companies located in any other state, subject to certain conditions. Effective
June 1, 1997, the Company has the ability, subject to certain restrictions,
including state opt-out provisions, to acquire by acquisition or merger branches
outside of its home state. States may affirmatively opt-in earlier. Competition
may increase as banks branch across state lines and enter new markets.
70
74
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Securities will be passed upon for the Trust by Richards, Layton & Finger,
special Delaware counsel to the Issuer Trust and the Company. Certain matters of
law relating to the validity of the Subordinated Debentures, the Guarantee and
related matters will be passed upon for the Company by Alexander M. Donaldson,
Esq., General Counsel of the Company. Certain United States federal income tax
matters will be passed upon for the Company and the Issuer Trust by Arnold &
Porter, special tax counsel for the Company and the Issuer Trust. As of October
30, 1997, Mr. Donaldson beneficially owned 600 shares of common stock of the
Company.
EXPERTS
The consolidated balance sheets as of December 31, 1996 and 1995 and the
consolidated statements of income, shareholders equity, and cash flows for each
of the three years in the period ended December 31, 1996 incorporated by
reference in the Company's Annual Report on Form 10-K, and the supplemental
consolidated balance sheets as of December 31, 1996 and 1995 and the
supplemental consolidated statements of income, changes in shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1996, giving retroactive effect to the merger consummated October 2, 1997, and
included in the Company's Form 8-K dated October 31, 1997, have been
incorporated herein by reference in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The consolidated balance sheets as of December 31, 1996 and 1995 of Bank of
Mecklenburg and the consolidated statements of income, shareholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1996, incorporated by reference in this Registration Statement, have been
incorporated herein in reliance on the report of KPMG Peat Marwick LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
71
75
======================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE ISSUER TRUST. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
PAGE
----
Available Information................. 2
Incorporation of Certain Documents
by Reference........................ 3
Certain Defined Terms................. 4
Summary............................... 5
Risk Factors.......................... 14
Triangle Bancorp, Inc................. 22
Consolidated Ratios of Earnings to
Fixed Charges....................... 23
Selected Consolidated Financial Data
and Other Information............... 24
Supplemental Selected Consolidated
Financial Data and Other
Information......................... 25
Triangle Capital Trust................ 26
Accounting Treatment.................. 26
The Exchange Offer.................... 26
Description of the New Capital
Securities.......................... 36
Description of the New Junior
Subordinated Debentures............. 49
Description of the Guarantee.......... 58
Relationship among the Capital
Securities, the Subordinated
Debentures and the Guarantee........ 61
United States Federal Income
Taxation............................ 62
Plan of Distribution.................. 66
Benefit Plan Considerations........... 67
Supervision, Regulation and Other
Matters............................. 69
Legal Matters......................... 71
Experts............................... 71
======================================================
======================================================
$20,000,000
------------------------
PROSPECTUS
------------------------
TRIANGLE BANCORP, INC.
OFFER TO EXCHANGE ITS
9.375% CAPITAL SECURITIES
(AGGREGATE LIQUIDATION
AMOUNT $20,000,000)
FOR ANY AND ALL OF ITS
9.375% OUTSTANDING CAPITAL SECURITIES
(AGGREGATE LIQUIDATION
AMOUNT $20,000,000)
October , 1997
======================================================
76
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The North Carolina Business Corporation Act ("NCBCA") provides for
indemnification by a corporation of its officers, directors, employees and
agents, and any person who is or was serving at the corporation's request as a
director, officer, employee or agent of another entity or enterprise or as a
trustee or administrator under an employee benefit plan, against liability and
expense, including reasonable attorneys' fees, in any proceeding (including
without limitation a proceeding brought by or on behalf of the corporation
itself) arising out of their status as such or their activities in any of the
foregoing capacities.
Permissible Indemnification. Under the NCBCA, a corporation may, but is
not required to, indemnify any such person against liability and expenses
incurred in any such proceeding, provided such person conducted himself or
herself in good faith and (i) in the case of conduct in his or her official
corporate capacity, reasonably believed that his or her conduct was in the
corporation's best interests, and (ii) in all other cases, reasonably believed
that his or her conduct was at least not opposed to the corporation's best
interests, and, in the case of a criminal proceeding, where he or she had no
reasonable cause to believe his or her conduct was unlawful. However, a
corporation may not indemnify such person either in connection with a proceeding
by or in the right of the corporation in which such person was adjudged liable
to the corporation, or in connection with any other proceeding charging improper
personal benefit to such person (whether or not involving action in an official
capacity) in which such person was adjudged liable on the basis that personal
benefit was improperly received.
Mandatory Indemnification. Unless limited by the corporation's charter,
the NCBCA requires a corporation to indemnify a director or officer of the
corporation who is holy successful, on the merits or otherwise, in the defense
of any proceeding to which such person was a party because he or she is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding.
Advance for Expenses. Expenses incurred by a director, officer, employee
or agent of the corporation in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding as authorized
by the board of directors in the specific case, or as authorized by the charter
or bylaws or by any applicable resolution or contract, upon receipt of an
undertaking by or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified by the
corporation against such expenses.
Voluntary Indemnification. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, contract or resolution, indemnify or agree to indemnify
any one or more of its directors, officers, employees or agents against
liability and expenses in any proceeding (including any proceeding brought by or
on behalf of the corporation itself) arising out of their status as such or
their activities in any of the foregoing capacities. However, the corporation
may not indemnify or agree to indemnify a person against liability or expenses
he may incur on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws or in a contract
or resolution my include provisions for recovery from the corporation of
reasonable costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and my further include
provisions establishing reasonable procedures for determining and enforcing such
rights.
Court-Ordered Indemnification. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court deems necessary, may
order indemnification if it determines either (i) that the director or officer
is entitled to mandatory indemnification as described above, in which case the
court also will order the corporation to pay the reasonable expenses incurred to
obtain the court-ordered indemnification, or (ii) that the director or officer
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such person met the requisite standard of conduct
or was adjudged liable to the corporation in connection with a proceeding by or
in the right of the corporation or on the basis that personal
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77
benefit was improperly received in connection with any other proceeding so
charging (but if adjudged so liable, indemnification is limited to reasonable
expenses incurred).
Parties Entitled to Indemnification. The NCBCA defines "director" to
include ex-directors and the estate or personal representative of a director.
Unless its charter provides otherwise, a corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with public
policy, as may be provided in its charger or bylaws, by general or specific
action of its board of directors, or by contract.
Indemnification by the Registrant. The Bylaws of the Registrant provide
for indemnification of its directors, officer, employees and agents, and require
its Board of Directors to take all actions necessary and appropriate to
authorize such indemnification.
Under the NCBCA, a corporation also may purchase insurance on behalf of any
person who is or was a director or officer against any liability arising out of
his status as such. The Registrant currently maintains a directors' and
officers' liability insurance policy.
Trust Agreement Indemnity. The Company has agreed in the Trust Agreement,
to the fullest extent permitted by applicable law, to indemnify and hold
harmless (i) the Property Trustee, (ii) the Delaware Trustee, (iii) and any
Affiliate (as defined in the Trust Agreement) of the Delaware Trustee and
Property Trustee, (iv) each Administrator (as defined in the Trust Agreement) of
the Issuer Trust, (v) any officer, director, shareholder, employee,
representative or agent of the Property Trustee or Delaware Trustee, and (vi)
any employee or agent of the Issuer Trust (each a "Indemnified Person") from and
against any loss, damage, liability, tax, penalty, expense or claim of any kind
or nature whatsoever incurred by such indemnified person arising out of or in
connection with the creation, operation or dissolution of the Issuer Trust or
any act or omission performed or admitted by such Indemnified Person in good
faith on behalf of the Issuer Trust, and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by the Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
An index of exhibits appears at page II-8, which is incorporated herein by
reference.
ITEM 22. UNDERTAKINGS.
(A) Each of the undersigned registrants hereby undertakes:
1. to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in "Calculation of
Registration Fee" table in the effective registration statement; and
II-2
78
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
2. that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
3. to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.
(B) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report to Section 13(a) or
Section 15(b) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the
registrants in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction,
the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will each be governed by the
final adjudication of such issue.
(D) The undersigned registrants hereby undertake to respond to
requests for information that is incorporated by reference into the
Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of
responding to the request.
(E) The undersigned registrants hereby undertake to supply by means
of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the Registration Statement when it became
effective.
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79
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Raleigh,
State of North Carolina, on October 29, 1997.
TRIANGLE BANCORP, INC.
By: /s/ MICHAEL S. PATTERSON
------------------------------------
Michael S. Patterson
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael
S. Patterson his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he or she might, or could,
do in person, hereby ratifying and confirming all that said attorney-in fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the capacity
and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ MICHAEL S. PATTERSON President, Chief Executive October 29, 1997
- - ----------------------------------------------------- Officer and Director
Michael S. Patterson (Principal Executive
Officer)
/s/ DEBRA L. LEE Chief Financial Officer October 29, 1997
- - ----------------------------------------------------- (Principal Financial Officer
Debra L. Lee and Principal Accounting
Officer)
/s/ CAROLE S. ANDERS Director October 29, 1997
- - -----------------------------------------------------
Carole S. Anders
/s/ CHARLES H. ASHFORD, JR. Chairman and Director October 29, 1997
- - -----------------------------------------------------
Charles H. Ashford, Jr.
/s/ H. LEIGH BALLANCE, JR. Director October 29, 1997
- - -----------------------------------------------------
H. Leigh Ballance, Jr.
Director
- - -----------------------------------------------------
Edwin B. Borden
/s/ ROBERT E. BRYAN, JR. Director October 29, 1997
- - -----------------------------------------------------
Robert E. Bryan, Jr.
II-4
80
NAME TITLE DATE
---- ----- ----
/s/ DAVID T. CLANCY Director October 29, 1997
- - -----------------------------------------------------
David T. Clancy
Director
- - -----------------------------------------------------
N. Leo Daughtry
Director
- - -----------------------------------------------------
Syd W. Dun, Jr.
/s/ WILLIE S. EDWARDS Director October 29, 1997
- - -----------------------------------------------------
Willie S. Edwards
Director
- - -----------------------------------------------------
James P. Godwin, Sr.
Director
- - -----------------------------------------------------
Robert L. Guthrie
/s/ JOHN B. HARRIS, JR. Director October 29, 1997
- - -----------------------------------------------------
John B. Harris, Jr.
Director
- - -----------------------------------------------------
George W. Holt
/s/ EARL JOHNSON, JR. Director October 29, 1997
- - -----------------------------------------------------
Earl Johnson, Jr.
/s/ EDYTHE P. LUMSDEN Director October 29, 1997
- - -----------------------------------------------------
Edythe P. Lumsden
Director
- - -----------------------------------------------------
J. L. Maxwell, Jr.
/s/ MICHAEL A. MAXWELL Director October 29, 1997
- - -----------------------------------------------------
Michael A. Maxwell
/s/ WENDELL H. MURPHY Director October 29, 1997
- - -----------------------------------------------------
Wendell H. Murphy
Director
- - -----------------------------------------------------
Patrick L. Pope
/s/ WILLIAM R. POPE Director October 29, 1997
- - -----------------------------------------------------
William R. Pope
/s/ BILLY N. QUICK, SR. Director October 29, 1997
- - -----------------------------------------------------
Billy N. Quick, Sr.
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81
NAME TITLE DATE
---- ----- ----
/s/ J. DAL SNIPES Director October 29, 1997
- - -----------------------------------------------------
J. Dal Snipes
/s/ N. JOHNSON TILGHMAN Director October 29, 1997
- - -----------------------------------------------------
N. Johnson Tilghman
/s/ SYDNOR M. WHITE, JR. Director October 29, 1997
- - -----------------------------------------------------
Sydnor M. White, Jr.
Director
- - -----------------------------------------------------
J. Blount Williams
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82
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Raleigh,
State of North Carolina, on October 29, 1997.
TRIANGLE CAPITAL TRUST
By: /s/ ALEXANDER M. DONALDSON
------------------------------------
Alexander M. Donaldson
Administrator
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the capacity
and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ ALEXANDER M. DONALDSON Administrator October 29, 1997
- - -----------------------------------------------------
Alexander M. Donaldson, Esq.
/s/ DEBRA L. LEE Administrator October 29, 1997
- - -----------------------------------------------------
Debra L. Lee
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83
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- - ------- -----------
3.1 Articles of Incorporation of the Company, as amended
(incorporated by reference to the Company's Form 10-K for
the year ended December 31, 1996, filed with the Commission
on March 25, 1997, File No. 000-21346).
3.2 Bylaws of the Company, as amended (incorporated by reference
to the Company's Form 10-K for the year ended December 31,
1994, filed with the Commission on March 31, 1995, File No.
000-21346).
3.3 Certificate of Trust of the Issuer Trust, dated May 28,
1997, as filed with the Secretary of State of Delaware.
4.1 Indenture, dated as of June 3, 1997, between the Company and
Bankers Trust Company, as Trustee.
4.2 Amended and Restated Trust Agreement, dated as of June 3,
1997, among the Company, Bankers Trust Company, as Property
Trustee, Bankers Trust Company (Delaware), as Delaware
Trustee, and the Administrators named therein.
4.3 Form of Guarantee Agreement entered into by the Company and
Bankers Trust Company, as Guarantee Trustee, and registered
under the Securities Act of 1933, as amended.
4.4 Registration Rights Agreement, dated June 3, 1997, between
Issuer Trust, the Company, and the Initial Purchaser named
therein.
4.5 Form of Capital Security.
4.6 Form of Junior Subordinated Debenture.
5.1 Opinion of Alexander M. Donaldson, Senior Vice President and
General Counsel of the Company, as to the legality of the
Subordinated Debentures and the Guarantee.
5.2 Opinion of Richards, Layton & Finger, special Delaware
counsel, as to the legality of the Capital Securities.
8.1 Opinion of Arnold & Porter, special tax counsel, as to
certain federal income tax matters.
12 Statement of Ratios
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Alexander M. Donaldson (included in Exhibit 5.1).
23.4 Consent of Richards, Layton & Finger (included in Exhibit
5.2).
23.5 Consent of Arnold & Porter (included in Exhibit 8.1).
24 Powers of Attorney (contained in the signature page of the
Registration Statement of which this Exhibit List is a
part).
25.1 Form T-1 Statement of Eligibility of Bankers Trust Company
to act as Trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of Bankers Trust Company
to act as Trustee under the Amended and Restated Trust
Agreement (contained in Exhibit 26.1).
25.3 Form T-1 Statement of Eligibility of Bankers Trust Company
under the Guarantee for the benefit of the holders of the
Capital Securities (contained in Exhibit 26.1).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agent Agreement.
II-8