As filed with the Securities and Exchange Commission on March 29, 2001.
Registration No. 333-_______
Registration No. 333-_____-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
GREAT SOUTHERN BANCORP, INC. GREAT SOUTHERN CAPITAL TRUST I
(Exact name of registrant and co-registrant as specified in their charters)
Delaware 43-1524856 Delaware Applied for
(State or other jurisdiction of (I.R.S. Employer (State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number) incorporation or organization) Identification Number)
1451 East Battlefield Road 1451 East Battlefield Road
Springfield, Missouri 65804 Springfield, Missouri 65804
(417) 887-4400 (417) 887-4400
(Addresses, including zip codes, and telephone numbers of registrant's and
co-registrant's principal executive offices)
Joseph W. Turner
President and Chief Executive Officer
Great Southern Bancorp, Inc.
1451 East Battlefield Road
Springfield, Missouri 65804
(417) 887-4400
(Name, address and telephone number of agent for service)
Copies to:
Harold R. Burroughs, Esq.
Martin L. Meyrowitz, P.C. James R. Levey, Esq.
Dave M. Muchnikoff, P.C. Gregory A. Billhartz, Esq.
Agata Szypszak, Esq. Bryan Cave LLP
Silver, Freedman & Taff, L.L.P. One Metropolitan Square
1100 New York Avenue, N.W. 211 N. Broadway, Suite 3600
Washington, DC 20005 St. Louis, MO 63102
(202) 414-6100 (314) 259-2000
Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Proposed
maximum Proposed maximum Amount of
Amount to be offering price aggregate registration
Title of each class of securities to be registered registered(1) per unit offering price fee(2)
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% Cumulative Trust Preferred Securities of Great
Southern Capital Trust I................................. 1,725,000 $10.00 $17,250,000 $4,313
% Subordinated Debentures due 2031 of Great Southern
Bancorp, Inc.(3)............................................. (2)
Guarantee of Preferred Securities(4)......................... (3)
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(1) Includes 225,000 Preferred Securities which may be sold by Great Southern
Capital Trust I to cover over-allotments.
(2) The registration fee is calculated in accordance with Rule 457(a), (i) and
(n) of the Securities Act of 1933.
(3) The Debentures will be purchased by Great Southern Capital Trust I with
the proceeds from the sale of Preferred Securities. Such securities may
later be distributed for no additional consideration to the holders of the
Preferred Securities of Great Southern Capital Trust I upon its
dissolution.
(4) This Registration Statement is deemed to cover the % Subordinated
Debentures due 2031 of Great Southern Bancorp, Inc., the rights of holders
of % Subordinated Debentures of Great Southern Bancorp, Inc. under the
Indenture, and the rights of holders of the Preferred Securities under the
Trust Agreement, the Guarantee and the Expense Agreement entered into by
Great Southern Bancorp, Inc. No separate consideration will be received
for the Guarantee.
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated March ___, 2001
PROSPECTUS
1,500,000 Preferred Securities
GREAT SOUTHERN CAPITAL TRUST I
% Cumulative Trust Preferred Securities
[LOGO OF GSBC] (Liquidation Amount $10 Per Preferred Security)
Fully, irrevocably and unconditionally guaranteed
on a subordinated basis, as described in this prospectus, by
GREAT SOUTHERN BANCORP, INC.
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Great Southern Capital Trust I is offering 1,500,000 preferred securities
at $10 per preferred security. The preferred securities represent an indirect
interest in our % subordinated debentures. The debentures have the same payment
terms as the preferred securities and will be purchased by the trust using the
proceeds from its offering of the preferred securities.
We have applied to have the preferred securities designated for inclusion
in the Nasdaq National Market under the symbol "GSBCP." Trading is expected to
commence on or prior to delivery of the preferred securities.
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Investing in the preferred securities involves risks. See "Risk Factors"
beginning on page __.
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The preferred securities are not savings accounts, deposits or obligations
of any bank and are not insured by the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation or any other governmental agency.
Per Preferred
Security Total
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Public offering price........................... $10.00 $15,000,000
Proceeds to the trust........................... $10.00 $15,000,000
This is a firm commitment underwriting. We will pay underwriting
commissions of $ per preferred security, or a total of $ , to the
underwriters for arranging the investment in our junior subordinated debentures.
The underwriters have been granted a 30-day option to purchase up to an
additional 225,000 preferred securities to cover over-allotments, if any.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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Stifel, Nicolaus & Company Dain Rauscher Wessels
Incorporated
, 2001
GREAT SOUTHERN BANCORP, INC.
[Map depicting locations of Great Southern's banking facilities and main bank
office.]
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in, or incorporated
by reference into, this prospectus. Because this is a summary, it may not
contain all the information that may be important to you. Therefore, you should
read the entire prospectus, as well as our financial statements and related
notes and the other information that is incorporated by reference in this
prospectus, before making a decision to invest in the preferred securities. The
words "we," "our" and "us" refer to Great Southern Bancorp, Inc. and its wholly
owned subsidiaries, unless we indicate otherwise. Unless otherwise indicated,
the information in this prospectus assumes that the underwriters will not
exercise their option to purchase additional preferred securities to cover
over-allotments.
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc. is a financial holding company headquartered
in Springfield, Missouri which owns all of the stock of Great Southern Bank. The
bank was founded in 1923, and we became a one-bank holding company in 1998
upon the conversion of Great Southern Bank to a Missouri-chartered trust
company. Our bank offers a broad range of banking services through its 27
branches located in southwestern and central Missouri. Our primary market area
includes Springfield, Joplin, the resort areas of Branson and the Lake of the
Ozarks, and various smaller communities in our market area. We are principally
engaged in the business of originating residential and commercial real estate
loans and other commercial and consumer loans, and funding these loans through
attracting deposits from the general public, originating brokered deposits and
borrowing from the Federal Home Loan Bank of Des Moines and other financial
institutions. In addition, through subsidiaries of our bank, we offer insurance,
travel, discount brokerage and related services. At December 31, 2000, we had
consolidated assets of $1.13 billion, net loans of $890.8 million, deposits of
$751.0 million and stockholders' equity of $71.0 million.
For many years, we have followed a strategy of emphasizing quality loan
origination through residential, commercial and consumer lending activities in
our local market area. The goal of this strategy is to be one of the leading
providers of financial services in our market area, while simultaneously
diversifying assets and reducing interest rate risk by originating and holding
adjustable-rate loans in our portfolio and selling fixed-rate loans in the
secondary market. We continue to place primary emphasis on residential mortgage
and other real estate lending while also expanding and increasing our
originations of commercial business and consumer loans. At December 31, 2000,
commercial real estate, commercial, consumer and residential real estate loans
represented 42.0%, 8.9%, 9.6% and 39.5% of the loan portfolio, respectively.
Our bank has three principal subsidiaries through which we offer corporate
services and an extensive portfolio of specialized business services. Great
Southern Travel, founded in 1976 as a travel agency for businesses, has since
grown into a full service travel agency, offering leisure travel services to
individuals as well as group travel services. Great Southern Insurance,
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established in 1974, is a service-oriented agency offering commercial, personal,
life, and health insurance throughout southwestern Missouri. Great Southern
Investments, established in 1982, offers discounted brokerage services as well
as numerous financial products and planning services to customers.
Business Strategy
Our goal is to provide the finest in banking services to our customers. In
order of priority we emphasize:
o High Quality and Personal Customer Service - We are a community-oriented
company committed to serving the needs of our customers. Key to maintaining our
existing customer base and growing through the addition of new customers is our
high level of quality personal service and the individual attention we give to
our customers. For customers who desire automated convenience, we also offer
alternative delivery systems, such as bank-by-mail, bank-by-phone, ATMs and
Internet banking. Despite the entry of several larger banks with many more
resources than us into our markets, we have increased our assets internally at a
compound annual rate of 12% since June 30, 1996. We believe our internal growth
over the past few years has demonstrated the effectiveness of our high quality
customer service and strong community focus.
o Efficient Operations - To achieve consistent profitability, we
continually monitor our costs and strive to find more efficient ways to operate.
We leverage our existing branch system by placing sales managers in our
branches. Through our branch system, we have the ability to sell virtually all
of the financial products we offer, including deposit products, consumer and
mortgage loans, and in many cases, annuities and certain other investment
products. In addition, by centralizing our back office operations and utilizing
wholesale funding, we are able to grow without significantly increasing
overhead. These cost controls have contributed to our high profitability. For
the year ended December 31, 2000, our return on average assets and return on
average equity were 1.53% and 22.36%, respectively, and our efficiency ratio was
49.07%.
o A Wide Variety of Product Offerings - In addition to traditional banking
products, we offer a wide variety of business related financial products to our
customers, including investment counseling, discount brokerage, insurance and
travel services. Most recently we have dedicated a team to focus on developing
and servicing commercial business, offering to customers products such as our
Automated Clearing House origination service for cash management and commercial
Internet banking services. Through our broad product offerings, we achieve a
substantial portion of our total revenues from noninterest income. We will
continue to enhance our current product offerings to enable our customers access
to a variety of financial products to service their commercial or individual
banking needs.
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Great Southern Capital Trust I
Great Southern Capital Trust I is a newly created Delaware business trust.
We created Great Southern Capital Trust I to offer the preferred securities and
to purchase the debentures. The trust has a term of 31 years, but may be
dissolved earlier as provided in the trust agreement. Upon issuance of the
preferred securities offered by this prospectus, the purchasers in this offering
will own all of the issued and outstanding preferred securities of the trust. In
exchange for our capital contribution to the trust, we will own all of the
common securities of the trust.
Our principal executive offices, as well as those of the trust, are located
at 1451 East Battlefield, Springfield, Missouri 65804. The main telephone number
for us and the trust is (417) 887-4400.
The Offering
The issuer........................................... Great Southern Capital
Trust I
Securities being offered............................. 1,500,000 preferred
securities, which
represent preferred
undivided interests in
the assets of the trust.
Those assets will consist
solely of the debentures
and payments received on
the debentures.
The trust will sell the
preferred securities to
the public for cash. The
trust will use that cash
to buy the debentures
from us.
Offering price....................................... $10 per preferred
security.
When distributions will be paid to you............... If you purchase the
preferred securities, you
are entitled to receive
cumulative cash
distributions at a %
annual rate.
Distributions will
accumulate from the date
the trust issues the
preferred securities and
are to be paid quarterly
on March 31, June 30,
September 30 and December
31 of each year,
beginning June 30, 2001.
As long as the preferred
securities are
represented by a global
security, the record date
for distributions on the
preferred securities will
be the business day prior
to the distribution date.
We may defer the payment
of cash distributions, as
described below.
When the preferred securities must be
redeemed............................................. The debentures will
mature and the preferred
securities must be
redeemed on June 30,
2031. We have the option,
however, to shorten the
maturity
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date to a date not
earlier than June 30,
2006. We will not shorten
the maturity date unless
we have received the
prior approval of the
Board of Governors of the
Federal Reserve System,
if approval is then
required by law or
regulation.
Redemption of the preferred securities
before June 30, 2031 is possible..................... The trust must redeem the
preferred securities when
the debentures are paid
at maturity or upon any
earlier redemption of the
debentures. We may redeem
all or part of the
debentures at any time on
or after June 30, 2006.
In addition, we may
redeem, at any time, all
of the debentures if:
o existing laws or
regulations, or the
interpretation or
application of these
laws or regulations,
change, causing the
interest we pay on
the debentures to no
longer be deductible
by us for federal
income tax purposes;
or causing the trust
to become subject to
federal income tax
or to certain other
taxes or
governmental
charges;
o existing laws or
regulations change,
requiring the trust
to register as an
investment company;
or
o the capital adequacy
guidelines of the
Federal Reserve
change so that the
preferred securities
no longer qualify as
Tier 1 capital.
We may also redeem the
debentures at any time,
and from time to time, in
an amount equal to the
liquidation amount of any
preferred securities we
purchase, plus a
proportionate amount of
common securities, but
only in exchange for a
like amount of the
preferred securities and
common securities that we
then own.
Redemption of the
debentures prior to
maturity will be subject
to the prior approval of
the Federal Reserve, if
approval is then required
by law or regulation. If
your preferred securities
are redeemed by the
trust, you will receive
the liquidation amount of
$10 per preferred
security, plus any
accrued and unpaid
distributions to the
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date of redemption.
We have the option to extend the interest payment
period............................................... The trust will rely
solely on payments made
by us under the
debentures to pay
distributions on the
preferred securities. As
long as we are not in
default under the
indenture relating to the
debentures, we may, at
one or more times, defer
interest payments on the
debentures for up to 20
consecutive quarters, but
not beyond June 30, 2031.
If we defer interest
payments on the
debentures:
o the trust will also
defer distributions
on the preferred
securities;
o the distributions
you are entitled to
will accumulate; and
o these accumulated
distributions will
earn interest at an
annual rate of
%, compounded
quarterly, until
paid.
At the end of any
deferral period, we will
pay to the trust all
accrued and unpaid
interest under the
debentures. The trust
will then pay all
accumulated and unpaid
distributions to you.
You will still be taxed if distributions on the
preferred securities are deferred.................... If a deferral of payment
occurs, you must
recognize the amount of
the deferred
distributions as income
for United States federal
income tax purposes in
advance of receiving the
actual cash
distributions, even if
you are a cash-basis
taxpayer.
Our full and unconditional guarantee of payment...... Our obligations described
in this prospectus, in
the aggregate, constitute
a full, irrevocable and
unconditional guarantee
by us on a subordinated
basis, of the obligations
of the trust under the
preferred securities.
Under the guarantee
agreement, we guarantee
the trust will use its
assets to pay the
distributions on the
preferred securities and
the liquidation amount
upon liquidation of the
trust. However, the
guarantee does not apply
when the trust does not
have sufficient funds to
make the payments. If we
do not make payments on
the
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debentures, the trust
will not have sufficient
funds to make payments on
the preferred securities.
In this event, a legal
proceeding directly
against us for
enforcement of payments
under the debentures must
be instituted by you or
the trust.
We may distribute the debentures directly to you..... We may, at any time,
dissolve the trust and
distribute the debentures
to you, subject to the
prior approval of the
Federal Reserve, if
approval is then required
by law or regulation. If
we distribute the
debentures, we will use
our best efforts to
include them in the
Nasdaq National Market or
to list them on a
national securities
exchange or comparable
automated quotation
system.
How the securities will rank in right of
payment.............................................. Our obligations under the
preferred securities,
debentures and guarantee
are unsecured and will
rank as follows with
regard to right of
payment:
o the preferred
securities will rank
equally with the
common securities of
the trust. The trust
will pay
distributions on the
preferred securities
and the common
securities pro rata.
However, if we
default with respect
to the debentures,
then no
distributions on the
common securities of
the trust or our
common stock will be
paid until all
accumulated and
unpaid distributions
on the preferred
securities have been
paid;
o our obligations
under the debentures
and the guarantee
are unsecured and
generally will rank
junior in priority
to our existing and
future senior and
subordinated
indebtedness; and
o because we are a
holding company, the
debentures and the
guarantee will
effectively be
subordinated to all
depositors' claims,
as well as existing
and future
liabilities of our
subsidiaries.
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Voting rights of the preferred securities............ Except in limited
circumstances, holders of
the preferred securities
will have no voting
rights.
Proposed Nasdaq National Market
symbol............................................... GSBCP.
You will not receive certificates.................... The preferred securities
will be represented by a
global security that will
be deposited with and
registered in the name of
The Depository Trust
Company, or its nominee.
This means that you will
not receive a certificate
for the preferred
securities, and your
beneficial ownership
interests will be
recorded through the DTC
book-entry system.
How the proceeds of this offering will
be used.............................................. The trust will invest all
of the proceeds from the
sale of the preferred
securities in the
debentures. We estimate
that the net proceeds to
us from the sale of the
debentures to the trust,
after deducting offering
expenses and underwriting
commissions, will be
approximately $
million. We expect to use
the net proceeds from the
sale of the debentures to
reduce the indebtedness
currently outstanding
under our revolving
credit facility. The
remaining net proceeds,
if any, will be used to
make additional capital
contributions to our bank
and its operating
subsidiaries or for
general corporate
purposes.
Before purchasing the preferred securities being offered, you should
carefully consider the "Risk Factors" beginning on page __.
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SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is our selected consolidated financial information and
other financial data. The selected balance sheet and statement of income data,
insofar as they relate to the years ended December 31, 2000 and 1999, to the six
months ended December 31, 1998 and to the years ended June 30, 1998, 1997 and
1996, are derived from our consolidated financial statements, which have been
audited by Baird, Kurtz and Dobson. The selected consolidated financial data as
of and for the six months ended December 31, 1997 are derived from unaudited
consolidated financial statements. In our opinion, all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of results as
of and for the six months ended December 31, 1997 have been included. This
information should be read together with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our audited consolidated
financial statements and the related notes incorporated by reference into this
prospectus from our Annual Report on Form 10-K for the year ended December 31,
2000. Results for past periods are not necessarily indicative of results that
may be expected for any future period.
At or For the At or For the At or For the
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
-------------------- ------------------- ------------------------------
2000 1999 1998(1) 1997 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
Selected Income Statement Data: (Dollars in thousands, except per share data)
Interest income:
Loans ......................................... $ 76,671 $ 63,386 $ 30,332 $ 27,878 $ 57,537 $ 51,365 $ 49,884
Investment securities and other ............... 8,751 4,652 2,153 2,163 4,395 4,175 4,054
-------- -------- -------- -------- -------- -------- --------
Total interest income ..................... 85,422 68,038 32,485 30,041 61,932 55,540 53,938
-------- -------- -------- -------- -------- -------- --------
Interest expense:
Deposits ...................................... 32,244 24,966 12,255 10,395 20,951 17,951 17,003
Federal Home Loan Bank advances ............... 14,312 9,403 4,237 4,676 9,905 10,229 10,585
Short-term borrowings ......................... 2,305 1,094 38 530 1,136 642 544
-------- -------- -------- -------- -------- -------- --------
Total interest expense .................... 48,861 35,463 16,530 15,601 31,992 28,822 28,132
-------- -------- -------- -------- -------- -------- --------
Net interest income ............................. 36,561 32,575 15,955 14,440 29,940 26,718 25,806
Provision for loan losses ....................... 3,106 2,062 1,291 852 1,853 1,706 1,451
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for loan
losses ................................... 33,455 30,513 14,664 13,588 28,087 25,012 24,355
-------- -------- -------- -------- -------- -------- --------
Noninterest income:
Commissions ................................... 7,024 7,054 3,136 2,586 5,652 4,969 4,413
Service charges and ATM fees .................. 5,968 4,502 2,390 1,753 3,841 2,785 2,381
Net realized gains on sales of loans .......... 570 1,098 386 461 1,125 521 540
Net realized gains (losses) on sales
of available-for-sale securities ........... (9) 316 355 873 1,398 205 680
Income on foreclosed assets ................... 295 -- 420 383 326 285 728
Other income .................................. 1,863 2,379 1,171 777 1,457 1,752 1,582
-------- -------- -------- -------- -------- -------- --------
Total noninterest income .................. 15,711 15,349 7,858 6,833 13,799 10,517 10,324
-------- -------- -------- -------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits ................ 13,642 13,765 5,743 5,227 10,829 9,234 8,382
Net occupancy expense ......................... 4,529 4,124 1,772 1,349 3,034 2,400 2,220
Postage ....................................... 1,152 1,006 447 392 857 626 634
Insurance ..................................... 521 639 292 352 637 3,428 1,268
Amortization of excess of cost over
fair value of net assets acquired .......... 160 160 83 -- 65 1,107 193
Advertising ................................... 713 611 276 295 586 675 533
Office supplies and printing .................. 703 991 396 323 666 563 435
Other operating expenses ...................... 4,084 3,871 2,297 1,945 3,844 2,405 2,609
-------- -------- -------- -------- -------- -------- --------
Total noninterest expense ................. 25,504 25,167 11,306 9,883 20,518 20,438 16,274
-------- -------- -------- -------- -------- -------- --------
Income before income taxes ...................... 23,662 20,695 11,216 10,538 21,368 15,091 18,405
Provision for income taxes ...................... 8,184 7,018 3,858 3,058 6,924 5,751 7,111
-------- -------- -------- -------- -------- -------- --------
Net income ................................... $ 15,478 $ 13,677 $ 7,358 $ 7,480 $ 14,444 $ 9,340 $ 11,294
======== ======== ======== ======== ======== ======== ========
Per Common Share Data:
Basic earnings ................................ $ 2.16 $ 1.79 $ 0.93 $ 0.93 $ 1.79 $ 1.11 $ 1.27
Diluted earnings .............................. 2.12 1.76 0.91 0.91 1.76 1.10 1.23
Cash dividends declared ....................... 0.50 0.50 0.24 0.21 0.43 0.39 0.35
Book value (at end of period) ................. 10.30 9.20 8.76 8.13 8.47 7.45 7.70
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At or For the At or For the At or For the
Year Ended Six Months Ended Year Ended
December 31, December 31, June 30,
---------------------- ---------------------- ---------------------------------
2000 1999 1998(1) 1997 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ---------
(Dollars in thousands)
Selected Financial Condition Data
(at end of period):
Total assets .................................. $1,130,178 $ 964,803 $ 836,498 $ 750,458 $ 795,091 $ 707,841 $ 668,105
Loans receivable, net ......................... 890,784 766,807 696,962 622,849 653,672 581,948 544,705
Available-for-sale securities ................. 126,409 79,891 6,476 6,256 6,363 7,408 4,656
Held-to-maturity securities ................... 27,758 37,646 60,394 48,258 51,917 51,518 51,236
Total deposits ................................ 751,042 625,900 597,625 464,430 549,773 456,370 395,238
Total borrowings .............................. 291,573 261,642 159,250 216,794 169,509 180,566 197,057
Total stockholders' equity .................... 71,049 68,926 68,382 65,616 67,409 60,348 67,808
Selected Performance Ratios:(2)
Return on average assets(3) ................... 1.53% 1.56% 1.83% 2.08% 1.93% 1.39% 1.75%
Return on average stockholders' equity(4) ..... 22.36 19.98 21.97 24.04 22.49 15.02 17.28
Non-interest income to average total
assets ...................................... 1.55 1.65 1.95 1.90 1.85 1.57 1.60
Non-interest expense to average total
assets ...................................... 2.52 2.87 2.81 2.75 2.74 3.04 2.53
Net interest spread(5) ........................ 3.18 3.36 4.02 3.78 3.79 3.79 3.82
Net interest margin(6) ........................ 3.74 3.86 4.32 4.18 4.18 4.17 4.21
Adjusted efficiency ratio (excl. foreclosed
assets)(7) .................................. 49.07 52.51 48.33 47.31 47.20 55.22 45.97
Net overhead ratio(8) ......................... 0.97 1.06 0.87 0.85 0.90 1.48 0.92
Common dividend pay-out ratio ................. 23.58 28.41 25.82 23.08 24.43 35.23 28.46
Asset Quality Ratios:(2)
Allowance for loan losses to total loans. ..... 2.06% 2.21% 2.37% 2.48% 2.44% 2.60% 2.56%
Allowance for loan losses to non-performing
loans ....................................... 149.72 194.48 228.20 155.26 227.18 197.01 243.03
Net charge-offs to average loans .............. 0.20 0.23 0.23 0.09 0.16 0.10 0.32
Non-performing assets to total assets ......... 1.34 1.05 1.55 1.84 1.79 1.96 2.52
Non-performing loans to total loans ........... 1.37 1.18 1.42 1.60 1.42 1.32 1.06
Balance Sheet Ratios:
Loans to deposits ............................. 118.61% 122.51% 116.62% 134.11% 118.90% 127.52% 137.82%
Average interest-earning assets to
average interest-bearing liabilities ........ 111.06 111.95 106.57 108.82 108.62 108.45 108.41
Capital Ratios:
Total stockholders' equity to total
assets ...................................... 6.29% 7.14% 8.17% 8.74% 8.48% 8.53% 10.15%
Tangible stockholders' equity to assets........ 6.26 7.10 8.11 8.67 8.40 8.53 9.98
Leverage ratio ................................ 6.49 7.43 8.16 * 8.33 * *
Tier 1 risk-based capital ratio ............... 7.84 9.05 10.45 * 10.97 * *
Total risk-based capital ratio ................ 9.10 10.32 11.72 * 12.24 * *
Ratio of Earnings to Fixed Charges:(9)
Including deposit interest .................... 1.48x 1.58x 1.68x 1.68x 1.67x 1.52x 1.65x
Excluding deposit interest .................... 2.42 2.97 3.62 3.02 2.94 2.39 2.65
- ----------------------
(1) In 1998, we changed our fiscal year-end from June 30 to December 31.
(2) Certain financial ratios for interim periods have been annualized.
(3) Earnings divided by average total assets.
(4) Earnings divided by average stockholders' equity.
(5) Yield on average interest-earning assets less rate on average
interest-bearing liabilities.
(6) Net interest income divided by average interest-earning assets.
(7) Non-interest expense divided by the sum of net interest income, on a tax
equivalent basis, plus non-interest income.
(8) Non-interest expense less non-interest income divided by average total
assets.
(9) In computing the ratio of earnings to fixed charges: (a) earnings have
been based on income before income taxes and fixed charges, and (b) fixed
charges consist of interest and amortization of debt discount and expense
including amounts capitalized and the estimated interest portion of rents.
* Prior to 1998, we were a savings and loan holding company and did not have
any regulatory capital requirements.
9
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RISK FACTORS
Investing in preferred securities involves a number of risks. Some of
these risks relate to the preferred securities and others relate to us and the
financial services industry, generally. We urge you to read all of the
information contained in this prospectus. In addition, we urge you to consider
carefully the following factors in evaluating an investment in the trust before
you purchase the preferred securities.
Because the trust will rely on the payments it receives on the debentures
to fund all payments on the preferred securities, and because the trust may
distribute the debentures in exchange for the preferred securities, purchasers
of the preferred securities are making an investment decision that relates to
the debentures being issued by Great Southern Bancorp as well as the preferred
securities. Purchasers should carefully review the information in this
prospectus about the preferred securities, the debentures and the guarantee.
Risks Related to an Investment in Great Southern Bancorp
Since our business is concentrated in the Springfield metropolitan area and
Branson, a downturn in the Springfield and Branson economies may adversely
affect our business.
Currently, our lending and deposit gathering activities are concentrated
primarily in the Springfield and Branson, Missouri areas. Our success depends on
the general economic condition of Springfield and Branson and their surrounding
areas. Although we believe the economy in these areas has been favorable, we do
not know whether such conditions will continue. Our greatest concentration of
loans and deposits is in the Greater Springfield area. With a population of
approximately 308,000, the Greater Springfield area is the third largest
metropolitan area in Missouri.
The next largest concentration of loans is in the Branson area. The region
is a vacation and entertainment center, attracting tourists to its theme parks,
resorts, country music and novelty shows and other recreational facilities. As a
result of the rapid growth of the Branson area in the early 1990's, property
values increased at unusually high rates. This growth also provided for
increased loan demand and a more volatile lending market than had previously
been present in that area. Due to overbuilding of commercial properties during
the mid-1990's, property values have experienced downward pressure during the
past few years. Reduced demand for residential properties has similarly created
downward pressure on one- to four-family and multi-family, primary and vacation
residences in this area. At December 31, 2000, approximately 16% of the loan
portfolio consisted of loans in the two county region that includes the Branson
area.
Adverse changes in the regional and general economy could reduce our
growth rate, impair our ability to collect loans, and generally affect our
financial condition and results of operations.
10
Our loan portfolio possesses increased risk due to our relatively high
concentration of multi-family and commercial real estate, consumer and
commercial business loans.
Our multi-family and commercial real estate, consumer and commercial
business loans accounted for approximately 71.5% of our total loan portfolio as
of December 31, 2000. Generally, we consider these types of loans to involve a
higher degree of risk compared to first mortgage loans on one- to four-family,
owner-occupied residential properties. These portfolios include $101.1 million
of loans secured by motels, $51.8 million of loans secured by healthcare
facilities and $45.0 million of loans secured by recreational facilities, which
are particularly sensitive to certain risks including the following:
o large loan balances owed by a single borrower;
o payments that are dependent on the successful operation of the
project; and
o loans that are more directly impacted by adverse conditions in the
real estate market or the economy generally.
We plan to continue our emphasis on commercial real estate and commercial
business lending. Because of the increased risks related to these types of
loans, we may determine it necessary to increase the level of our provision for
loan losses. Increased provisions for loan losses would adversely impact our
operating results. See "Item 1. Business-The Company-Lending
Activities-Commercial Real Estate and Construction Lending," "-Other Commercial
Lending," "-Consumer Lending" and "-Allowance for Losses on Loans and Foreclosed
Assets" incorporated by reference into this prospectus from our Annual Report on
Form 10-K for the year ended December 31, 2000.
Our operations depend upon our continued ability to access brokered deposits and
Federal Home Loan Bank advances.
Due to the high level of competition for deposits in our market, we
utilize certificates of deposit obtained through deposit brokers and advances
from the Federal Home Loan Bank of Des Moines to help fund our asset base.
Brokered deposits are marketed through national brokerage firms that solicit
funds from their customers for deposit in banks, including our bank. Both
brokered deposits and Federal Home Loan Bank advances are generally more
sensitive to changes in interest rates and volatility in the capital markets
than retail deposits attracted through our branch network, and our reliance on
these sources of funds increases the sensitivity of our portfolio to these
external factors. At December 31, 2000, we had $286.7 million in brokered
deposits and $234.4 million in Federal Home Loan Bank advances.
Bank regulations can restrict our access to these sources of funds in
certain circumstances. For example, if our bank's regulatory capital ratios
declined below the "well capitalized" status, banking regulators would require
our bank to obtain their approval prior to obtaining or renewing brokered
deposits. The regulators might not approve our purchases of deposits in amounts
that we desire or at all. Similarly, Federal Home Loan Bank advances are only
available to borrowers that meet certain conditions. If our bank were to cease
meeting these
11
conditions, our access to Federal Home Loan Bank advances could be significantly
reduced or eliminated.
We rely on these resources of funds because we believe that generating
funds through brokered deposits and Federal Home Loan Bank advances decreases
our cost of funds, relative to the cost of generating and retaining retail
deposits through our branch network. If our access to brokered deposits or
Federal Home Loan Bank advances were reduced or eliminated for whatever reason,
the resulting decrease in our net interest income or limitation on our ability
to generate additional loans would adversely affect our business, financial
condition and results of operations.
Our future success is dependent on our ability to compete effectively in the
highly competitive banking industry.
We face substantial competition in all phases of our operations from a
variety of different competitors. Our future growth and success will depend on
our ability to compete effectively in this highly competitive environment. To
date, we have grown our business successfully by focusing on our geographic
market and emphasizing the high level of service and responsiveness desired by
our customers. We compete for loans, deposits and other financial services with
other commercial banks, thrifts, credit unions and brokerage houses. Many of our
competitors offer products and services which we do not offer, and many have
substantially greater resources, name recognition and market presence that
benefit them in attracting business. In addition, larger competitors may be able
to price loans and deposits more aggressively than we do, and smaller newer
competitors may also be more aggressive in terms of pricing loan and deposit
products than us in order to obtain a share of the market. As we have grown, we
have become increasingly dependent on outside funding sources, including funds
borrowed from the Federal Home Loan Bank and brokered deposits, where we face
nationwide competition. Some of the financial institutions and financial
services organizations with which we compete are not subject to the same degree
of regulation as is imposed on bank holding companies, federally insured
state-chartered banks and national banks and federal savings banks. As a result,
these nonbank competitors have certain advantages over us in accessing funding
and in providing various services.
Our business may be adversely affected by the highly regulated environment in
which we operate.
We are subject to extensive federal and state legislation, regulation,
examination and supervision. Recently enacted, proposed and future legislation
and regulations have had, will continue to have, or may have a material adverse
effect on our business and operations. Our success depends on our continued
ability to maintain compliance with these regulations, including those
pertaining to the Community Reinvestment Act. Some of these regulations may
increase our costs and thus place other financial institutions in stronger, more
favorable competitive positions. We cannot predict what restrictions may be
imposed upon us with future legislation. See "Item 1.-The Company -Government
Supervision and Regulation" incorporated into this prospectus from our Annual
Report on Form 10-K for the year ended December 31, 2000.
12
We may be adversely affected by interest rate changes.
Our operating results are largely dependent on our net interest income.
When interest rates are rising, the interest income we earn on loans and
interest-bearing investments may not increase as rapidly as the interest expense
paid on our liabilities. As a result, our earnings may be adversely affected. We
measure the impact of interest rate changes on our income statement through the
use of gap analysis which is a way to measure and manage sensitivity to interest
rate fluctuations. The amount of earning assets that reprice or mature during a
given time interval is compared to the amount of interest-bearing liabilities
that reprice or mature during the same time period. A bank which matches
perfectly the maturities of its assets and liabilities has a "gap" position of
1.00. In this instance, under the gap analysis changes in interest rates would
have no effect on net interest income because interest income and interest
expense change in like amounts. There is an interest rate "gap" if the amounts
of repricing assets and liabilities differ for the given time period. A positive
gap, or a position greater than 1.00, indicates that more assets than
liabilities will reprice in that time period, while a negative gap, or a
position less than 1.00, indicates that more liabilities than assets will
reprice. A bank with a positive gap position would benefit from rising interest
rates because assets will reprice faster than liabilities, improving net
interest income, but net interest income would be reduced when interest rates
are falling. Conversely, a bank would benefit from a negative gap position in a
falling interest rate environment.
We generally operate within guidelines set by our asset/liability policy
for maximum interest rate risk exposure, and attempt to maximize our returns
within an acceptable degree of risk. However, at times, depending on the level
of general interest rates, the relationship between long- and short-term
interest rates, market conditions and competitive factors, we may determine to
increase our interest rate risk position in order to maintain our net interest
margin. Our policy calls for maintaining a gap position at the one year horizon
of between 0.80 and 1.25 to allow us to take advantage of anticipated interest
rate environments, but within reasonable maximum risk exposures. At December 31,
2000, our gap position was 0.95. We attempt to limit this exposure by
originating adjustable rate loans and managing our deposits and borrowings to
establish stable relationships with both retail customers and wholesale funding
sources. From time to time, we utilize interest rate swap derivatives, when
appropriate, to help manage the risks of operating in a changing interest rate
environment. However, there can be no assurance that these derivatives will be
effective in avoiding undue interest rate risk.
We may be adversely affected by government monetary policy.
As a bank holding company, our business is affected by the monetary
policies of the Federal Reserve System, which regulates the national money
supply in order to mitigate recessionary and inflationary pressures. In setting
its policy, the Federal Reserve System may utilize techniques such as the
following:
o engaging in open market transactions in United States government
securities;
o setting the discount rate on member bank borrowings; and
13
o determining reserve requirements.
These techniques may have an adverse effect on our deposit levels, net interest
margin, loan demand or our business and operations.
Our allowance for loan losses may prove to be insufficient to absorb potential
losses in our loan portfolio.
Lending money is a substantial part of our business. However, every loan
we make carries a certain risk of non-payment. This risk is affected by, among
other things:
o cash flow of the borrower and/or the project being financed;
o in the case of a collateralized loan, the changes and uncertainties
as to the future value of the collateral;
o the credit history of a particular borrower;
o changes in economic and industry conditions; and
o the duration of the loan.
We maintain an allowance for loan losses which we believe is appropriate
to provide for any potential losses in our loan portfolio. The amount of this
allowance is determined by management through a periodic review and
consideration of several factors, including:
o an ongoing review of the quality, size and diversity of our loan
portfolio;
o evaluation of non-performing loans;
o historical loan loss experience; and
o the amount and quality of collateral, including guarantees, securing
the loans.
At December 31, 2000, our allowance for possible loan losses as a
percentage of total loans was 2.06%, and as a percentage of total non-performing
loans was 150%. Although we believe our loan loss allowance is adequate to
absorb probable losses in our loan portfolio, we cannot predict such losses or
that our allowance will be adequate. Excess loan losses could have a material
adverse effect on our financial condition and results of operations.
We continually encounter technological change, and we may have fewer resources
than many of our competitors to continue to invest in technological
improvements.
The financial services industry is undergoing rapid technological changes,
with frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions
14
to reduce costs. Our future success will depend, in part, upon our ability to
address the needs of our clients by using technology to provide products and
services that will satisfy client demands for convenience, as well as to create
additional efficiencies in our operations. Many of our competitors have
substantially greater resources to invest in technological improvements. We may
not be able to effectively implement new technology-driven products and services
or be successful in marketing these products and services to our clients.
As a service to our clients, we currently offer Great Access Online, our
Internet PC banking product. Use of this service involves the transmission of
confidential information over public networks. We cannot be sure that advances
in computer capabilities, new discoveries in the field of cryptography or other
developments will not result in a compromise or breach in the commercially
available encryption and authentication technology that we use to protect our
clients' transaction data. If we were to experience such a breach or compromise,
we could suffer losses and our operations could be adversely affected.
Risks Related to an Investment in the Preferred Securities
If we do not make interest payments under the debentures, the trust will be
unable to pay distributions and liquidation amounts. The guarantee will not
apply because the guarantee covers payments only if the trust has funds
available.
The trust will depend solely on our payments on the debentures to pay
amounts due to you on the preferred securities. If we default on our obligation
to pay the principal or interest on the debentures, the trust will not have
sufficient funds to pay distributions or the liquidation amount on the preferred
securities. In that case, you will not be able to rely on the guarantee for
payment of these amounts because the guarantee only applies if the trust has
sufficient funds to make distributions on or to pay the liquidation amount of
the preferred securities. Instead, you or the property trustee will have to
institute a direct action against us to enforce the property trustee's rights
under the indenture relating to the debentures.
To the extent we must rely on dividends from our subsidiaries to make interest
payments on the debentures to the trust, our available cash flow may be
restricted and distributions may be deferred.
We are a holding company and substantially all of our assets are held by
our direct and indirect subsidiaries. Our ability to make payments on the
debentures when due will depend primarily on available cash resources at the
bank holding company and dividends from our direct and indirect subsidiaries.
Dividend payments or extensions of credit from our bank are subject to
regulatory limitations, generally based on capital levels and current and
retained earnings, imposed by the various regulatory agencies with authority
over such subsidiaries. The ability of our bank to pay dividends is also subject
to its profitability, financial condition, capital expenditures and other cash
flow requirements and the ability of certain of its subsidiaries to pay
dividends to the bank. As of December 31, 2000, our bank had the ability to pay
$1.6 million in dividends to us and still maintain its "well capitalized" status
for regulatory capital purposes. We cannot assure you that the bank will be able
to pay dividends in the future.
15
The debentures and the guarantee rank lower than most of our other indebtedness
and our holding company structure effectively subordinates any claims against us
to those of our subsidiaries' creditors.
Our obligations under the debentures and the guarantee are unsecured and
will rank junior in priority of payment to our existing and future senior and
subordinated indebtedness, which totaled $17.8 million in outstanding principal
amount at December 31, 2000. Except for certain circumstances which may limit
our ability to issue additional trust preferred securities or similar
securities, the securities that we are offering do not impose limits on our
ability or the ability of our subsidiaries to incur additional indebtedness. See
"Description of the Debentures-Miscellaneous" beginning on page __.
Because we are a holding company, the creditors of our subsidiaries,
including depositors, also will have priority over you in any distribution of
our subsidiaries' assets in liquidation, reorganization or otherwise.
Accordingly, the debentures and the guarantee will be effectively subordinated
to all existing and future liabilities of our direct and indirect subsidiaries,
and you should look only to our assets for payments on the preferred securities
and the debentures.
We may defer interest payments on the debentures for substantial periods, which
could have adverse consequences for you.
We may, at one or more times, defer interest payments on the debentures
for up to 20 consecutive quarters. If we defer interest payments on the
debentures, the trust will defer distributions on the preferred securities
during any deferral period. During a deferral period, you will be required to
recognize as income for federal income tax purposes the amount approximately
equal to the interest that accrues on your proportionate share of the debentures
held by the trust in the tax year in which that interest accrues, even though
you will not receive these amounts until a later date.
You will also not receive the cash related to any accrued and unpaid
interest from the trust if you sell the preferred securities before the end of
any deferral period. During a deferral period, accrued but unpaid distributions
will increase your tax basis in the preferred securities. If you sell the
preferred securities during a deferral period, your increased tax basis will
decrease the amount of any capital gain or increase the amount of any capital
loss that you may have otherwise realized on the sale. A capital loss, except in
certain limited circumstances, cannot be applied to offset ordinary income. As a
result, deferral of distributions could result in ordinary income, and a related
tax liability for the holder, and a capital loss that may only be used to offset
a capital gain.
We do not currently intend to exercise our right to defer interest
payments on the debentures. In the event of a deferral period, however, the
market price of the preferred securities would likely be adversely affected. The
preferred securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest on the debentures. If you sell the preferred
securities during a deferral period, you may not receive the same return on
investment as someone who continues to hold the preferred securities. Due to our
right to defer interest
16
payments, the market price of the preferred securities may be more volatile than
the market prices of other securities without the deferral feature.
Regulators may preclude us from making distributions on the debentures in the
event our regulatory capital, liquidity or financial performance deteriorates.
We and our subsidiaries are subject to extensive federal and state law,
regulation and supervision. Our regulators monitor our financial condition on a
periodic basis and may impose limitations on our operations and business
activities under various circumstances. In response to any perceived
deficiencies in liquidity or regulatory capital levels, our regulators may
require us to obtain their consent prior to paying dividends on our capital
stock or interest on the debentures. In the event our regulators withheld their
consent to our payment of interest on the debentures, we would exercise our
right to defer interest payments on the debentures, and the trust would not have
funds available to make distributions on the preferred securities during the
deferral period. This action by our regulators may or may not be taken in
conjunction with similar restrictions on the ability of our subsidiaries to pay
dividends to us. See "-To the extent we must rely on dividends from our
subsidiaries to make interest payments on the debentures to the trust, our
available cash flow may be restricted and distributions may be deferred" on page
___. The commencement of a deferral period with respect to interest on the
debentures and, accordingly, distributions on the preferred securities, would
likely cause the market price of the preferred securities to decline. See "-We
may defer interest payments on the debentures for substantial periods, which
could have adverse consequences for you" beginning on page ___.
We have made only limited covenants in the indenture and the trust agreement,
which may not protect your investment in the event we experience significant
adverse changes in our financial condition or results of operations.
The indenture governing the debentures and the trust agreement governing
the trust do not require us to maintain any credit rating on the securities
offered or any financial ratios or specified levels of net worth, revenues,
income, cash flow or liquidity. In addition, except in limited circumstances,
they do not protect holders of the debentures or the preferred securities if we
are involved in a highly leveraged transaction and therefore do not protect
holders of the debentures or the preferred securities in the event we experience
adverse changes in our financial condition or results of operations. The
indenture prevents us and any of our subsidiaries from incurring, in connection
with the issuance of any trust preferred securities or any similar securities,
indebtedness that is senior in right of payment to the debentures. Additionally,
the indenture limits our ability and the ability of any of our subsidiaries to
incur indebtedness, in connection with the issuance of any trust preferred
securities or any similar securities, which is equal in right of payment to the
debentures. Except as described above, neither the indenture nor the trust
agreement limits our ability or the ability of any of our subsidiaries to incur
other additional indebtedness that is senior in right of payment to the
debentures. Therefore, you should not consider the provisions of these governing
instruments as a significant factor in evaluating whether we will be able to
comply with our obligations under the debentures or the guarantee.
17
In the event we redeem the debentures before June 30, 2031, you may not be able
to reinvest your principal at the same or a higher rate of return.
Under the following circumstances, we may redeem the debentures before
their stated maturity:
o We may redeem the debentures, in whole or in part, at any time on or
after June 30, 2006.
o We may redeem the debentures in whole, but not in part, within 180
days after certain occurrences at any time during the life of the
trust. These occurrences may include adverse tax, investment company
or bank regulatory developments. See "Description of the
Debentures-Redemption" beginning on page __.
You should assume that we will exercise our redemption option if we are
able to obtain capital at a lower cost than we must pay on the debentures or if
it is otherwise in our interest to redeem the debentures. If the debentures are
redeemed, the trust must redeem preferred securities having an aggregate
liquidation amount equal to the aggregate principal amount of debentures
redeemed, and you may be required to reinvest your principal at a time when you
may not be able to earn a return that is as high as you were earning on the
preferred securities.
We can distribute the debentures to you, which may have adverse tax consequences
for you and which may adversely affect the market price of the preferred
securities prior to such distribution.
The trust may be dissolved at any time before maturity of the debentures
on June 30, 2031. As a result, and subject to the terms of the trust agreement,
the trustees may distribute the debentures to you.
We cannot predict the market prices for the debentures that may be
distributed in exchange for preferred securities upon liquidation of the trust.
The preferred securities, or the debentures that you may receive if the trust is
liquidated, may trade at a discount to the price that you paid to purchase the
preferred securities. Because you may receive debentures, your investment
decision with regard to the preferred securities will also be an investment
decision with regard to the debentures. You should carefully review all of the
information contained in this prospectus regarding the debentures.
Under current interpretations of United States federal income tax laws
supporting classification of the trust as a grantor trust for tax purposes, a
distribution of the debentures to you upon the dissolution of the trust would
not be a taxable event to you. Nevertheless, if the trust is classified for
United States federal income tax purposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the debentures
would be a taxable event to you. In addition, if there is a change in law, a
distribution of debentures upon the dissolution of the trust could be a taxable
event to you.
18
You are subject to repayment risk because possible tax law changes could result
in a redemption of the trust preferred securities.
Future legislation may be enacted that could adversely affect our ability
to deduct our interest payments on the debentures for federal income tax
purposes, making redemption of the debentures likely and resulting in a
redemption of the trust preferred securities.
From time to time, Congress has proposed federal income tax law changes
that would, among other things, generally deny interest deductions to a
corporate issuer if the debt instrument has a term exceeding 15 years and if the
debt instrument is not reflected as indebtedness on the issuer's consolidated
balance sheet. Other proposed tax law changes would have denied interest
deductions if the debt instrument had a term exceeding 20 years. These proposals
were not enacted into law. Although it is impossible to predict whether future
proposals of this nature will be introduced and enacted with application to
already issued and outstanding securities, in the future we could be precluded
from deducting interest on the debentures in this event. Enactment of this type
of proposal might in turn give rise to a tax event as described under
"Description of the Preferred Securities-Redemption or Exchange-Redemption upon
a Tax Event, Investment Company Event or Capital Treatment Event" beginning on
page ___.
Trading characteristics of the preferred securities may create adverse tax
consequences for you.
The trust preferred securities may trade at a price that does not reflect
the value of accrued but unpaid interest on the underlying debentures. If you
dispose of your trust preferred securities between record dates for payments on
the trust preferred securities, you may have adverse tax consequences. Under
these circumstances, you will be required to include accrued but unpaid interest
on the debentures allocable to the trust preferred securities through the date
of disposition in your income as ordinary income if you use the accrual method
of accounting or if this interest represents original issue discount.
If interest on the debentures is included in income under the original
issue discount provisions, you would add this amount to your adjusted tax basis
in your share of the underlying debentures deemed disposed. If your selling
price is less than your adjusted tax basis, which will include all accrued but
unpaid original issue discount interest included in your income, you could
recognize a capital loss which, subject to limited exceptions, cannot be applied
to offset ordinary income for federal income tax purposes. See "Federal Income
Tax Consequences" beginning on page ___ for more information on possible adverse
tax consequences to you.
There is no current public market for the preferred securities and their market
price may decline after you invest.
There is currently no public market for the preferred securities. Although
we have applied to have the preferred securities designated for inclusion in the
Nasdaq National Market, there is no guarantee that an active or liquid trading
market will develop for the preferred securities or that the quotation of the
preferred securities will continue on the Nasdaq National Market. If an active
trading market does not develop, the market price and liquidity of the
19
preferred securities will be adversely affected. Even if an active public market
does develop, there is no guarantee that the market price for the preferred
securities will equal or exceed the price you pay for the preferred securities.
Future trading prices of the preferred securities may be subject to
significant fluctuations in response to prevailing interest rates, our future
operating results and financial condition, the market for similar securities and
regional and general economic and market conditions. The initial public offering
price of the preferred securities has been set at the liquidation amount of the
preferred securities and may be greater than the market price following the
offering.
The market price for the preferred securities, or the debentures that you
may receive in a distribution, is also likely to decline during any period that
we are deferring interest payments on the debentures.
You must rely on the property trustee to enforce your rights if there is an
event of default under the indenture.
You may not be able to directly enforce your rights against us if an event
of default under the indenture occurs. If an event of default under the
indenture occurs and is continuing, this event will also be an event of default
under the trust agreement. In that case, you must rely on the enforcement by the
property trustee of its rights as holder of the debentures against us. The
holders of a majority in liquidation amount of the preferred securities will
have the right to direct the property trustee to enforce its rights. If the
property trustee does not enforce its rights following an event of default and a
request by the record holders to do so, any record holder may, to the extent
permitted by applicable law, take action directly against us to enforce the
property trustee's rights. If an event of default occurs under the trust
agreement that is attributable to our failure to pay interest or principal on
the debentures, or if we default under the guarantee, you may proceed directly
against us. You will not be able to exercise directly any other remedies
available to the holders of the debentures unless the property trustee fails to
do so.
As a holder of preferred securities you have limited voting rights, and we can
amend the trust agreement to change the terms and conditions of the
administration, operation and management of the trust without your consent.
Holders of preferred securities have limited voting rights. We can,
without your consent, make certain amendments to the trust agreement. Your
voting rights pertain primarily to certain amendments to the trust agreement and
not to the administration, operation or management of the trust. In general,
only we can replace or remove any of the trustees. However, if an event of
default under the trust agreement occurs and is continuing, the holders of at
least a majority in aggregate liquidation amount of the preferred securities may
replace the property trustee and the Delaware trustee. In certain circumstances,
with the consent of the holders of a majority in the aggregate liquidation
amount of the preferred securities, we may amend the trust agreement to ensure
that the trust remains classified for federal income tax purposes as a grantor
trust and to ensure that the trust retains its exemption from status as an
"investment company" under the Investment Company Act, even if such amendment
adversely affects your rights as a holder of preferred securities. For more
information regarding limitation on your ability to control
20
amendments to the trust agreement, see "Description of the Preferred
Securities-Voting Rights; Amendment of Trust Agreement" beginning on page ___.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in or incorporated by reference into this
prospectus constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. We intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for
purposes of invoking these safe harbor provisions. You can identify these
statements from our use of the words "estimate," "project," "believe," "intend,"
"anticipate," "expect," "target," and similar expressions. These forward-looking
statements may include, among other things:
o statements relating to projected growth; anticipated improvements in
earnings, earnings per share, and other financial performance
measures; and management's long term performance goals;
o statements relating to the anticipated effects on results of
operations or financial condition from expected developments or
events;
o statements relating to our business and growth strategies, including
potential acquisitions; and
o any other statements which are not historical facts.
Forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause our actual results, performance or
achievements, or industry results, to differ materially from our expectations of
future results, performance or achievements expressed or implied by these
forward-looking statements. In addition, our past results of operations do not
necessarily indicate our future results. We discuss these and other
uncertainties in the "Risk Factors" section of this prospectus beginning on page
__.
21
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of the preferred
securities in the debentures. We anticipate that the net proceeds from the sale
of the debentures will be approximately $ million after deduction of offering
expenses, estimated to be $250,000 and underwriting commissions.
We expect to use the net proceeds to reduce the indebtedness currently
outstanding under our revolving credit facility with an unaffiliated bank. The
credit facility provides for maximum borrowings of $25 million. The interest
rate on borrowings under the revolving line is based on, at our option, either
the lender's prime rate or a LIBOR-based rate. At February 28, 2001, borrowings
outstanding under the credit facility totalled $16.5 million and bear interest
at an annual interest rate of 7.32%. During the past year, we used this credit
facility to infuse capital into our bank and for repurchases of our common
stock. The credit facility is secured by all of the common stock of our bank.
Following repayment of amounts outstanding out of the proceeds of this offering,
we plan to keep the credit line available for future borrowings. The remaining
net proceeds, if any, will be used to make additional capital contributions to
our bank and its operating subsidiaries or for general corporate purposes.
22
CAPITALIZATION
The following table sets forth our indebtedness and capitalization at
December 31, 2000, on a historical basis and as adjusted for the offering,
assuming no exercise of the underwriters' over-allotment option, and the
application of the estimated net proceeds from the corresponding sale of the
debentures as if such sale had been consummated on December 31, 2000. This data
should be read in conjunction with our consolidated financial statements and the
related notes incorporated by reference into this prospectus from our Annual
Report on Form 10-K for the year ended December 31, 2000.
December 31, 2000
------------------------
Actual As Adjusted
--------- -----------
(dollars in thousands)
Short-Term Indebtedness:
Short-term borrowings (including securities sold under agreement to repurchase and
federal funds purchased) ......................................................... $ 41,695 $ 41,695
Notes payable under revolving credit line with commercial bank(1) ................ 15,500
--------- ---------
Total short-term indebtedness ............................................ $ 57,195 $
========= =========
Long-Term Indebtedness:
Trust preferred securities ....................................................... $ -- $ 15,000
--------- ---------
Stockholders' Equity:
Preferred stock, 1,000,000 shares authorized; no shares issued and outstanding ... -- --
Common stock, $0.01 par value; 20,000,000 shares authorized;
12,325,002 shares issued and 6,897,332 outstanding ........................... 123 123
Additional paid-in capital ....................................................... 17,461 17,461
Retained earnings ................................................................ 112,177 112,177
Accumulated other comprehensive income ........................................... 384 384
Treasury stock ................................................................... (59,096) (59,096)
--------- ---------
Total stockholders' equity ............................................... 71,049 71,049
--------- ---------
Total capitalization(2) ............................................. $ 71,049 $ 86,049
========= =========
Capital Ratios:(3)
Total equity to total assets ..................................................... 6.29% 6.29%
Leverage ratio (4)(5) ............................................................ 6.49 7.87
Tier 1 risk-based capital ratio(5) ............................................... 7.84 9.51
Total risk-based capital ratio(5) ................................................ 9.10 10.77
- ----------
(1) The net proceeds of this offering, estimated to be $ million, will be
applied to reduce the amounts outstanding under the revolving credit
facility.
(2) Includes stockholders' equity and long-term indebtedness.
(3) The capital ratios, as adjusted, are computed including the estimated
proceeds from the sale of the preferred securities, in a manner consistent
with Federal Reserve regulations.
(4) The leverage ratio is Tier 1 capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(5) The preferred securities have been structured to qualify as Tier 1
capital. However, in calculating the amount of Tier 1 qualifying capital,
the preferred securities, together with any other trust preferred
securities or cumulative preferred stock of Great Southern Bancorp that
may be outstanding in the future, can only be included up to the amount
constituting 25% of total Tier 1 core capital elements (including the
preferred securities). As adjusted for this offering, our Tier 1 capital
as of December 31, 2000, would have been approximately $85.5 million, of
which $15.0 million would have been attributable to the preferred
securities offered by this prospectus.
23
ACCOUNTING AND REGULATORY TREATMENT
The trust will be treated, for financial reporting purposes, as our
subsidiary and, accordingly, the accounts of the trust will be included in our
consolidated financial statements. The preferred securities will be presented as
a separate line item in our consolidated balance sheet under the caption "Trust
preferred securities," or other similar caption. In addition, appropriate
disclosures about the preferred securities, the guarantee and the debentures
will be included in the notes to our consolidated financial statements. For
financial reporting purposes, we will record distributions payable on the
preferred securities in our consolidated statements of income.
Our future reports filed under the Securities Exchange Act of 1934 will
include a footnote to the audited consolidated financial statements stating
that:
o the trust is wholly owned;
o the sole assets of the trust are the debentures, specifying the
debentures' outstanding principal amount, interest rate and maturity
date; and
o our obligations described in this prospectus, in the aggregate,
constitute a full, irrevocable and unconditional guarantee on a
subordinated basis by us of the obligations of the trust under the
preferred securities.
Under accounting rules of the SEC, we are not required to include separate
financial statements of the trust in this prospectus because we will own all of
the trust's voting securities, the trust has no independent operations and we
guarantee the payments on the preferred securities to the extent described in
this prospectus.
24
MANAGEMENT
Our directors and executive officers and their principal position(s) with
us are shown in the table below. All of our directors are also directors of our
bank. Our officers are elected annually by our board to serve for the terms
provided in our By-laws.
Name Position(s)
- ---- -----------
William V. Turner Chairman of the Board of Great Southern Bank
and Great Southern Bancorp
Joseph W. Turner President, Chief Executive Officer and
Director of Great Southern Bank and Great
Southern Bancorp
William E. Barclay Director
Larry D. Frazier Director
Thomas J. Carlson Director
Rex A. Copeland Treasurer of Great Southern Bancorp, Senior
Vice President and Chief Financial Officer
of Great Southern Bank
Steven G. Mitchem Senior Vice President and Chief Lending
Officer of Great Southern Bank
Douglas W. Marrs Vice President - Operations of Great
Southern Bank
Larry A. Larimore Secretary of Great Southern Bancorp,
Secretary and Vice President - Compliance
Officer of Great Southern Bank
William V. Turner, age 68, has served as the Chairman of the Board of our
bank since 1974, Chief Executive Officer of our bank from 1974 to 2000, and
President of our bank from 1974 to 1997. Mr. W. Turner has served in similar
capacities with us since incorporation in 1989. Mr. W. Turner has also served as
Chairman of the Board and President of Great Southern Financial Corporation, a
subsidiary of our bank, since incorporation in 1974, Chairman of the Board and
President of Appraisal Services, Inc., a subsidiary of our bank, since
incorporation in 1976 and Chairman of the Board of Great Southern Capital
Management, Inc., a subsidiary of our bank, since its formation in 1988. Mr. W.
Turner is the father of Joseph W. Turner, who is a Director and the President
and Chief Executive Officer of us and the bank.
Joseph W. Turner, age 36, joined our bank in 1991 and became one of our
officers in 1995. Mr. J. Turner became a Director in 1997 and currently serves
as President and Chief Executive Officer of us and the bank. Prior to joining
our bank, Mr. J. Turner was an attorney with the Kansas City, Missouri law firm
of Stinson, Mag and Fizzell. Mr. J. Turner is the son of William V. Turner.
William E. Barclay, age 71, was first elected a Director of our bank in
1975 and of us in 1989. Mr. Barclay is the founder and has served as President
and/or Chairman of Auto-Magic Full Service Car Washes in Springfield, Missouri
since 1962. Mr. Barclay also founded Barclay Love Oil Company in Springfield,
Missouri in 1964 and founded a chain of Ye Ole Buggy Bath Self-Service Car
Washes in Springfield, Missouri in 1978 and opened a Jiffy Lube franchise in
Springfield, Missouri in 1987. None of these entities are affiliated with us.
25
Larry D. Frazier, age 63, was first elected a Director of our bank and of
us in May 1992. Mr. Frazier was elected a Director of Great Southern Financial
Corporation, a subsidiary of our bank, in 1976, where he served until his
election as Director of our bank and of us. Mr. Frazier is retired from White
River Valley Electric Cooperative in Branson, Missouri, where he served as
President and Chief Executive Officer from 1975 to 1998. This entity is not
affiliated with us.
Thomas J. Carlson, age 48, was first appointed a Director of us in
January, 2001. He is the co-owner of Carlson Gardner, Inc., a development
company that has been in business since 1993. Mr. Carlson is also a shareholder
of Woodco, Inc., a real estate construction company. He co-owns and is a member
of Missouri Equity Partners, L.L.C. and Mid America Property Management, L.L.C.
He is the President and Chief Executive Officer of Pointe Royale Development,
Inc. and Resorts Management, Inc., both real estate development companies. Mr.
Carlson serves on the Board of Directors of ITEC Attractions, Inc., which owns
the IMAX Theater in Branson, Missouri. He also serves on the Board of Ozarks
Counseling Center and The Kitchen, both not-for-profit organizations in
Springfield, Missouri. Mr. Carlson, an attorney, is active in local political
and civic affairs. He was a member of the Springfield City Council from 1983 to
1985, serving as Mayor Pro Tem from 1985 to 1987. He was Mayor of the City of
Springfield from 1987 to 1993. Thereafter, he served on the Springfield-Branson
Regional Airport Board. In 1997, he was again re-elected to the Springfield City
Council. None of these entities are affiliated with us.
Rex A. Copeland, age 36, is our Treasurer and Senior Vice President and
Chief Financial Officer of our bank. He joined the bank in 2000 and is
responsible for our financial functions, including the internal and external
financial reporting of us and our subsidiaries. Mr. Copeland is a Certified
Public Accountant. Prior to joining the bank, Mr. Copeland served other
financial services companies. He was Accounting Director of a division of H&R
Block from 1999 to 2000, Division Controller of Bank One Corporation from 1996
to 1999 and an auditor with Baird, Kurtz and Dobson, prior to that.
Steven G. Mitchem, age 49, is Senior Vice President and Chief Lending
Officer of our bank. He joined the bank in 1990 and is responsible for all
lending activities of the bank. Prior to joining the bank, Mr. Mitchem was a
Senior Bank Examiner for the Federal Deposit Insurance Corporation.
Doug W. Marrs, age 43, is Vice President - Operations of our bank. He
joined the bank in 1996 and is responsible for all operations functions of the
bank. Prior to joining the bank, Mr. Marrs was a bank officer in the areas of
operations and data processing at a competing $1 billion bank.
Larry A. Larimore, age 60, is our Secretary and the Secretary, Vice
President - Compliance Officer of our bank. He joined the bank in 1998 and is
responsible for Compliance and Internal Audit for us and the bank. Prior to
joining the bank, Mr. Larimore was a bank officer in the areas of lending,
compliance and internal audit at a competing area bank from 1990 to 1998.
26
DESCRIPTION OF THE TRUST
The trust is a statutory business trust formed pursuant to the Delaware
Business Trust Act under a trust agreement executed by us, as depositor, and the
trustees named in the trust agreement. A certificate of trust has been filed
with the Delaware Secretary of State. The trust agreement will be amended and
restated in its entirety in the form filed as an exhibit to the registration
statement of which this prospectus is a part, as of the date the preferred
securities are initially issued. The trust agreement will be qualified under the
Trust Indenture Act of 1939.
The following discussion contains a description of the material terms of
the trust agreement and is subject to, and is qualified in its entirety by
reference to, the amended and restated trust agreement and the Trust Indenture
Act. We urge prospective investors to read the form of amended and restated
trust agreement, which is filed as an exhibit to the registration statement of
which this prospectus forms a part.
The holders of the preferred securities issued pursuant to the offering
described in this prospectus will own all of the issued and outstanding
preferred securities of the trust which have certain prior rights over the other
securities of the trust. We will not initially own any of the preferred
securities. We will acquire common securities in an amount equal to at least 3%
of the total capital of the trust and will initially own, directly or
indirectly, all of the issued and outstanding common securities. The common
securities, together with the preferred securities, are called the trust
securities.
The trust exists exclusively for the purposes of:
o issuing and selling the preferred securities to the public for cash;
o issuing and selling its common securities to us in exchange for our
capitalization of the trust;
o investing the proceeds from the sale of the trust securities in an
equivalent amount of debentures; and
o engaging in other activities that are incidental to those listed
above, such as receiving payments on the debentures and making
distributions to security holders, furnishing notices and other
administrative tasks.
The rights of the holders of the trust securities are as set forth in the
trust agreement, the Delaware Business Trust Act and the Trust Indenture Act.
The trust agreement does not permit the trust to borrow money or make any
investment other than in the debentures. Other than with respect to the trust
securities, we have agreed to pay for all debts and obligations and all costs
and expenses of the trust, including the fees and expenses of the trustees and
any income taxes, duties and other governmental charges, and all costs and
expenses related to these charges, to which the trust may become subject, except
for United States withholding taxes that are properly withheld.
27
The number of trustees of the trust will initially be five. Three of the
trustees will be persons who are employees or officers of or who are affiliated
with us. They are the administrative trustees. The fourth trustee will be an
entity that maintains its principal place of business in the State of Delaware.
It is the Delaware trustee. Initially, Wilmington Trust Company, a Delaware
banking corporation, will act as Delaware trustee. The fifth trustee, called the
property trustee, will also initially be Wilmington Trust Company. The property
trustee is the institutional trustee under the trust agreement and acts as the
indenture trustee called for under the applicable provisions of the Trust
Indenture Act. Also for purposes of compliance with the Trust Indenture Act,
Wilmington Trust Company will act as guarantee trustee and indenture trustee
under the guarantee agreement and the indenture. See "Description of the
Debentures" beginning on page ___ and "Description of the Guarantee" beginning
on page ___. We, as holder of all of the common securities, will have the right
to appoint or remove any trustee unless an event of default under the indenture
has occurred and is continuing, in which case only the holders of the preferred
securities may remove the Delaware trustee or the property trustee. The trust
has a term of approximately 31 years but may terminate earlier as provided in
the trust agreement.
The property trustee will hold the debentures for the benefit of the
holders of the trust securities and will have the power to exercise all rights,
powers and privileges under the indenture as the holder of the debentures. In
addition, the property trustee will maintain exclusive control of a segregated
non-interest-bearing "payment account" established with Wilmington Trust Company
to hold all payments made on the debentures for the benefit of the holders of
the trust securities. The property trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
trust securities out of funds from the payment account. The guarantee trustee
will hold the guarantee for the benefit of the holders of the preferred
securities. We will pay all fees and expenses related to the trust and the
offering of the preferred securities, including the fees and expenses of the
trustees.
DESCRIPTION OF THE PREFERRED SECURITIES
The preferred securities will be issued pursuant to the trust agreement.
For more information about the trust agreement, see "Description of the Trust"
beginning on page __. Wilmington Trust Company will act as property trustee for
the preferred securities under the trust agreement for purposes of complying
with the provisions of the Trust Indenture Act. The terms of the preferred
securities will include those stated in the trust agreement and those made part
of the trust agreement by the Trust Indenture Act.
The following discussion contains a description of the material provisions
of the preferred securities and is subject to, and is qualified in its entirety
by reference to, the trust agreement and the Trust Indenture Act. We urge
prospective investors to read the form of amended and restated trust agreement,
which is filed as an exhibit to the registration statement of which this
prospectus forms a part.
28
General
The trust agreement authorizes the administrative trustees, on behalf of
the trust, to issue the trust securities, which are comprised of 1,500,000
preferred securities to be sold to the public and 46,400 common securities which
we will acquire. In the event the underwriters exercise the over-allotment
option, the trust agreement authorizes the administrative trustees, on behalf of
the trust, to issue an additional 225,000 preferred securities to the public and
7,000 common securities to us. We will own all of the common securities issued
by the trust. The trust is not permitted to issue any securities other than the
trust securities or to incur any indebtedness.
The preferred securities will represent preferred undivided beneficial
interests in the assets of the trust, and the holders of the preferred
securities will be entitled to a preference over the common securities upon an
event of default with respect to distributions and amounts payable on redemption
or liquidation. The preferred securities will rank equally, and payments on the
preferred securities will be made proportionally, with the common securities,
except as described under "-Subordination of Common Securities" on page __.
The property trustee will hold legal title to the debentures in trust for
the benefit of the holders of the trust securities. We will guarantee the
payment of distributions out of money held by the trust, and payments upon
redemption of the preferred securities or liquidation of the trust, to the
extent described under "Description of the Guarantee" beginning on page __. The
guarantee agreement does not cover the payment of any distribution or the
liquidation amount when the trust does not have sufficient funds available to
make these payments.
Distributions
Source of Distributions. The funds of the trust available for distribution
to holders of the preferred securities will be limited to payments made under
the debentures, which the trust will purchase with the proceeds from the sale of
the trust securities. Distributions will be paid through the property trustee,
which will hold the amounts received from our interest payments on the
debentures in the payment account for the benefit of the holders of the trust
securities. If we do not make interest payments on the debentures, the property
trustee will not have funds available to pay distributions on the preferred
securities.
Payment of Distributions. Distributions on the preferred securities will
be payable at the annual rate of % of the $10 stated liquidation amount,
payable quarterly on March 31, June 30, September 30 and December 31 of each
year, to the holders of the preferred securities on the relevant record dates.
So long as the preferred securities are represented by a global security, as
described below, the record date will be the business day immediately preceding
the relevant distribution date. The first distribution date for the preferred
securities will be June 30, 2001.
Distributions will accumulate from the date of issuance, will be
cumulative and will be computed on the basis of a 360-day year of twelve 30-day
months. If the distribution date is not a business day, then payment of the
distributions will be made on the next day that is a business day, without any
additional interest or other payment for the delay. However, if the next
business day is in the next calendar year, payment of the distribution will be
made on the business day
29
immediately preceding the scheduled distribution date. When we use the term
"business day," we mean any day other than a Saturday, a Sunday, a day on which
banking institutions in New York, New York are authorized or required by law,
regulation or executive order to remain closed or a day on which the corporate
trust office of the property trustee or the indenture trustee is closed for
business.
Extension Period. As long as no event of default under the indenture has
occurred and is continuing, we have the right to defer the payment of interest
on the debentures at any time for a period not exceeding 20 consecutive
quarters. We refer to this period of deferral as an "extension period." No
extension period may extend beyond June 30, 2031 or end on a date other than an
interest payment date, which dates are the same as the distribution dates. If we
defer the payment of interest, quarterly distributions on the preferred
securities will also be deferred during any such extension period. Any deferred
distributions under the preferred securities will accumulate additional amounts
at the annual rate of %, compounded quarterly from the relevant distribution
date. The term "distributions" as used in this prospectus includes those
accumulated amounts.
During an extension period, we may not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any
of our capital stock, other than stock dividends, non-cash dividends
in connection with the implementation of a shareholder rights plan,
purchases of common stock in connection with employee benefit plans,
in connection with the reclassification of any class of our capital
stock into another class of capital stock, or allow any of our
direct or indirect subsidiaries to do the same with respect to their
capital stock (except as required to permit our subsidiary to
continue to qualify as a "real estate investment trust" under the
United States Internal Revenue Code of 1986, as amended), other than
the payment of dividends or distributions to us or to any of our
direct or indirect subsidiaries;
o make, or allow any of our direct or indirect subsidiaries to make,
any payment of principal, interest or premium on or repay,
repurchase or redeem any debt securities that rank equally, or
junior to, the debentures;
o make, or allow any of our direct or indirect subsidiaries to make,
any guarantee payments with respect to any other guarantee by us of
any other debt securities of any of our subsidiaries if the
guarantee ranks equally with or junior to the debentures, other than
payments under the guarantee; or
o redeem, purchase or acquire less than all of the debentures or any
of the preferred securities.
After the termination of any extension period and the payment of all
amounts due, we may elect to begin a new extension period, subject to the above
requirements.
30
We do not currently intend to exercise our right to defer distributions on
the preferred securities by deferring the payment of interest on the debentures.
Redemption or Exchange
General. Subject to the prior approval of the Federal Reserve, if
required, we will have the right to redeem the debentures:
o in whole at any time, or in part from time to time, on or after June
30, 2006;
o at any time, in whole, within 180 days following the occurrence of a
Tax Event, an Investment Company Event or a Capital Treatment Event,
which terms we define below; or
o at any time, to the extent of any preferred securities we
repurchase, plus a proportionate amount of the common securities we
hold.
Mandatory Redemption. Upon our repayment or redemption, in whole or in
part, of any debentures, whether on June 30, 2031 or earlier, the property
trustee will apply the proceeds to redeem the same amount of the trust
securities, upon not less than 30 days' nor more than 60 days' notice, at the
redemption price. The redemption price will equal 100% of the aggregate
liquidation amount of the trust securities plus accumulated but unpaid
distributions to the date of redemption. If less than all of the debentures are
to be repaid or redeemed on a date of redemption, then the proceeds from such
repayment or redemption will be allocated to redemption of preferred securities
and common securities proportionately.
Distribution of Debentures in Exchange for Preferred Securities. Upon
prior approval of the Federal Reserve, if required by law or regulation, we will
have the right at any time to dissolve, wind-up or terminate the trust and,
after satisfaction of the liabilities of creditors of the trust as provided by
applicable law, including, without limitation, amounts due and owing the
trustees of the trust, cause the debentures to be distributed directly to the
holders of trust securities in liquidation of the trust. See "-Liquidation
Distribution Upon Termination" beginning on page __.
After the liquidation date fixed for any distribution of debentures in
exchange for preferred securities:
o those trust securities will no longer be deemed to be outstanding;
o certificates representing debentures in a principal amount equal to
the liquidation amount of those preferred securities will be issued
in exchange for the preferred securities certificates;
o we will use our best efforts to include the debentures in the Nasdaq
National Market or to list them on a national exchange;
31
o any certificates representing trust securities that are not
surrendered for exchange will be deemed to represent debentures with
a principal amount equal to the liquidation amount of those
preferred securities, accruing interest at the rate provided for in
the debentures from the last distribution date on the preferred
securities;
o all rights of the trust security holders other than the right to
receive debentures upon surrender of a certificate representing
trust securities will terminate.
We cannot assure you that the market prices for the preferred securities
or the debentures that may be distributed if a dissolution and liquidation of
the trust were to occur would be favorable. The preferred securities that an
investor may purchase, or the debentures that an investor may receive on
dissolution and liquidation of the trust, may trade at a discount to the price
that the investor paid to purchase the preferred securities.
Redemption upon a Tax Event, Investment Company Event or Capital Treatment
Event. If a Tax Event, an Investment Company Event or a Capital Treatment Event
occurs, we will have the right to redeem the debentures in whole, but not in
part, and thereby cause a mandatory redemption of all of the trust securities at
the redemption price. If one of these events occurs and we do not elect to
redeem the debentures, or to dissolve the trust and cause the debentures to be
distributed to holders of the trust securities, then the preferred securities
will remain outstanding and additional interest may be payable on the
debentures. See "Description of the Debentures-Redemption" beginning on page __.
"Tax Event" means the receipt by the trust and us of an opinion of counsel
experienced in such matters stating that, as a result of any change or
prospective change in the laws or regulations of the United States or any
political subdivision or taxing authority of the United States, or as a result
of any official administrative pronouncement or judicial decision interpreting
or applying the tax laws or regulations, there is more than an insubstantial
risk that:
o interest payable by us on the debentures is not, or within 90 days
of the date of the opinion will not be, deductible by us, in whole
or in part, for federal income tax purposes;
o the trust is, or will be within 90 days after the date of the
opinion, subject to federal income tax with respect to income
received or accrued on the debentures; or
o the trust is, or will be within 90 days after the date of the
opinion, subject to more than an immaterial amount of other taxes,
duties, assessments or other governmental charges.
"Investment Company Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that the trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act, as a
32
result of a change in law or regulation or a change in interpretation or
application of law or regulation.
"Capital Treatment Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that there is more
than an insubstantial risk of impairment of our ability to treat the preferred
securities as Tier 1 capital for purposes of the current capital adequacy
guidelines of the Federal Reserve, as a result of any amendment to any laws or
any regulations.
For all of the events described above, we or the trust must request and
receive an opinion with regard to the event within a reasonable period of time
after we become aware of the possible occurrence of an event of this kind.
Redemption of Debentures in Exchange for Preferred Securities We
Repurchase. Upon prior approval of the Federal Reserve, if required, we will
also have the right at any time, and from time to time, to redeem debentures in
exchange for any preferred securities we may have repurchased in the market. If
we elect to surrender any preferred securities beneficially owned by us in
exchange for redemption of a like amount of debentures, we will also surrender a
proportionate amount of common securities in exchange for debentures. Neither we
nor the trust will call redemption at any time when we elect to exchange trust
securities we own for debentures.
The common securities we surrender will be in the same proportion to the
preferred securities we surrender as is the ratio of common securities purchased
by us to the preferred securities issued by the trust. In exchange for the trust
securities surrendered by us, the property trustee will cause to be released to
us for cancellation debentures with a principal amount equal to the liquidation
amount of the trust securities, plus any accumulated but unpaid distributions,
if any, then held by the property trustee allocable to those trust securities.
After the date of redemption involving an exchange by us, the trust securities
we surrender will no longer be deemed outstanding and the debentures redeemed in
exchange will be canceled.
Redemption Procedures
Preferred securities will be redeemed at the redemption price with the
applicable proceeds from our contemporaneous redemption of the debentures.
Redemptions of the preferred securities will be made, and the redemption price
will be payable, on each redemption date only to the extent that the trust has
funds available for the payment of the redemption price.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the date of redemption to each holder of trust securities to be
redeemed at its registered address. Unless we default in payment of the
redemption price on the debentures, interest will cease to accumulate on the
debentures called for redemption on and after the date of redemption.
If the trust gives notice of redemption of its trust securities, then the
property trustee, to the extent funds are available, will irrevocably deposit
with the depositary for the trust securities funds sufficient to pay the
aggregate redemption price and will give the depositary for the trust
33
securities irrevocable instructions and authority to pay the redemption price to
the holders of the trust securities. See "Book-Entry Issuance" beginning on page
__. If the preferred securities are no longer in book-entry only form, the
property trustee, to the extent funds are available, will deposit with the
designated paying agent for such preferred securities funds sufficient to pay
the aggregate redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to the holders upon
surrender of their certificates evidencing the preferred securities.
Notwithstanding the foregoing, distributions payable on or prior to the date of
redemption for any trust securities called for redemption will be payable to the
holders of the trust securities on the relevant record dates for the related
distribution dates.
If notice of redemption has been given and we have deposited funds as
required, then on the date of the deposit all rights of the holders of the trust
securities called for redemption will cease, except the right to receive the
redemption price, but without interest on such redemption price after the date
of redemption. The trust securities will also cease to be outstanding on the
date of the deposit. If any date fixed for redemption of trust securities is not
a business day, then payment of the redemption price payable on that date will
be made on the next day that is a business day without any additional interest
or other payment in respect of the delay. However, if the next business day is
in the next succeeding calendar year, payment of the interest will be made on
the immediately preceding business day.
If payment of the redemption price in respect of trust securities called
for redemption is improperly withheld or refused and not paid by the trust, or
by us pursuant to the guarantee, distributions on the trust securities will
continue to accumulate at the applicable rate from the date of redemption
originally established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
redemption price. See "Description of the Guarantee" beginning on page __.
Payment of the redemption price on the preferred securities and any
distribution of debentures to holders of preferred securities will be made to
the applicable recordholders as they appear on the register for the preferred
securities on the relevant record date. As long as the preferred securities are
represented by a global security, the record date will be the business day
immediately preceding the date of redemption or liquidation date, as applicable.
If less than all of the trust securities are to be redeemed, then the
aggregate liquidation amount of the trust securities to be redeemed will be
allocated proportionately to those trust securities based upon the relative
liquidation amounts. The particular preferred securities to be redeemed will be
selected by the property trustee from the outstanding preferred securities not
previously called for redemption by a method the property trustee deems fair and
appropriate. This method may provide for the redemption of portions equal to $10
or an integral multiple of $10 of the liquidation amount of the preferred
securities. The property trustee will promptly notify the registrar for the
preferred securities in writing of the preferred securities selected for
redemption and, in the case of any preferred securities selected for partial
redemption, the liquidation amount to be redeemed.
34
Subject to applicable law, and if we are not exercising our right to defer
interest payments on the debentures, we may, at any time, purchase outstanding
preferred securities.
Subordination of Common Securities
Payment of distributions on, and the redemption price of, the preferred
securities and common securities of the trust will be made based on the
liquidation amount of these securities. However, if an event of default under
the indenture has occurred and is continuing, no distributions on or redemption
of the common securities may be made unless payment in full in cash of all
accumulated and unpaid distributions on all of the outstanding preferred
securities for all distribution periods terminating on or before that time, or
in the case of payment of the redemption price, payment of the full amount of
the redemption price on all of the outstanding preferred securities then called
for redemption, has been made or provided for. All funds available to the
property trustee will first be applied to the payment in full in cash of all
distributions on, or the redemption price of, the preferred securities then due
and payable.
In the case of the occurrence and continuance of any event of default
under the trust agreement resulting from an event of default under the
indenture, we, as holder of the common securities, will be deemed to have waived
any right to act with respect to that event of default under the trust agreement
until the effect of the event of default has been cured, waived or otherwise
eliminated. Until the event of default under the trust agreement has been so
cured, waived or otherwise eliminated, the property trustee will act solely on
behalf of the holders of the preferred securities and not on our behalf, and
only the holders of the preferred securities will have the right to direct the
property trustee to act on their behalf.
Liquidation Distribution Upon Termination
We will have the right at any time to dissolve, wind-up or terminate the
trust and cause the debentures to be distributed to the holders of the preferred
securities. This right is subject, however, to us receiving approval of the
Federal Reserve, if required.
In addition, the trust will automatically terminate upon expiration of its
term and will terminate earlier on the first to occur of:
o our bankruptcy, dissolution or liquidation;
o the distribution of a like amount of the debentures to the holders
of trust securities, if we have given written direction to the
property trustee to terminate the trust;
o redemption of all of the preferred securities as described on page
__ under "-Redemption or Exchange-Mandatory Redemption;" or
o the entry of a court order for the dissolution of the trust.
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With the exception of a redemption as described on page __ under
"-Redemption or Exchange-Mandatory Redemption," if an early termination of the
trust occurs, the trust will be liquidated by the administrative trustees as
expeditiously as they determine to be possible. After satisfaction of
liabilities to creditors of the trust as provided by applicable law, the
trustees will distribute to the holders of trust securities, debentures:
o in an aggregate stated principal amount equal to the aggregate
stated liquidation amount of the trust securities;
o with an interest rate identical to the distribution rate on the
trust securities; and
o with accrued and unpaid interest equal to accumulated and unpaid
distributions on the trust securities.
However, if the property trustee determines that the distribution is not
practical, then the holders of trust securities will be entitled to receive,
instead of debentures, a proportionate amount of the liquidation distribution.
The liquidation distribution will be the amount equal to the aggregate of the
liquidation amount plus accumulated and unpaid distributions to the date of
payment. If the liquidation distribution can be paid only in part because the
trust has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by the trust on the trust
securities will be paid on a proportional basis, based on liquidation amounts,
to us, as the holder of the common securities, and to the holders of the
preferred securities. However, if an event of default under the indenture has
occurred and is continuing, the preferred securities will have a priority over
the common securities. See "-Subordination of Common Securities" on page __.
Under current United States federal income tax law and interpretations and
assuming that the trust is treated as a grantor trust, as is expected, a
distribution of the debentures should not be a taxable event to holders of the
preferred securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or another circumstance, however, the distribution
could be a taxable event to holders of the preferred securities. See "Federal
Income Tax Consequences-Receipt of Debentures or Cash Upon Liquidation of the
Trust" on page __ for more information regarding a taxable distribution.
If we do not elect to redeem the debentures prior to maturity or to
liquidate the trust and distribute the debentures to holders of the preferred
securities, the preferred securities will remain outstanding until the repayment
of the debentures. If we elect to dissolve the trust and thus cause the
debentures to be distributed to holders of the preferred securities in
liquidation of the trust, we will continue to have the right to shorten the
maturity of the debentures. See "Description of the Debentures-General"
beginning on page __.
Liquidation Value
The amount of the liquidation distribution payable on the preferred
securities in the event of any liquidation of the trust is $10 per preferred
security plus accumulated and unpaid distributions to the date of payment, which
may be in the form of a distribution of debentures
36
having a liquidation value and accrued interest of an equal amount. See
"-Liquidation Distribution upon Termination" beginning on page __.
Events of Default; Notice
Any one of the following events constitutes an event of default under the
trust agreement with respect to the preferred securities:
o the occurrence of an event of default under the indenture, see
"Description of the Debentures-Debenture Events of Default" on page
__;
o a default by the trust in the payment of any distribution when it
becomes due and payable, and continuation of the default for a
period of 30 days;
o a default by the trust in the payment of any redemption price of any
of the trust securities when it becomes due and payable;
o a default in the performance, or breach, in any material respect, of
any covenant or warranty of the trustees in the trust agreement,
other than those defaults covered in the previous two points, and
continuation of the default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the
trustees by the holders of at least 25% in aggregate liquidation
amount of the outstanding preferred securities, a written notice
specifying the default or breach and requiring it to be remedied and
stating that the notice is a "Notice of Default" under the trust
agreement; or
o the occurrence of events of bankruptcy or insolvency with respect to
the property trustee and our failure to appoint a successor property
trustee within 60 days.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to the holders of the preferred securities, the
administrative trustees and to us, unless the event of default has been cured or
waived. The administrative trustees and we are required to file annually with
the property trustee a certificate as to whether or not they or we are in
compliance with all the conditions and covenants applicable to them under the
trust agreement.
If an event of default under the indenture has occurred and is continuing,
the preferred securities will have preference over the common securities upon
termination of the trust. See "-Subordination of Common Securities" on page __
and "-Liquidation Distribution Upon Termination" beginning on page __. The
existence of an event of default under the trust agreement does not entitle the
holders of preferred securities to accelerate the maturity thereof, unless the
event of default is caused by the occurrence of an event of default under the
indenture and both the indenture trustee and holders of at least 25% in
principal amount of the debentures fail to accelerate the maturity thereof.
37
Removal of the Trustees
Unless an event of default under the indenture has occurred and is
continuing, we may remove any trustee at any time. If an event of default under
the indenture has occurred and is continuing, only the holders of a majority in
liquidation amount of the outstanding preferred securities may remove the
property trustee or the Delaware trustee. The holders of the preferred
securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with us as the
holder of the common securities. No resignation or removal of a trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts the appointment in accordance with the trust agreement.
Co-Trustees and Separate Property Trustee
Unless an event of default under the indenture has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property may
at the time be located, we will have the power to appoint at any time or times,
and upon written request of the property trustee will appoint, one or more
persons or entities either (1) to act as a co-trustee, jointly with the property
trustee, of all or any part of the trust property, or (2) to act as separate
trustee of any trust property. In either case, these trustees will have the
powers that may be provided in the instrument of appointment, and will have
vested in them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In case an event of
default under the indenture has occurred and is continuing, the property trustee
alone will have power to make the appointment.
Merger or Consolidation of Trustees
Generally, any person or successor to any of the trustees may be a
successor trustee to any of the trustees, including a successor resulting from a
merger or consolidation. However, any successor trustee must meet all of the
qualifications and eligibility standards to act as a trustee.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. For these purposes, if we consolidate or merge with another
entity, or transfer or sell substantially all of our assets to another entity,
in some cases that transaction may be considered to involve a replacement of the
trust, and the conditions set forth below would apply to such transaction. The
trust may, at our request, with the consent of the administrative trustees and
without the consent of the holders of the preferred securities, the property
trustee or the Delaware trustee, undertake a transaction listed above if the
following conditions are met:
o the successor entity either (a) expressly assumes all of the
obligations of the trust with respect to the preferred securities,
or (b) substitutes for the preferred securities other securities
having substantially the same terms as the preferred securities,
referred to as "successor securities," so long as the successor
securities
38
rank the same in priority as the preferred securities with respect
to distributions and payments upon liquidation, redemption and
otherwise;
o we appoint a trustee of the successor entity possessing
substantially the same powers and duties as the property trustee in
its capacity as the holder of the debentures;
o the successor securities are included, listed or traded or will be
included, listed or traded in or on any national securities exchange
or other organization in or on which the preferred securities are
then listed, if any;
o the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the preferred securities, including
any successor securities, in any material respect;
o the successor entity has a purpose substantially identical to that
of the trust;
o prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion from
independent counsel that (a) any transaction of this kind does not
adversely affect the rights, preferences and privileges of the
holders of the preferred securities, including any successor
securities, in any material respect, and (b) following the
transaction, neither the trust nor the successor entity will be
required to register as an "investment company" under the Investment
Company Act; and
o we own all of the common securities of the successor entity and
guarantee the obligations of the successor entity under the
successor securities at least to the extent provided by the
guarantee, the debentures, the trust agreement and the expense
agreement.
Notwithstanding the foregoing, the trust may not, except with the consent of
every holder of the preferred securities, enter into any transaction of this
kind if the transaction would cause the trust or the successor entity not to be
classified as a grantor trust for United States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as described below and under "Description of the
Guarantee-Amendments" on page __ and as otherwise required by the Trust
Indenture Act and the trust agreement, the holders of the preferred securities
will have no voting rights.
The trust agreement may be amended from time to time by us, as holders of
the common securities, and the trustees, without the consent of the holders of
the preferred securities, in the following circumstances:
39
o with respect to acceptance of appointment by a successor trustee;
o to cure any ambiguity, correct or supplement any provisions in the
trust agreement that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions
arising under the trust agreement, as long as the amendment is not
inconsistent with the other provisions of the trust agreement and
does not have a material adverse effect on the interests of any
holder of trust securities; or
o to modify, eliminate or add to any provisions of the trust agreement
if necessary to ensure that the trust will be classified for federal
income tax purposes as a grantor trust at all times that any trust
securities are outstanding or to ensure that the trust will not be
required to register as an "investment company" under the Investment
Company Act.
With the consent of the holders of a majority of the aggregate liquidation
amount of the outstanding trust securities, we and the trustees may amend the
trust agreement if the trustees receive an opinion of counsel to the effect that
the amendment or the exercise of any power granted to the trustees in accordance
with the amendment will not affect the trust's status as a grantor trust for
federal income tax purposes or the trust's exemption from status as an
"investment company" under the Investment Company Act. However, without the
consent of each holder of trust securities, the trust agreement may not be
amended to (a) change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the trust securities as of a specified date, or (b)
restrict the right of a holder of trust securities to institute suit for the
enforcement of the payment on or after that date.
As long as the property trustee holds any debentures, the trustees will
not, without obtaining the prior approval of the holders of a majority in
aggregate liquidation amount of all outstanding preferred securities:
o direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee, or executing any
trust or power conferred on the property trustee with respect to the
debentures;
o waive any past default that is waivable under the indenture;
o exercise any right to rescind or annul a declaration that the
principal of all the debentures will be due and payable; or
o consent to any amendment or termination of the indenture or the
debentures, where the property trustee's consent is required.
However, where a consent under the indenture requires the consent of
each holder of the affected debentures, no consent will be given by
the property trustee without the prior consent of each holder of the
preferred securities.
40
The trustees may not revoke any action previously authorized or approved by a
vote of the holders of the preferred securities except by subsequent vote of the
holders of the preferred securities. The property trustee will notify each
holder of preferred securities of any notice of default with respect to the
debentures. In addition to obtaining the foregoing approvals of the holders of
the preferred securities, prior to taking any of the foregoing actions, the
trustees must obtain an opinion of counsel experienced in these matters to the
effect that the trust will not be classified as an association taxable as a
corporation for federal income tax purposes on account of the action.
Any required approval of holders of trust securities may be given at a
meeting or by written consent. The property trustee will cause a notice of any
meeting at which holders of the trust securities are entitled to vote, or of any
matter upon which action by written consent of the holders is to be taken, to be
given to each holder of record of trust securities.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel its preferred securities in accordance with
the trust agreement.
Notwithstanding the fact that holders of preferred securities are entitled
to vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by us, the trustees or any affiliate of ours
or of any trustee, will, for purposes of the vote or consent, be treated as if
they were not outstanding.
Global Preferred Securities
The preferred securities will be represented by one or more global
preferred securities registered in the name of The Depository Trust Company, New
York, New York, referred to below as DTC, or its nominee. A global preferred
security is a security representing interests of more than one beneficial
holder. Ownership of beneficial interests in the global preferred securities
will be reflected in DTC participant account records through DTC's book-entry
transfer and registration system. Participants are brokers, dealers, or others
having accounts with DTC. Indirect beneficial interests of other persons
investing in the preferred securities will be shown on, and transfers will be
effected only through, records maintained by DTC participants. Except as
described below, preferred securities in definitive form will not be issued in
exchange for the global preferred securities. See "Book-Entry Issuance"
beginning on page __.
No global preferred security may be exchanged for preferred securities
registered in the names of persons other than DTC or its nominee unless:
o DTC notifies the indenture trustee that it is unwilling or unable to
continue as a depositary for the global preferred security and we
are unable to locate a qualified successor depositary;
o we execute and deliver to the indenture trustee a written order
stating that we elect to terminate the book-entry system through
DTC; or
41
o there shall have occurred and be continuing an event of default
under the indenture.
Any global preferred security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in the
names as DTC shall direct. It is expected that the instructions will be based
upon directions received by DTC with respect to ownership of beneficial
interests in the global preferred security. If preferred securities are issued
in definitive form, the preferred securities will be in denominations of $10 and
integral multiples of $10 and may be transferred or exchanged at the offices
described below.
Unless and until it is exchanged in whole or in part for the individual
preferred securities represented thereby, a global preferred security may not be
transferred, except as a whole, by DTC to a nominee of DTC, by a nominee of DTC
to DTC or another nominee of DTC or by DTC or any nominee to a successor
depositary or any nominee of the successor.
Payments on global preferred securities will be made to DTC, as the
depositary for the global preferred securities. If the preferred securities are
issued in definitive form, distributions will be payable by check mailed to the
address of record of the persons entitled to the distribution, and the transfer
of the preferred securities will be registrable, and preferred securities will
be exchangeable for preferred securities of other denominations of a like
aggregate liquidation amount, at the corporate office of the property trustee,
or at the offices of any paying agent or transfer agent appointed by the
administrative trustees. In addition, if the preferred securities are issued in
definitive form, the record dates for payment of distributions will be the 15th
day of the month in which the relevant distribution date occurs. For a
description of the terms of DTC arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-Entry
Issuance" beginning on page __.
Upon the issuance of one or more global preferred securities, and the
deposit of the global preferred security with or on behalf of DTC or its
nominee, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate liquidation amounts of the individual
preferred securities represented by the global preferred security to the
designated accounts of persons that participate in the DTC system. These
participant accounts will be designated by the dealers, underwriters or agents
selling the preferred securities. Ownership of beneficial interests in a global
preferred security will be limited to persons or entities having an account with
DTC or who may hold interests through participants. With respect to interests of
any person or entity that is a DTC participant, ownership of beneficial
interests in a global preferred security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by DTC or its
nominee. With respect to persons or entities who hold interests in a global
preferred security through a participant, the interest and any transfer of the
interest will be shown only on the participant's records. The laws of some
states require that certain purchasers of securities take physical delivery of
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a global preferred security.
So long as DTC or another depositary, or its nominee, is the registered
owner of the global preferred security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the preferred
securities represented by the global preferred security
42
for all purposes under the trust agreement. Except as described in this
prospectus, owners of beneficial interests in a global preferred security will
not be entitled to have any of the individual preferred securities represented
by the global preferred security registered in their names, will not receive or
be entitled to receive physical delivery of any the preferred securities in
definitive form and will not be considered the owners or holders of the
preferred securities under the trust agreement.
None of us, the property trustee, any paying agent or the securities
registrar for the preferred securities will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the global preferred security representing the
preferred securities or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of the
liquidation amount or distributions in respect of a global preferred security,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
liquidation amount of the global preferred security as shown on the records of
DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global preferred security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
the participants. See "Book-Entry Issuance" beginning on page __.
Payment and Paying Agency
Payments in respect of the preferred securities shall be made to DTC,
which shall credit the relevant accounts of participants on the applicable
distribution dates, or, if any of the preferred securities are not held by DTC,
the payments shall be made by check mailed to the address of the holder as
listed on the register of holders of the preferred securities. The paying agent
for the preferred securities will initially be the property trustee and any
co-paying agent chosen by the property trustee and acceptable to us and the
administrative trustees. The paying agent for the preferred securities may
resign as paying agent upon 30 days' written notice to the administrative
trustees, the property trustee and us. If the property trustee no longer is the
paying agent for the preferred securities, the administrative trustees will
appoint a successor to act as paying agent. The successor must be a bank or
trust company acceptable to us and the property trustee.
Registrar and Transfer Agent
The property trustee will act as the registrar and the transfer agent for
the preferred securities. Registration of transfers of preferred securities will
be effected without charge by or on behalf of the trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The trust and its registrar and transfer agent will not be
required to register or cause to be registered the transfer of preferred
securities after they have been called for redemption.
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Information Concerning the Property Trustee
The property trustee undertakes to perform only the duties set forth in
the trust agreement. After the occurrence of an event of default that is
continuing, the property trustee must exercise the same degree of care and skill
as a prudent person exercises or uses in the conduct of its own affairs. The
property trustee is under no obligation to exercise any of the powers vested in
it by the trust agreement at the request of any holder of preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred. If no event of default under the trust
agreement has occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous or inconsistent
provisions in the trust agreement or is unsure of the application of any
provision of the trust agreement, and the matter is not one on which holders of
preferred securities are entitled to vote upon, then the property trustee will
take the action directed in writing by us. If the property trustee is not so
directed, then it will take the action it deems advisable and in the best
interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
o the trust will not be deemed to be an "investment company" required
to be registered under the Investment Company Act;
o the trust will not be classified as an association taxable as a
corporation for federal income tax purposes; and
o the debentures will be treated as our indebtedness for federal
income tax purposes.
In this regard, we and the administrative trustees are authorized to take any
action not inconsistent with applicable law, the certificate of trust or the
trust agreement, that we and the administrative trustees determine to be
necessary or desirable for these purposes.
The administrative trustees are required to use their best efforts to
maintain the inclusion of the preferred securities in the Nasdaq National Market
or the listing of such preferred securities on a national securities exchange,
but this requirement will not prevent us from redeeming all or a portion of the
preferred securities in accordance with the trust agreement.
Holders of the preferred securities have no preemptive or similar rights.
The trust agreement and the trust securities will be governed by Delaware law.
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DESCRIPTION OF THE DEBENTURES
Concurrently with the issuance of the preferred securities, the trust will
invest the proceeds from the sale of the trust securities in the debentures
issued by us. The debentures will be issued as unsecured debt under the
indenture between us and Wilmington Trust Company, as indenture trustee. The
indenture will be qualified under the Trust Indenture Act.
The following discussion is subject to, and is qualified in its entirety
by reference to, the indenture and to the Trust Indenture Act. We urge
prospective investors to read the form of the indenture, which is filed as an
exhibit to the registration statement of which this prospectus forms a part.
General
The debentures will be limited in aggregate principal amount to
$15,464,000 or $17,784,000 if the underwriters' over-allotment option is
exercised in full. This amount represents the sum of the aggregate stated
liquidation amounts of the trust securities. The debentures will bear interest
at the annual rate of % of the principal amount. The interest will be payable
quarterly on March 31, June 30, September 30 and December 31 of each year,
beginning June 30, 2001, to the person in whose name each debenture is
registered at the close of business on the 15th day of the last month of the
calendar quarter. It is anticipated that, until the liquidation, if any, of the
trust, the debentures will be held in the name of the property trustee in trust
for the benefit of the holders of the trust securities.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. If any date on which interest
is payable on the debentures is not a business day, then payment of interest
will be made on the next day that is a business day without any additional
interest or other payment in respect of the delay. However, if the next business
day is in the next calendar year, payment of interest will be made on the
immediately preceding business day. Accrued interest that is not paid on the
applicable interest payment date will bear additional interest on the amount due
at the annual rate of %, compounded quarterly.
The debentures will mature on June 30, 2031, the stated maturity date. We
may shorten this date once at any time to any date on or after June 30, 2006,
subject to the prior approval of the Federal Reserve, if required by law or
regulation.
We will give notice to the indenture trustee and the holders of the
debentures, no more than 180 days and no less than 30 days prior to the
effectiveness of any change in the stated maturity date. We will not have the
right to redeem the debentures from the trust until on or after June 30, 2006,
except if (a) a Tax Event, an Investment Company Event or a Capital Treatment
Event, which terms are defined on pages __ and __, has occurred, or (b) we
repurchase preferred securities in the market, in which case we can elect to
redeem debentures specifically in exchange for a like amount of preferred
securities owned by us plus a proportionate amount of common securities.
45
The debentures will be unsecured and will rank junior to all of our senior
and subordinated debt, including indebtedness we may incur in the future.
Because we are a holding company, our right to participate in any distribution
of assets of any of our subsidiaries, upon any subsidiary's liquidation or
reorganization or otherwise, and thus the ability of holders of the debentures
to benefit indirectly from any distribution by a subsidiary, is subject to the
prior claim of creditors of the subsidiary, except to the extent that we may be
recognized as a creditor of the subsidiary. The debentures will, therefore, be
effectively subordinated to all existing and future liabilities of our
subsidiaries, and holders of debentures should look only to our assets for
payment. The indenture does not limit our ability to incur or issue secured or
unsecured senior and junior debt, except in limited circumstances. See
"-Subordination" beginning on page __ and __ "-Miscellaneous" beginning on page
__.
The indenture does not contain provisions that afford holders of the
debentures protection in the event of a highly leveraged transaction or other
similar transaction involving us, nor does it require us to maintain or achieve
any financial performance levels or to obtain or maintain any credit rating on
the debentures.
Option to Extend Interest Payment Period
As long as no event of default under the indenture has occurred and is
continuing, we have the right under the indenture to defer the payment of
interest on the debentures at any time for a period not exceeding 20 consecutive
quarters. However, no extension period may extend beyond the stated maturity of
the debentures or end on a date other than a date interest is normally due. At
the end of an extension period, we must pay all interest then accrued and
unpaid, together with interest thereon at the annual rate of __%, compounded
quarterly. During an extension period, interest will continue to accrue and
holders of debentures, or the holders of preferred securities if they are then
outstanding, will be required to accrue and recognize as income for federal
income tax purposes the accrued but unpaid interest amounts in the year in which
such amounts accrued. See "Federal Income Tax Consequences" beginning on page
__.
During an extension period, we may not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any
of our capital stock, other than stock dividends, non-cash dividends
in connection with the implementation of a shareholder rights plan,
purchases of common stock in connection with employee benefit plans
or in connection with the reclassification of any class of our
capital stock into another class of capital stock, or allow any of
our direct or indirect subsidiaries to do the same with respect to
their capital stock (except as required to permit our subsidiary to
continue to qualify as a "real estate investment trust" under the
United States Internal Revenue Code of 1986, as amended), other than
payment of dividends or distributions to us or to any of our direct
or indirect subsidiaries;
46
o make, or allow any of our subsidiaries to make, any payment of
principal, interest or premium on, or repay, repurchase or redeem
any debt securities issued by us that rank equally with or junior to
the debentures;
o make, or allow any of our subsidiaries to make, any guarantee
payments with respect to any other guarantee by us of any other debt
securities of any of our subsidiaries if the guarantee ranks equally
with or junior to the debentures, other than payments under the
guarantee relating to the preferred securities; or
o redeem, purchase or acquire less than all of the debentures or any
of the preferred securities.
Prior to the termination of any extension period, so long as no event of
default under the indenture is continuing, we may further defer the payment of
interest subject to the above stated requirements. Upon the termination of any
extension period and the payment of all amounts then due, we may elect to begin
a new extension period at any time. We do not currently intend to exercise our
right to defer payments of interest on the debentures.
We must give the property trustee, the administrative trustees and the
indenture trustee notice of our election of an extension period at least two
business days prior to the earlier of (a) the next date on which distributions
on the trust securities would have been payable except for the election to begin
an extension period, or (b) the date we are required to give notice of the
record date, or the date the distributions are payable, to the Nasdaq National
Market, or other applicable self-regulatory organization, or to holders of the
preferred securities, but in any event at least one business day prior to the
record date.
Other than as described above, there is no limitation on the number of
times that we may elect to begin an extension period.
Additional Sums to be Paid as a Result of Additional Taxes
If the trust is required to pay any additional taxes, duties, assessments
or other governmental charges as a result of the occurrence of a Tax Event, we
will pay as additional interest on the debentures any amounts which may be
required so that the net amounts received and retained by the trust after paying
any additional taxes, duties, assessments or other governmental charges will not
be less than the amounts the trust would have received had the additional taxes,
duties, assessments or other governmental charges not been imposed.
Redemption
Subject to prior approval of the Federal Reserve, if required by law or
regulation, we may redeem the debentures prior to maturity:
o on or after June 30, 2006, in whole at any time or in part from time
to time;
47
o in whole at any time within 180 days following the occurrence of a
Tax Event, an Investment Company Event or a Capital Treatment Event;
or
o at any time, to the extent of any preferred securities we purchase,
plus a proportionate amount of the common securities we hold.
In each case we will pay a redemption price equal to the accrued and
unpaid interest on the debentures so redeemed to the date fixed for redemption,
plus 100% of the principal amount of the redeemed debentures.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of debentures to be redeemed
at its registered address. Redemption of less than all outstanding debentures
must be effected proportionately, by lot or in any other manner deemed to be
fair and appropriate by the indenture trustee. Unless we default in payment of
the redemption price for the debentures, on and after the redemption date
interest will no longer accrue on the debentures or the portions of the
debentures called for redemption.
The debentures will not be subject to any sinking fund.
Distribution Upon Liquidation
As described beginning on page __ under "Description of the Preferred
Securities-Liquidation Distribution Upon Termination," under certain
circumstances and with the Federal Reserve's approval, the debentures may be
distributed to the holders of the preferred securities in liquidation of the
trust after satisfaction of liabilities to creditors of the trust. If this
occurs, we will use our best efforts to include the debentures in the Nasdaq
National Market or to list them on another stock exchange or national quotation
system in or on which the preferred securities are then included or listed, if
any. There can be no assurance as to the market price of any debentures that may
be distributed to the holders of preferred securities.
Restrictions on Payments
We are restricted from making certain payments, as described below, if we
have chosen to defer payment of interest on the debentures, if an event of
default has occurred and is continuing under the indenture, or if we are in
default with respect to our obligations under the guarantee.
If any of these events occur, we will not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of our capital stock, other than stock dividends, non-cash
dividends in connection with the implementation of a shareholder
rights plan, purchases of common stock in connection with employee
benefit plans or in connection with the reclassification of any
class of our capital stock into another class of capital stock, or
allow any of our direct or indirect subsidiaries to do the same with
respect to their capital stock (except as required
48
to permit our subsidiary to continue to qualify as a "real estate
investment trust" under the United States Internal Revenue Code of
1986, as amended), other than payment of dividends or distributions
to us or to any of our direct or indirect subsidiaries;
o make, or allow any of our subsidiaries to make, any payment of
principal, interest or premium on, or repay or repurchase or redeem
any of our debt securities that rank equally with or junior to the
debentures;
o make, or allow any of our subsidiaries to make, any guarantee
payments with respect to any guarantee by us of the debt securities
of any of our subsidiaries if the guarantee ranks equally with or
junior to the debentures, other than payments under the guarantee
relating to the preferred securities; or
o redeem, purchase or acquire less than all of the debentures or any
of the preferred securities.
Subordination
The debentures are subordinated and junior in right of payment to all of
our senior and subordinated debt, as defined below. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up or reorganization of our company, whether voluntary or involuntary in
bankruptcy, insolvency, receivership or other proceedings in connection with any
insolvency or bankruptcy proceedings, the holders of our senior and subordinated
debt will first be entitled to receive payment in full of principal and interest
before the holders of debentures will be entitled to receive or retain any
payment in respect of the debentures.
If the maturity of any debentures is accelerated, the holders of all of
our senior and subordinated debt outstanding at the time of the acceleration
will also be entitled to first receive payment in full of all amounts due to
them, including any amounts due upon acceleration, before the holders of the
debentures will be entitled to receive or retain any principal or interest
payments on the debentures.
No payments of principal or interest on the debentures may be made if
there has occurred and is continuing a default in any payment with respect to
any of our senior or subordinated debt or an event of default with respect to
any of our senior or subordinated debt resulting in the acceleration of the
maturity of the senior or subordinated debt, or if any judicial proceeding is
pending with respect to any default.
The term "debt" means, with respect to any person, whether recourse is to
all or a portion of the assets of the person and whether or not contingent:
o every obligation of the person for money borrowed;
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o every obligation of the person evidenced by bonds, subordinated
debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property,
assets or businesses;
o every reimbursement obligation of the person with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of the person;
o every obligation of the person issued or assumed as the deferred
purchase price of property or services, excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business;
o every capital lease obligation of the person; and
o every obligation of the type referred to in the first five points of
another person and all dividends of another person the payment of
which, in either case, the first person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or
otherwise.
The term "senior debt" means the principal of, and premium and interest,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to us, on, debt, whether incurred on or prior to
the date of the indenture or incurred after the date. However, senior debt will
not be deemed to include:
o any debt where it is provided in the instrument creating the debt
that the obligations are not superior in right of payment to the
debentures or to other debt which is equal with, or subordinated to,
the debentures;
o any of our debt that when incurred and without regard to any
election under the federal bankruptcy laws, was without recourse to
us;
o any debt to any of our employees;
o any debt that by its terms is subordinated to trade accounts payable
or accrued liabilities arising in the ordinary course of business to
the extent that payments made to the holders of the debt by the
holders of the debentures as a result of the subordination
provisions of the indenture would be greater than they otherwise
would have been as a result of any obligation of the holders to pay
amounts over to the obligees on the trade accounts payable or
accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which the debt is subject; and
o debt which constitutes subordinated debt.
The term "subordinated debt" means the principal of, and premium and
interest, including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to us, on, debt. Subordinated debt
includes debt incurred on or prior to the date of the indenture
50
or thereafter incurred, which is by its terms expressly provided to be junior
and subordinate to other debt of ours, other than the debentures. However,
subordinated debt will not be deemed to include:
o any of our debt which when incurred and without regard to any
election under the federal bankruptcy laws was without recourse to
us;
o any debt to any of our employees;
o any debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of the debt
by the holders of the debentures as a result of the subordination
provisions of the indenture would be greater than they otherwise
would have been as a result of any obligation of the holders to pay
amounts over to the obligees on the trade accounts payable or
accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which the debt is subject;
o debt which constitutes senior debt; and
o any debt of ours under debt securities, and guarantees in respect of
these debt securities, initially issued to any trust, or a trustee
of a trust, partnership or other entity affiliated with us that is,
directly or indirectly, our financing subsidiary in connection with
the issuance by that entity of preferred securities or other
securities which are intended to qualify for "Tier 1" capital
treatment.
We expect from time to time to incur additional indebtedness, and there is
no limitation under the indenture on the amount we may incur. We had
consolidated senior and subordinated debt of $17.8 million outstanding principal
amount at December 31, 2000. Although a portion of these amounts is expected to
be repaid with a portion of the proceeds from the sale of the debentures, we
expect to incur additional senior or subordinated debt in the future.
Payment and Paying Agents
Generally, payment of principal of and interest on the debentures will be
made at the office of the indenture trustee in Wilmington, Delaware. However, we
have the option to make payment of any interest by (a) check mailed to the
address of the person entitled to payment at the address listed in the register
of holders of the debentures, or (b) wire transfer to an account maintained by
the person entitled thereto as specified in the register of holders of the
debentures, provided that proper transfer instructions have been received by the
applicable record date. Payment of any interest on debentures will be made to
the person in whose name the debenture is registered at the close of business on
the regular record date for the interest payment, except in the case of
defaulted interest.
Any moneys deposited with the indenture trustee or any paying agent for
the debentures, or then held by us in trust, for the payment of the principal of
or interest on the debentures and
51
remaining unclaimed for two years after the principal or interest has become due
and payable, will be repaid to us on June 30 of each year. If we hold any of
this money in trust, then it will be discharged from the trust to us and the
holder of the debenture will thereafter look, as a general unsecured creditor,
only to us for payment.
Registrar and Transfer Agent
The indenture trustee will act as the registrar and the transfer agent for
the debentures. Debentures may be presented for registration of transfer, with
the form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed, at the office of the registrar. Provided that we
maintain a transfer agent in Wilmington, Delaware, we may rescind the
designation of any transfer agent or approve a change in the location through
which any transfer agent acts. We may at any time designate additional transfer
agents with respect to the debentures.
If we redeem any of the debentures, neither we nor the indenture trustee
will be required to (a) issue, register the transfer of or exchange any
debentures during a period beginning at the opening of business 15 days before
the day of the mailing of and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (b) transfer or exchange any
debentures so selected for redemption, except, in the case of any debentures
being redeemed in part, any portion not to be redeemed.
Modification of Indenture
We and the indenture trustee may, from time to time without the consent of
the holders of the debentures, amend, waive our rights under or supplement the
indenture for purposes which do not materially adversely affect the rights of
the holders of the debentures. Other changes may be made by us and the indenture
trustee with the consent of the holders of a majority in principal amount of the
outstanding debentures. However, without the consent of the holder of each
outstanding debenture affected by the proposed modification, no modification
may:
o extend the maturity date of the debentures; or
o reduce the principal amount or the rate or extend the time of
payment of interest; or
o reduce the percentage of principal amount of debentures required to
amend the indenture.
As long as any of the preferred securities remain outstanding, no
modification of the indenture may be made that requires the consent of the
holders of the debentures, no termination of the indenture may occur, and no
waiver of any event of default under the indenture may be effective, without the
prior consent of the holders of a majority of the aggregate liquidation amount
of the preferred securities.
52
Debenture Events of Default
The indenture provides that any one or more of the following events with
respect to the debentures that has occurred and is continuing constitutes an
event of default under the indenture:
o our failure to pay any interest on the debentures for 30 days after
the due date, except where we have properly deferred the interest
payment;
o our failure to pay any principal on the debentures when due whether
at maturity, upon redemption or otherwise;
o our failure to observe or perform in any material respect any other
covenants or agreements contained in the indenture for 90 days after
written notice to us from the indenture trustee or the holders of at
least 25% in aggregate outstanding principal amount of the
debentures; or
o our bankruptcy, insolvency or reorganization or dissolution of the
trust, except for certain transactions specifically permitted by the
trust agreement.
The holders of a majority of the aggregate outstanding principal amount of
the debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the indenture trustee. The indenture
trustee, or the holders of at least 25% in aggregate outstanding principal
amount of the debentures, may declare the principal due and payable immediately
upon an event of default under the indenture. The holders of a majority of the
outstanding principal amount of the debentures may rescind and annul the
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the indenture trustee.
The holders may not annul the declaration and waive a default if the default is
the non-payment of the principal of the debentures which has become due solely
by the acceleration. Should the holders of the debentures fail to annul the
declaration and waive the default, the holders of at least 25% in aggregate
liquidation amount of the preferred securities will have this right.
If an event of default under the indenture has occurred and is continuing,
the property trustee will have the right to declare the principal of and the
interest on the debentures, and any other amounts payable under the indenture,
to be immediately due and payable and to enforce its other rights as a creditor
with respect to the debentures.
We are required to file annually with the indenture trustee a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the indenture.
53
Enforcement of Certain Rights by Holders of the Preferred Securities
If an event of default under the indenture has occurred and is continuing
and the event is attributable to the failure by us to pay interest on or
principal of the debentures on the date on which the payment is due and payable,
then a holder of preferred securities may institute a direct action against us
to compel us to make the payment. We may not amend the indenture to remove the
foregoing right to bring a direct action without the prior written consent of
all of the holders of the preferred securities. If the right to bring a direct
action is removed, the trust may become subject to the reporting obligations
under the Securities Exchange Act of 1934.
The holders of the preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the debentures unless there has been an event of
default under the trust agreement. See "Description of the Preferred
Securities-Events of Default; Notice" on page __.
Consolidation, Merger, Sale of Assets and Other Transactions
We may not consolidate with or merge into any other entity or convey or
transfer our properties and assets substantially as an entirety to any entity,
and no entity may be consolidated with or merged into us or sell, convey,
transfer or otherwise dispose of its properties and assets substantially as an
entirety to us, unless:
o if we consolidate with or merge into another person or convey or
transfer our 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 the
successor person expressly assumes by supplemental indenture our
obligations on the debentures, and the ultimate parent entity of the
successor entity expressly assumes our obligations under the
guarantee, to the extent the preferred securities are then
outstanding;
o immediately after the transaction, no event of default under the
indenture, and no event which, after notice or lapse of time, or
both, would become an event of default under the indenture, has
occurred and is continuing; and
o other conditions as prescribed in the indenture are met.
Under certain circumstances, if we consolidate or merge with another
entity, or transfer or sell substantially all of our assets to another entity,
such transaction may be considered to involve a replacement of the trust, and
the provisions of the trust agreement relating to a replacement of the trust
would apply to such transaction. See "Description of the Preferred
Securities-Mergers, Consolidations, Amalgamations or Replacements of the Trust"
beginning on page __.
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Satisfaction and Discharge
The indenture will cease to be of further effect and we will be deemed to
have satisfied and discharged our obligations under the indenture when all
debentures not previously delivered to the indenture trustee for cancellation:
o have become due and payable;
o will become due and payable at their stated maturity within one year
or are to be called for redemption within one year, and we deposit
or cause to be deposited with the indenture trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the
entire indebtedness on the debentures not previously delivered to
the indenture trustee for cancellation, for the principal and
interest due to the date of the deposit or to the stated maturity or
redemption date, as the case may be.
We may still be required to provide officers' certificates, opinions of
counsel and pay fees and expenses due after these events occur.
Governing Law
The indenture and the debentures will be governed by and construed in
accordance with New York law.
Information Concerning the Indenture Trustee
The indenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to these provisions, the indenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of debentures, unless offered reasonable security or indemnity by the
holder against the costs, expenses and liabilities which might be incurred. The
indenture trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
indenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Miscellaneous
We have agreed, pursuant to the indenture, for so long as preferred
securities remain outstanding:
o to maintain directly or indirectly 100% ownership of the common
securities of the trust, except that certain successors that are
permitted pursuant to the indenture may succeed to our ownership of
the common securities;
o not to voluntarily terminate, wind up or liquidate the trust without
prior approval of the Federal Reserve, if required by law or
regulation;
55
o to use our reasonable efforts to cause the trust (a) to remain a
business trust and to avoid involuntary termination, winding up or
liquidation, except in connection with a distribution of debentures,
the redemption of all of the trust securities of the trust or
mergers, consolidations or amalgamations, each as permitted by the
trust agreement; and (b) to otherwise continue not to be treated as
an association taxable as a corporation or partnership for federal
income tax purposes;
o to use our reasonable efforts to cause each holder of trust
securities to be treated as owning an individual beneficial interest
in the debentures;
o to use our best efforts to maintain the eligibility of the preferred
securities for inclusion, quotation or listing in the Nasdaq
National Market or on any national securities exchange or other
organization for as long as the preferred securities are
outstanding;
o not to issue or incur, directly or indirectly, any additional
indebtedness in connection with the issuance of additional trust
preferred securities or similar securities that are senior in right
of payment to the debentures; and
o not to issue or incur, directly or indirectly, any additional
indebtedness related to the issuance of additional trust preferred
securities or similar securities that rank equal in right of payment
with the debentures unless:
o the pro forma sum of all outstanding debt issued by us or any
of our subsidiaries in connection with any trust preferred
securities issued by any of our finance subsidiaries,
including the debentures and the maximum liquidation amount of
the additional trust preferred or similar securities that we
or our finance subsidiary is then proposing to offer, plus our
total long term debt, excluding any long term debt which, by
its terms, is expressly stated to be junior and subordinate to
the debentures,
is less than 60 percent of
o the sum of our common and preferred stockholders' equity, plus
any long term debt which, by its terms, is expressly stated to
be junior and subordinate to the debentures, in each case on a
consolidated basis.
BOOK-ENTRY ISSUANCE
General
DTC will act as securities depositary for the preferred securities and may
act as securities depositary for all of the debentures in the event of the
distribution of the debentures to the holders of preferred securities. Except as
described below, the preferred securities will be issued
56
only as registered securities in the name of Cede & Co., as DTC's nominee. One
or more global preferred securities will be issued for the preferred securities
and will be deposited with DTC.
DTC is a limited purpose trust company organized under New York banking
law, a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its direct participants and by
the New York Stock Exchange, the American Stock Exchange and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to indirect participants, such as securities brokers and dealers,
banks and trust companies that clear through or maintain custodial relationships
with direct participants, either directly or indirectly. The rules applicable to
DTC and its participants are on file with the SEC.
Purchases of preferred securities within the DTC system must be made by or
through direct participants, which will receive a credit for the preferred
securities on DTC's records. The ownership interest of each actual purchaser of
each preferred security is in turn to be recorded on the direct and indirect
participants' records. These beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or indirect participants
through which the beneficial owners purchased preferred securities. Transfers of
ownership interests in the preferred securities are to be accomplished by
entries made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interest in preferred securities, except if use of the book-entry-only system
for the preferred securities is discontinued.
DTC will have no knowledge of the actual beneficial owners of the
preferred securities; DTC's records reflect only the identity of the direct
participants to whose accounts the preferred securities are credited, which may
or may not be the beneficial owners. The participants will remain responsible
for keeping account of their holdings on behalf of their customers.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be accurate, but we and the
trust assume no responsibility for the accuracy thereof. Neither we nor the
trust have any responsibility for the performance by DTC or its participants of
their respective obligations as described in this prospectus or under the rules
and procedures governing their respective operations.
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Notices and Voting
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the preferred securities. If less than all of the preferred securities are being
redeemed, the amount to be redeemed will be determined in accordance with the
trust agreement.
Although voting with respect to the preferred securities is limited to the
holders of record of the preferred securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to preferred securities. Under its usual procedures, DTC would mail an
omnibus proxy to the property trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the preferred securities are credited on
the record date.
Distribution of Funds
The property trustee will make distribution payments on the preferred
securities to DTC. DTC's practice is to credit direct participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the payment date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices and will be the
responsibility of the participant and not of DTC, the property trustee, the
trust or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of distributions to DTC is the responsibility
of the property trustee, disbursement of the payments to direct participants is
the responsibility of DTC, and disbursements of the payments to the beneficial
owners is the responsibility of direct and indirect participants.
Successor Depositaries and Termination of Book-Entry System
DTC may discontinue providing its services with respect to any of the
preferred securities at any time by giving reasonable notice to the property
trustee or us. If no successor securities depositary is obtained, definitive
certificates representing the preferred securities are required to be printed
and delivered. We also have the option to discontinue use of the system of
book-entry transfers through DTC or a successor depositary. After an event of
default under the indenture, the holders of a majority in liquidation amount of
preferred securities may determine to discontinue the system of book-entry
transfers through DTC. In these events, definitive certificates for the
preferred securities will be printed and delivered.
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DESCRIPTION OF THE GUARANTEE
The preferred securities guarantee agreement will be executed and
delivered by us concurrently with the issuance of the preferred securities for
the benefit of the holders of the preferred securities. The guarantee agreement
will be qualified as an indenture under the Trust Indenture Act. Wilmington
Trust Company, the guarantee trustee, will act as trustee for purposes of
complying with the provisions of the Trust Indenture Act, and will also hold the
guarantee for the benefit of the holders of the preferred securities.
The following discussion contains a description of the material provisions
of the guarantee and is subject to, and is qualified in its entirety by
reference to, the guarantee agreement and the Trust Indenture Act. We urge
prospective investors to read the form of the guarantee agreement, which has
been filed as an exhibit to the registration statement of which this prospectus
forms a part.
General
We agree to pay in full on a subordinated basis, to the extent described
in the guarantee agreement, the guarantee payments, as defined below, to the
holders of the preferred securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the trust may have or assert other than
the defense of payment.
The following payments with respect to the preferred securities are called
the "guarantee payments" and, to the extent not paid or made by the trust and to
the extent that the trust has funds available for those distributions, will be
subject to the guarantee:
o any accumulated and unpaid distributions required to be paid on the
preferred securities;
o with respect to any preferred securities called for redemption, the
redemption price; and
o upon a voluntary or involuntary dissolution, winding up or
termination of the trust, other than in connection with the
distribution of debentures to the holders of preferred securities in
exchange for preferred securities, the lesser of:
(a) the amount of the liquidation distribution; and
(b) the amount of assets of the trust remaining available for
distribution to holders of preferred securities in liquidation
of the trust.
We may satisfy our obligations to make a guarantee payment by making a
direct payment of the required amounts to the holders of the preferred
securities or by causing the trust to pay the amounts to the holders.
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The guarantee agreement is a guarantee, on a subordinated basis, of the
guarantee payments, but the guarantee only applies to the extent the trust has
funds available for those distributions. If we do not make interest payments on
the debentures purchased by the trust, the trust will not have funds available
to make the distributions and will not pay distributions on the preferred
securities.
Status of the Guarantee
The guarantee constitutes our unsecured obligation that ranks subordinate
and junior in right of payment to all of our senior and subordinated debt in the
same manner as the debentures. We expect to incur additional indebtedness in the
future, although we have no specific plans in this regard presently and, except
in certain circumstances, neither the indenture nor the trust agreement limits
the amounts of senior and subordinated debt that we may incur.
The guarantee constitutes a guarantee of payment and not of collection. If
we fail to make guarantee payments when required, holders of preferred
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
any other person or entity.
The guarantee will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon distribution of the
debentures to the holders of the preferred securities. Because we are a bank
holding company, our right to participate in any distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Our obligations
under the guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of our subsidiaries, and claimants should look only to
our assets for payments under the guarantee.
Amendments
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities, in which case no vote will be
required, the guarantee may be amended only with the prior approval of the
holders of a majority of the aggregate liquidation amount of the outstanding
preferred securities. See "Description of the Preferred Securities- Voting
Rights; Amendment of Trust Agreement" beginning on page __.
Events of Default; Remedies
An event of default under the guarantee agreement will occur upon our
failure to make any required guarantee payments or to perform any other
obligations under the guarantee. The holders of a majority in aggregate
liquidation amount of the preferred securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the guarantee trustee in respect of the guarantee and may direct the exercise of
any power conferred upon the guarantee trustee under the guarantee agreement.
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Any holder of preferred securities may institute and prosecute a legal
proceeding directly against us to enforce its rights under the guarantee without
first instituting a legal proceeding against the trust, the guarantee trustee or
any other person or entity.
We are required to provide to the guarantee trustee annually a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the guarantee agreement.
Termination of the Guarantee
The guarantee will terminate and be of no further force and effect upon:
o full payment of the redemption price of the preferred securities;
o full payment of the amounts payable upon liquidation of the trust;
or
o distribution of the debentures to the holders of the preferred
securities.
If at any time any holder of the preferred securities must restore payment
of any sums paid under the preferred securities or the guarantee, the guarantee
will continue to be effective or will be reinstated with respect to such
amounts.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of
our default in performance of the guarantee, undertakes to perform only those
duties as are specifically set forth in the guarantee. When an event of default
has occurred and is continuing, the guarantee trustee must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to those provisions, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at the request of any holder of any preferred securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
Expense Agreement
We will, pursuant to the Agreement as to Expenses and Liabilities entered
into by us and the trust under the trust agreement, irrevocably and
unconditionally guarantee to each person or entity to whom the trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the trust, other than obligations of the trust to pay to the holders of the
preferred securities or other similar interests in the trust of the amounts due
to the holders pursuant to the terms of the preferred securities or other
similar interests, as the case may be. Third party creditors of the trust may
proceed directly against us under the expense agreement, regardless of whether
they had notice of the expense agreement.
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Governing Law
The guarantee will be governed by New York law.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
We irrevocably guarantee, as and to the extent described in this
prospectus, payments of distributions and other amounts due on the preferred
securities, to the extent the trust has funds available for the payment of these
amounts. We and the trust believe that, taken together, our obligations under
the debentures, the indenture, the trust agreement, the expense agreement and
the guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of distributions
and other amounts due on the preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes a guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the obligations of the trust under the preferred securities.
If and to the extent that we do not make payments on the debentures, the
trust will not pay distributions or other amounts due on the preferred
securities. The guarantee does not cover payment of distributions when the trust
does not have sufficient funds to pay the distributions. In this event, the
remedy of a holder of preferred securities is to institute a legal proceeding
directly against us for enforcement of payment of the distributions to the
holder. Our obligations under the guarantee are subordinated and junior in right
of payment to all of our other indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the debentures, these payments will be sufficient to cover distributions and
other payments due on the preferred securities, primarily because:
o the aggregate principal amount of the debentures will be equal to
the sum of the aggregate stated liquidation amount of the trust
securities;
o the interest rate and interest and other payment dates on the
debentures will match the distribution rate and distribution and
other payment dates for the preferred securities;
o we will pay for any and all costs, expenses and liabilities of the
trust, except the obligations of the trust to pay to holders of the
preferred securities the amounts due to the holders pursuant to the
terms of the preferred securities; and
62
o the trust will not engage in any activity that is not consistent
with the limited purposes of the trust.
Enforcement Rights of Holders of Preferred Securities
A holder of any preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the trust or any
other person. A default or event of default under any of our senior or
subordinated debt would not constitute a default or event of default under the
trust agreement. In the event, however, of payment defaults under, or
acceleration of, our senior or subordinated debt, the subordination provisions
of the indenture provide that no payments may be made in respect of the
debentures until the obligations have been paid in full or any payment default
has been cured or waived. Failure to make required payments on the debentures
would constitute an event of default under the trust agreement.
Limited Purpose of the Trust
The preferred securities evidence preferred undivided beneficial interests
in the assets of the trust. The trust exists for the exclusive purposes of
issuing the trust securities, investing the proceeds thereof in debentures and
engaging in only those other activities necessary, advisable or incidental
thereto. A principal difference between the rights of a holder of a preferred
security and the rights of a holder of a debenture is that a holder of a
debenture is entitled to receive from us the principal amount of and interest
accrued on debentures held, while a holder of preferred securities is entitled
to receive distributions from the trust, or from us under the guarantee
agreement, if and to the extent the trust has funds available for the payment of
the distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation
of the trust involving the liquidation of the debentures, the holders of the
preferred securities will be entitled to receive, out of assets held by the
trust, the liquidation distribution in cash. See "Description of the Preferred
Securities-Liquidation Distribution Upon Termination" beginning on page __.
Upon our voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the debentures, would be a subordinated creditor of ours.
Therefore, the property trustee would be subordinated in right of payment to all
of our senior and subordinated debt, but is entitled to receive payment in full
of principal and interest before any of our shareholders receive payments or
distributions. Since we are the guarantor under the guarantee and have agreed to
pay for all costs, expenses and liabilities of the trust other than the
obligations of the trust to pay to holders of the preferred securities the
amounts due to the holders pursuant to the terms of the preferred securities,
the positions of a holder of the preferred securities and a holder of the
debentures relative to our other creditors and to our stockholders in the event
of liquidation or bankruptcy are expected to be substantially the same.
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FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Silver, Freedman & Taff, L.L.P., special federal income
tax counsel to us and the trust, the following describes the material federal
income tax consequences of the purchase, ownership and disposition of a
preferred security.
This summary addresses only the tax consequences to a person that acquires
a preferred security on its original issuance at its original offering price and
that holds the preferred security as a capital asset. This summary does not
address all tax consequences that may be applicable to a beneficial owner of a
preferred security and does not address the tax consequences to holders subject
to special tax treatment, for example banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors or persons that will hold a
preferred security as a position in a "straddle," as part of a "synthetic
security" or "hedge" or as part of a "conversion transaction" or other
integrated investment. This summary does not include any description of any
alternative minimum tax consequences or other collateral tax consequences or
discuss the tax laws of any state or local government or of any foreign
government that may apply to the purchasing, owning or disposing of a preferred
security. This discussion is addressed to a "U.S. Holder," which is defined as a
beneficial owner of a preferred security that, for federal income tax purposes,
is, or is treated as:
o a citizen or individual resident of the United States;
o a corporation or partnership, or entity treated for federal income
tax purposes as a corporation or partnership, created or organized
in or under the laws of the United States or any state, including
the District of Columbia, or other political subdivision thereof;
o an estate the income of which is includible in gross income for
federal income tax purposes without regard to its source; or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the ability to control all substantial
decisions of the trust.
This summary does not address the special consequences to a non U.S.
Holder who acquires a preferred security. For purposes of this discussion, a
"Non U.S. Holder" generally is any corporation, individual, partnership, estate
or trust that is not a U.S. Holder for federal income tax purposes.
This summary does not address the tax consequences to any stockholder,
partner or beneficiary of a holder of a preferred security. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations issued thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. An opinion of Silver, Freedman & Taff,
L.L.P. is not
64
binding on the IRS or the courts. No rulings have been or are expected to be
sought from the IRS with respect to any of the matters described in this
offering memorandum. We can give no assurance that the opinions expressed will
not be challenged by the IRS or, if challenged, that the challenge will not be
successful.
Prospective investors are advised to consult with their own tax advisors
with respect to the tax consequences to them of the purchase, ownership and
disposition of the preferred securities, including the tax consequences under
state, local, foreign, and other tax laws and possible effects of changes in
such tax laws.
Classification of the Debentures
We intend to take the position that the debentures will be classified for
federal income tax purposes as our indebtedness. We, together with the trust and
the holders of the preferred securities agree to treat the debentures as our
indebtedness for all federal income tax purposes and, by acceptance of the
preferred securities treat such preferred securities as evidence of an indirect
beneficial ownership interest in the debentures. We cannot be sure, however,
that this position will not be challenged by the IRS or, if challenged, that the
challenge will not be successful. The remainder of this discussion assumes that
the debentures will be classified as our indebtedness for federal income tax
purposes.
Classification of the Trust
In connection with the issuance of the preferred securities, Silver,
Freedman & Taff, L.L.P. will render its opinion that, under then current law and
assuming full compliance with the terms of the trust agreement and the
indenture, and certain other documents, and based on certain facts and
assumptions contained in that opinion, the trust will be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for federal income tax purposes, the trust will not be
subject to federal income tax, and each holder of a preferred security will be
treated as owning an undivided beneficial interest in the preferred securities
and in the underlying debentures and will be required to include in its gross
income any interest, or original issue discount ("OID") accrued, with respect to
its allocable share of the debentures.
Interest Income and Original Issue Discount
Under the indenture, we have the right to defer the payment of interest on
the debentures at any time or from time to time for one or more deferral periods
not exceeding twenty (20) consecutive quarterly periods each, provided that no
deferral period shall end on a date other than an interest payment date or
extend beyond June 30, 2031. By reason of that right, the applicable Treasury
regulations will subject the debentures to the rules in the Code and Treasury
regulations on debt instruments issued with OID, unless the indenture or
debentures contain terms or conditions that make the likelihood of exercise of
the deferral option remote. Under the Treasury regulations, a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. We believe that the
likelihood that we would exercise our option to defer payments of interest is
remote since exercising that option
65
would, among other things, prevent us from declaring dividends on any class of
our equity securities. Accordingly, we intend to take the position that the
debentures will not be considered to be issued with OID by reason of the
deferral option alone and, accordingly, stated interest on the debentures
generally will be taxable to a holder as ordinary income at the time it is paid
or accrued in accordance with such holder's method of accounting for federal
income tax consequences.
Under the applicable Treasury regulations, if we were to exercise our
option to defer payments of interest, the debentures would at that time be
treated as reissued with OID, and all stated interest on the debentures would
thereafter be treated as OID for so long as the debentures remain outstanding.
If this occurred, all of a holder's interest income with respect to the
debentures would thereafter be accounted for on an economic accrual basis,
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as taxable income. Consequently, a
holder of a preferred security would be required to include OID in gross income
even though we would not make actual cash payments during a deferral period. The
amount of such includible OID could be significant. Also, under the Treasury
regulations, if the exercise of the option to defer the payment of interest were
determined not to be remote, the debentures would be treated as having been
originally issued with OID. In such event, a holder would be required to include
in gross income an amount equal to the sum of the daily portions of OID for each
day during the taxable year on which such holder held the preferred securities.
Regardless of such holder's method of tax accounting, a holder would be required
to include OID as ordinary income, over the term of the preferred securities, on
a truly economic accrual basis and actual cash payments of interest on the
debenture would not be separately includible in gross income. It is possible
that the IRS could take a position contrary to the interpretation described in
this prospectus.
Because income on the preferred securities will constitute interest or
OID, corporate holders of the preferred securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the preferred securities.
Receipt of Debentures or Cash upon Liquidation of the Trust
We will have the right at any time to liquidate the trust and cause the
debentures to be distributed to the holders of the preferred securities. Under
current law, the liquidation of the trust and the distribution of the debentures
to preferred security holders, for federal income tax purposes, would be treated
as a nontaxable event to each holder, and the aggregate tax basis in the
debentures received by such holder would be equal to the holder's aggregate tax
basis in its preferred securities surrendered. A holder's holding period in the
debentures received in liquidation of the trust would be the same as the holding
period that the holder had in the preferred securities surrendered.
The debentures may be redeemed for cash, and the proceeds of that
prepayment would be distributed to holders in redemption of their preferred
securities. Under current law, that redemption would constitute, for federal
income tax purposes, a taxable disposition of the redeemed preferred securities,
the tax consequences of which are described below under "-Sales or Redemptions
of Preferred Securities."
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Sales or Redemptions of Preferred Securities
On a sale or redemption of a preferred security for cash, a holder will
recognize gain or loss equal to the difference between its adjusted tax basis in
the preferred security and the amount realized on the sale or redemption of that
preferred security. If the rules regarding OID do not apply, a holder's adjusted
tax basis in a preferred security generally will be its initial purchase price,
and if the holder uses an accrual method of accounting, the holder's basis will
be increased by any accrued but unpaid interest. If the rules regarding OID
apply, a holder's adjusted tax basis in a preferred security generally will be
its initial purchase price increased by any OID previously included in the
holder's gross income to the date of disposition and decreased by any payments
received with respect to OID on the preferred security. Gain or loss recognized
on a sale or redemption of a preferred security will be capital gain or loss.
Capital gain recognized by an individual in respect of a preferred security held
for more than one year as of the date of sale or redemption is subject to a
maximum United States federal income tax rate of twenty percent.
The preferred securities may trade at a price that discounts any accrued
but unpaid interest, or OID, on the debentures. A holder who disposes of a
preferred security between distribution payment dates will be required to
include in its taxable income for United States federal income tax purposes (1)
any portion of the income realized that is attributable to the accrued but
unpaid interest, to the extent not previously included in income or (2) any
amount of OID that has accrued on its pro rata share of the underlying
debentures during the taxable year of sale through the date of disposition. Any
such income inclusion will increase a holder's adjusted tax basis in the
disposed preferred securities. To the extent that the amount realized in the
sale is less than the holder's adjusted tax basis in the preferred securities
sold, a holder will recognize a capital loss. Subject to a limited exception in
the case of individual taxpayers, capital losses cannot be applied to offset
ordinary income for federal income tax purposes.
Possible Tax Law Changes
In recent years there have been legislative proposals which, if enacted,
could have adversely affected our ability to deduct interest paid on the
debentures. These proposals were not enacted. There can be no assurance,
however, that legislation enacted after the date of this prospectus will not
adversely affect our ability to deduct the interest payable on the debentures.
Consequently, there can be no assurance that a Tax Event will not occur.
Backup Withholding Tax and Information Reporting
The amount of interest, including OID, accrued on preferred securities
held of record by a United States person, other than a corporation and other
exempt holders, will be reported to the IRS. "Backup" withholding at a rate of
thirty-one percent will apply to payments of interest to a non-exempt United
States person unless such holder furnishes its taxpayer identification number in
the manner prescribed in applicable Treasury regulations, certifies that the
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
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Payment of the proceeds from the disposition of preferred securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amount withheld from a holder under the backup withholding rules will
be allowed as a refund or credit against such holder's United States federal
income tax liability, provided the required information is furnished to the IRS.
It is anticipated that income on preferred securities for a calendar year
will be reported to holders on Form 1099, or any successor form, and mailed to
holders of preferred securities by the following January 31.
The federal income tax discussion set forth above is included for general
information only and may not be applicable depending upon a holder's particular
situation. You should consult your tax adviser with respect to the tax
consequences to you of the purchase, ownership and disposition of a preferred
security, including the tax consequences under state, local, foreign and other
tax laws and the possible effects of changes in federal or other tax laws.
ERISA CONSIDERATIONS
We and certain of our affiliates may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or a "disqualified person" within the meaning of
Section 4975 of the Code with respect to many employee benefit plans that are
subject to ERISA. The purchase of the preferred securities by a plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code and with respect to which
either we, or any affiliate of ours, is a service provider, or otherwise is a
party in interest or a disqualified person, may constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless the
preferred securities are acquired pursuant to and in accordance with an
applicable exemption.
Any plan fiduciary considering whether to purchase or hold any preferred
securities on behalf of a plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the prohibited transaction provisions of the Code to
such investment. Among other things, before purchasing any preferred securities,
a fiduciary of a plan that is subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA or to the prohibited transaction
provisions of the Code should make its own determination as to its compliance
with such applicable provisions, together with the availability, if needed, of
the exemptive relief provided in an exemption.
In addition, a plan fiduciary considering the purchase of preferred
securities should be aware that the assets of the trust may be considered "plan
assets" for ERISA purposes. In such event, any persons exercising discretion
with respect to the debentures may become fiduciaries,
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parties in interest or disqualified persons with respect to an investing plan.
Accordingly, each investing plan, by purchasing the preferred securities, will
be deemed to have directed the trust to invest in the debentures, consented to
the appointment of the property trustee, and made its own determination as to
the plan's compliance with the applicable provisions of the Code and ERISA,
insofar as they relate to persons exercising discretion with respect to the
preferred securities.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among
us, the trust and the underwriters named below, for whom Stifel, Nicolaus &
Company, Incorporated and Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated, are acting as representatives, the underwriters have severally
agreed to purchase from the trust, and the trust has agreed to sell to them, an
aggregate of 1,500,000 preferred securities in the amounts set forth below
opposite their names.
Number of Preferred
Underwriters Securities
- ---------------------------------------------------------- -------------------
Stifel, Nicolaus & Company, Incorporated..................
Dain Rauscher Incorporated................................
---------
Total..................................................... 1,500,000
=========
Under the terms and conditions of the underwriting agreement, the
underwriters are committed to accept and pay for all of the preferred
securities, if any are taken. If an underwriter defaults, the underwriting
agreement provides that the purchase commitments of the non-defaulting
underwriters may be increased or, in certain cases, the underwriting agreement
may be terminated. In the underwriting agreement, the obligations of the
underwriters are subject to approval of certain legal matters by their counsel,
including the authorization and the validity of the preferred securities, and to
other conditions contained in the underwriting agreement, such as receipt by the
underwriters of officers' certificates and legal opinions.
The underwriters propose to offer the preferred securities directly to the
public at the public offering price set forth on the cover page of this
prospectus, and to certain securities dealers (who may include the underwriters)
at this price, less a concession not in excess of $ per preferred security.
The underwriters may allow, and the selected dealers may reallow, a concession
not in excess of $ per preferred security to certain brokers and dealers.
After the preferred securities are released for sale to the public, the offering
price and other selling terms may, from time to time, be changed by the
underwriters.
The trust has granted to the underwriters an option, exercisable within 30
days after the date of this prospectus, to purchase up to 225,000 additional
preferred securities at the same price
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per preferred security as set forth in the table below. If the underwriters
purchase any of the additional preferred securities under this option, each
underwriter will be committed to purchase the additional shares in approximately
the same proportion allocated to them in the table above. The underwriters may
exercise the option only for the purpose of covering over-allotments, if any,
made in connection with the distribution of the preferred securities being
offered.
If the underwriters exercise their option to purchase additional preferred
securities, the trust will issue and sell to us additional common securities,
and we will issue and sell to the trust, debentures in an aggregate principal
amount equal to the total aggregate liquidation amount of the additional
preferred securities being purchased under the option and the additional common
securities sold to us.
The table below shows the price and proceeds on a per preferred security
and aggregate basis. The proceeds to be received by the trust, as shown in the
table below, do not reflect estimated expenses payable by us. See "Use of
Proceeds" on page ___.
Per Preferred Total with
Security Total Over-allotment
------------- ----------- --------------
Public offering price....................................... $10.00 $15,000,000 $17,250,000
Proceeds, before expenses, to the trust..................... $10.00 $15,000,000 $17,250,000
Underwriting commission..................................... $ $ $
Net proceeds to Great Southern Bancorp, Inc................. $ $ $
The offering of the preferred securities is made for delivery when, as and
if accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject any order for the purchase of the preferred
securities.
We and the trust have agreed to indemnify the underwriters against several
liabilities, including liabilities under the Securities Act of 1933.
We have applied to have the preferred securities designated for inclusion
in the Nasdaq National Market under the symbol "GSBCP," and trading is expected
to commence on or prior to delivery of the preferred securities. The
representatives have advised the trust that they presently intend to make a
market in the preferred securities after the commencement of trading in Nasdaq.
However, no assurances can be made as to the liquidity of the preferred
securities or that an active and liquid market will develop or, if developed,
that the market will continue. The offering price and distribution rate have
been determined by negotiations between the underwriters and us, and the
offering price of the preferred securities may not be indicative of the market
price following the offering. The representatives will have no obligation to
make a market in the preferred securities, however, and may cease market-making
activities, if commenced, at any time.
In connection with the offering, the underwriters may engage in
transactions that are intended to stabilize, maintain or otherwise affect the
price of the preferred securities during and after the offering, such as the
following:
70
o the underwriters may over-allot or otherwise create a short position
in the preferred securities for their own account by selling more
preferred securities than have been sold to them;
o the underwriters may elect to cover any short position by purchasing
preferred securities in the open market or by exercising the
over-allotment option;
o the underwriters may stabilize or maintain the price of the
preferred securities by bidding;
o the underwriters may engage in passive market making transactions;
and
o the underwriters may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-dealers
participating in this offering are reclaimed if preferred securities
previously distributed in the offering are repurchased in connection
with stabilization transactions or otherwise.
The effect of these transactions may be to stabilize or maintain the
market price at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the price of the
preferred securities to the extent that it discourages resales. No
representation is made as to the magnitude or effect of any such stabilization
or other transactions. Such transactions may be effected in the Nasdaq National
Market or otherwise and, if commenced, may be discontinued at any time.
Our subsidiary, Great Southern Capital Management, Inc., which does
business as Great Southern Investments, Inc., is participating in the selling
group in the offering of the preferred securities. Accordingly, the offer and
sale of the preferred securities is being made in compliance with the provisions
of Rule 2720 under the NASD Conduct Rules. That rule requires that the initial
offering price of the preferred securities may be no higher than that
recommended by a "qualified independent underwriter" that has conducted due
diligence investigations and has participated in the preparation of this
prospectus and the registration statement of which this prospectus is a part.
Stifel, Nicolaus & Company, Incorporated has agreed to assume these
responsibilities and is acting as the qualified independent underwriter for the
offer and sale of the preferred securities, in addition to its capacity as a
representative of the underwriters. Stifel, Nicolaus & Company, Incorporated
will receive no additional compensation for acting in the capacity of a
qualified independent underwriter; however, we have agreed to indemnify Stifel,
Nicolaus & Company, Incorporated additionally against certain liabilities it may
incur in connection with its responsibilities as a qualified independent
underwriter.
Because the National Association of Securities Dealers, Inc. may view the
preferred securities as interests in a direct participation program, the offer
and sale of the preferred securities is being made in compliance with the
provisions of Rule 2810 under the NASD Conduct Rules.
Certain of the underwriters and their affiliates have, from time to time,
performed investment banking and other services for us in the ordinary course of
business and have received fees from us for their services. In addition, we have
an existing margin account with Dain Rauscher Wessels through which we have
purchased from time to time marketable equity securities. This account is
maintained by us in the ordinary course of our business and has substantially
the same terms, including interest rates and collateral requirements as those
prevailing for comparable margin accounts held by other persons with Dain
Rauscher.
71
LEGAL MATTERS
Certain legal matters, including matters relating to federal income tax
considerations, for Great Southern Bancorp and the trust will be passed upon by
Silver, Freedman & Taff, L.L.P., Washington, D.C., counsel to Great Southern
Bancorp and the trust. Certain legal matters will be passed upon for the
underwriters by Bryan Cave LLP, St. Louis, Missouri. Silver, Freedman & Taff,
L.L.P. and Bryan Cave LLP will rely on the opinion of Richards, Layton & Finger,
P.A. as to certain matters of Delaware law.
EXPERTS
The consolidated financial statements of Great Southern Bancorp as of and
for the year ended December 31, 2000, that are incorporated by reference in our
Annual Report on Form 10-K for the year ended December 31, 2000, have been
audited by Baird, Kurtz and Dobson, independent public accountants, as stated in
their report dated February 2, 2001. These consolidated financial statements are
incorporated by reference in this prospectus in reliance on their report dated
February 2, 2001, given on the authority of said firm as experts in accounting
and auditing.
WHERE YOU CAN GET MORE INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 filed by
us and the trust with the SEC under the Securities Act, with respect to the
preferred securities, the debentures and the guarantee. This prospectus does not
contain all the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. For further information with respect to us and the securities offered by
this prospectus, reference is made to the registration statement, including the
exhibits to the registration statement and documents incorporated by reference.
Statements contained in this prospectus concerning the provisions of such
documents are necessarily summaries of such documents and each such statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
We file periodic reports, proxy statements and other information with the
SEC. Our filings are available to the public over the Internet at the SEC's web
site at http://www.sec.gov. You may also inspect and copy these materials at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information.
The trust is not currently subject to the information reporting
requirements of the Securities Exchange Act of 1934 and, although the trust will
become subject to such requirements upon the effectiveness of the registration
statement, it is not expected that the trust will file separate reports under
the Exchange Act.
72
Each holder of the trust securities will receive a copy of our annual
report at the same time as we furnish the annual report to the holders of our
common stock.
DOCUMENTS INCORPORATED BY REFERENCE
We "incorporate by reference" into this prospectus the information in
documents we file with the SEC, which means that we can disclose important
information to you through those documents. The information incorporated by
reference is an important part of this prospectus. Some information contained in
this prospectus updates the information incorporated by reference and some
information that we file subsequently with the SEC will automatically update
this prospectus. We incorporate by reference our Annual Report on Form 10-K for
the year ended December 31, 2000, filed with the SEC on March __, 2001.
We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the initial filing of the registration statement that contains this prospectus
and before the time that all of the securities offered in this prospectus are
sold.
You may request, and we will provide, a copy of these filings at no cost
by contacting Rex A. Copeland, our Treasurer, at the following address and phone
number:
Great Southern Bancorp, Inc.
P.O. Box 9009
Springfield, MO 65808
(417) 887-4400
73
================================================================================
TABLE OF CONTENTS
Page
----
Prospectus Summary.............................................................
Selected Consolidated Financial Data...........................................
Risk Factors...................................................................
Special Note Regarding Forward-Looking
Statements.................................................................
Use of Proceeds................................................................
Capitalization.................................................................
Accounting and Regulatory Treatment............................................
Management.....................................................................
Description of the Trust.......................................................
Description of Preferred Securities............................................
Description of the Debentures..................................................
Book-Entry Issuance............................................................
Description of the Guarantee...................................................
Relationship among the Preferred Securities,
the Debentures and the Guarantee...........................................
Federal Income Tax Consequences................................................
ERISA Considerations...........................................................
Underwriting..................................................................
Legal Matters..................................................................
Experts.......................................................................
Where You Can Get More Information.............................................
Documents Incorporated by Reference............................................
o You should only rely on the information contained or incorporated by
reference in this prospectus. We have not, and our underwriters have not,
authorized any person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not
rely on it.
o We are not, and our underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
o You should assume that the information appearing in this prospectus is
accurate as of the date on the front cover of this prospectus only.
o This prospectus does not constitute an offer to sell, or the solicitation
of an offer to buy, any securities other than the securities to which it
relates.
================================================================================
================================================================================
1,500,000 Preferred Securities
GREAT SOUTHERN
CAPITAL TRUST I
% Cumulative Trust
Preferred Securities
(Liquidation Amount $10 per
Preferred Security)
Fully, irrevocably and unconditionally
guaranteed on a subordinated basis, as
described in this prospectus, by
GREAT SOUTHERN
BANCORP, INC.
----------
[LOGO]
$15,000,000
% Subordinated Debentures
of
GREAT SOUTHERN
BANCORP, INC.
----------
Prospectus
___________, 2001
----------
Stifel, Nicolaus & Company
Incorporated
Dain Rauscher Wessels
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable in connection
with the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of such expenses will be paid by
Great Southern Bancorp, Inc. All amounts shown are estimates, except the SEC
registration fee and the NASD and the Nasdaq National Market filing fees:
SEC registration fee.............................................. $ 4,313
NASD filing fee................................................... 2,225
Nasdaq National Market filing fee................................. 38,750
Trustees' fees and expenses....................................... 17,500
Printing and mailing expenses..................................... 40,000
Fees and expenses of counsel...................................... 125,000
Accounting and related expenses................................... 10,000
Blue Sky fees and expenses........................................ 2,500
Miscellaneous..................................................... 9,712
---------
Total.................................................. $ 250,000
=========
Item 15. Indemnification of Directors and Officers.
In accordance with the General Corporation Law of the State of Delaware,
Articles Eleventh and Twelfth of Great Southern Bancorp's Certificate of
Incorporation provide as follows:
ELEVENTH:
A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or
was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an
II-1
official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith; provided,
however, that, except as provided in Section C hereof with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this
Article shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses"); provided, however,
that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered
by such indemnitee, including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right
to appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Section or
otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article shall be contract
rights and such rights shall continue as to an indemnitee who has ceased
to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be
twenty days, the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the indemnitee shall also be entitled to be paid the
expense of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in
a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking the Corporation shall be entitled to recover such expenses
upon a final adjudication that, the indemnitee has not
II-2
met any applicable standard for indemnification set forth in the Delaware
General Corporation Law. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders) to
have made a determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the circumstances because
the indemnitee has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the indemnitee has
not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought
by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
burden of proving that the indemnitee is not entitled to be indemnified,
or to such advancement of expenses, under this Article or otherwise shall
be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, By-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of
the Corporation.
TWELFTH: A director of this Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further eliminate or limit the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended.
II-3
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's Board of Directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a proceeding
by or in the right of such other corporation or enterprise. Indemnification is
permitted where such person (i) was acting in good faith; (ii) was acting in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation or other corporation or enterprise, as appropriate; (iii) with
respect to a criminal proceeding, has no reasonable cause to believe his conduct
was unlawful; and (iv) was not adjudged to be liable to the corporation or other
corporation or enterprise (unless the court where the proceeding was brought
determines that such person is fairly and reasonably entitled to indemnity).
Unless ordered by a court, indemnification of directors and officers may
be made only following a determination that such indemnification is permissible
because the person being indemnified has met the requisite standard of conduct.
Such determination may be made (i) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a quorum,
or (ii) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iv) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation against such expenses.
Under a directors' and officers' liability insurance policy, directors and
officers of the Great Southern Bancorp are insured against certain liabilities,
including certain liabilities under the Securities Act of 1933.
Under the Form of Underwriting Agreement filed as an exhibit hereto, the
underwriters named therein will agree to indemnify, under certain conditions,
the Registrants, their officers and directors and persons who control the
Registrants, within the meaning of the Securities Act of 1933, against certain
liabilities.
II-4
Item 16. Exhibits.
- -------- ---------
Exhibit
Number Description
------ -----------
1.1 Form of Underwriting Agreement.
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as Exhibit A to Exhibit
4.1).
4.3 Certificate of Trust of Great Southern Capital Trust I.
4.4 Trust Agreement.
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Common Securities Certificate (included as Exhibit B to
Exhibit 4.5).
4.7 Form of Expense Agreement (included as Exhibit C to Exhibit 4.5).
4.8 Form of Preferred Securities Certificate (included as Exhibit D to
Exhibit 4.5).
4.9 Form of Preferred Securities Guarantee Agreement.
5.1 Opinion of Silver, Freedman & Taff, L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Silver, Freedman & Taff, L.L.P. as to certain federal
income tax matters.
12.1 Calculation of ratios of earnings to fixed charges.
23.1 Consent of Baird, Kurtz & Dobson
23.2 Consent of Silver, Freedman & Taff, L.L.P. (included in opinions
filed as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger, P.A. (included in opinion
filed as Exhibit 5.2).
24.1 Powers of Attorney (included as part of signature pages).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.1 Trust Company, as trustee under
the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.2 Trust Company, as trustee under
the Trust Agreement.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.3 Trust Company, as trustee under
the Preferred Securities Guarantee Agreement.
II-5
Item 17. Undertakings.
- -------- -------------
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in 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.
(f) The undersigned Registrants hereby undertake to provide to the
underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as
required by the underwriters to permit prompt delivery to each purchaser.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrants 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 that 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, each Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(i) The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Great Southern
Bancorp, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Springfield, State of Missouri, on March 28,
2001.
GREAT SOUTHERN BANCORP, INC.
By: /s/ Joseph W. Turner
--------------------------------
Joseph W. Turner
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, Great
Southern Capital Trust I certifies that it has reasonable grounds to believe
that it meets all of the requirements of filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Springfield, State of Missouri, on
March 28, 2001.
GREAT SOUTHERN CAPITAL TRUST I
By: /s/ Joseph W. Turner
--------------------------------
Joseph W. Turner, Trustee
By: /s/ Rex A. Copeland
--------------------------------
Rex A. Copeland, Trustee
By: /s/ Larry A. Larimore
--------------------------------
Larry A. Larimore, Trustee
II-7
POWER OF ATTORNEY
We, the undersigned officers and directors of Great Southern Bancorp,
Inc., hereby severally and individually constitute and appoint Joseph W. Turner
and Rex A. Copeland, and each of them, the true and lawful attorneys and agents
of each of us to execute in the name, place and stead of each of us
(individually and in any capacity stated below) any and all amendments
(including post-effective amendments) to this Registration Statement and all
instruments necessary or advisable in connection therewith and to file the same
with the Securities and Exchange Commission, each of said attorneys and agents
to have the power to act with or without the others and to have full power and
authority to do and perform in the name and on behalf of each of the undersigned
every act whatsoever necessary or advisable to be done in the premises as fully
and to all intents and purposes as any of the undersigned might or could do in
person, and we hereby ratify and confirm our signatures as they may be signed by
our said attorneys and agents or each of them to any and all such amendments and
instruments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Joseph W. Turner President, Chief Executive Officer and Director
- ---------------------------------- (Principal Executive Officer) March 28, 2001
Joseph W. Turner
/s/ William V. Turner Chairman of the Board March 28, 2001
- ----------------------------------
William V. Turner
/s/ Rex A. Copeland Treasurer
- ---------------------------------- (Principal Financial Officer and
Rex A. Copeland Principal Accounting Officer) March 28, 2001
/s/ William E. Barclay Director March 28, 2001
- ----------------------------------
William E. Barclay
/s/ Larry D. Frazier Director March 28, 2001
- ----------------------------------
Larry D. Frazier
/s/ Thomas J. Carlson Director March 28, 2001
- ----------------------------------
Thomas J. Carlson
II-8
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
1.1 Form of Underwriting Agreement.
4.1 Form of Indenture.
4.2 Form of Subordinated Debenture (included as Exhibit A to Exhibit
4.1).
4.3 Certificate of Trust of Great Southern Capital Trust I.
4.4 Trust Agreement.
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Common Securities Certificate (included as Exhibit B to
Exhibit 4.5).
4.7 Form of Expense Agreement (included as Exhibit C to Exhibit 4.5).
4.8 Form of Preferred Securities Certificate (included as Exhibit D to
Exhibit 4.5).
4.9 Form of Preferred Securities Guarantee Agreement.
5.1 Opinion of Silver, Freedman & Taff, L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Silver, Freedman & Taff, L.L.P. as to certain federal
income tax matters.
12.1 Calculation of ratios of earnings to fixed charges.
23.1 Consent of Baird, Kurtz & Dobson
23.2 Consent of Silver, Freedman & Taff, L.L.P. (included in opinions
filed as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger, P.A. (included in opinion
filed as Exhibit 5.2).
24.1 Powers of Attorney (included as part of signature pages).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.1 Trust Company, as trustee under
the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.2 Trust Company, as trustee under
the Trust Agreement.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington 25.3 Trust Company, as trustee under
the Preferred Securities Guarantee Agreement.