<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1997
REGISTRATION NOS. 333-29019 AND 333-29019-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
SUMMIT BANCORP. SUMMIT CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS
(EXACT NAME OF REGISTRANT AS SPECIFIED
SPECIFIED IN ITS CHARTER) IN ITS TRUST AGREEMENT)
NEW JERSEY DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
------------------------ ------------------------
6711 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
22-1903313 22-6729413
(I.R.S. EMPLOYER (I.R.S. EMPLOYER
IDENTIFICATION NO.) IDENTIFICATION NO.)
</TABLE>
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301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
RICHARD F. OBER, JR., ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SUMMIT BANCORP
301 CARNEGIE CENTER, P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENTS FOR SERVICE)
------------------------
COPIES TO:
MITCHELL KLEINMAN, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
SUMMIT CAPITAL TRUST I
OFFER TO EXCHANGE ITS 8.40% SERIES B CAPITAL TRUST PASS-THROUGH SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF
ITS OUTSTANDING
8.40% CAPITAL TRUST PASS-THROUGH SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
SUMMIT BANCORP.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON SEPTEMBER 2, 1997, UNLESS EXTENDED.
Summit Capital Trust I, a trust formed under the laws of the State of Delaware
(the "Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus (as the same may be amended or supplemented from time
to time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to $150,000,000
aggregate Liquidation Amount (as defined herein) of its 8.40% Series B Capital
Trust Pass-Through Securities (the "New Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of its outstanding
8.40% Capital Trust Pass-Through Securities (the "Old Capital Securities"), of
which $150,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, Summit Bancorp, a New Jersey corporation (the "Corporation"), is
also offering to exchange (i) its guarantee of payments of cash distributions
and payments on liquidation of the Trust or redemption of the New Capital
Securities (the "New Guarantee") for a like guarantee in respect of the Old
Capital Securities (the "Old Guarantee") and (ii) all of its 8.40% Series B
Junior Subordinated Deferrable Interest Debentures due March 15, 2027 (the "New
Junior Subordinated Debentures") for a like aggregate principal amount of its
8.40% Junior Subordinated Deferrable Interest Debentures due March 15, 2027 (the
"Old Junior Subordinated Debentures"), which New Guarantee and New Junior
Subordinated Debentures also have been registered under the Securities Act. The
Old Capital Securities, the Old Guarantee and the Old Junior Subordinated
Debentures are collectively referred to herein as the "Old Securities" and the
New Capital Securities, the New Guarantee and the New Junior Subordinated
Debentures are collectively referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to the
respective terms of the Old Securities, except that the New Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Securities, New Junior
Subordinated Debentures will not provide for any increase in the Distribution
rate thereon, and the New Junior Subordinated Debentures will not provide for
any increase in the interest rate thereon. See "Description of New Securities"
and "Description of Old Securities." The New Capital Securities are being
offered for exchange in order to satisfy certain obligations of the Corporation
and the Trust under the Registration Rights Agreement dated as of March 20, 1997
(the "Registration Rights Agreement") among the Corporation, the Trust and the
Initial Purchasers (as defined herein). In the event that the Exchange Offer is
consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding Liquidation Amount
thereof have taken certain actions or exercised certain rights under the
Declaration (as defined herein).
(Continued on the following page)
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST BEING MAILED TO ALL
HOLDERS OF OLD CAPITAL SECURITIES ON JULY 31, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 16 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL SECURITIES IN
THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July 30, 1997.
<PAGE> 3
(Continued from cover page)
The New Capital Securities and the Old Capital Securities (collectively,
the "Capital Securities") represent beneficial interests in the assets of the
Trust. The Corporation is the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities," and
together with the Capital Securities, the "Trust Securities"). The First
National Bank of Chicago is the Institutional Trustee (the "Institutional
Trustee"), of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in the Junior Subordinated
Debentures (as defined herein). The Junior Subordinated Debentures will mature
on March 15, 2027 (the "Stated Maturity Date"). The Capital Securities will have
a preference over the Common Securities under certain circumstances with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of New Securities -- Description of New Capital
Securities -- General."
As used herein, (i) the "Indenture" means the Indenture, dated as of March
20, 1997, as amended and supplemented from time to time, between the Corporation
and The First National Bank of Chicago, as Debenture Trustee (the "Debenture
Trustee"), (ii) the "Declaration" means the Amended and Restated Declaration of
Trust relating to the Trust among the Corporation, as Sponsor, The First
National Bank of Chicago, as Institutional Trustee, First Chicago Delaware Inc.,
as Delaware Trustee (the "Delaware Trustee"), and the Administrators named
therein (collectively, with the Institutional Trustee and Delaware Trustee, the
"Issuer Trustees"). In addition, as the context may require, unless otherwise
expressly stated, (i) the term "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(ii) the term "Guarantee" includes the Old Guarantee and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
preferential cumulative cash distributions arising from the payment of interest
on the Junior Subordinated Debentures, accruing from March 20, 1997, and payable
semi-annually in arrears on March 15 and September 15 of each year, commencing
September 15, 1997, at the annual rate of 8.40% of the Liquidation Amount of
$1,000 per New Capital Security ("Distributions"). The Corporation will have the
right to defer payments of interest on the Junior Subordinated Debentures at any
time and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity Date.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Corporation may elect to begin a new Extension Period, subject to
the requirements set forth in the Indenture. If and for so long as interest
payments on the Junior Subordinated Debentures are so deferred, Distributions on
the Trust Securities will also be deferred and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay any
cash distributions with respect to the Corporation's capital stock (which
includes common and preferred stock) or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Securities are entitled will accumulate) at the
rate of 8.40% per annum, compounded semi-annually, and holders of Trust
Securities will be required to accrue interest income for United States federal
income tax purposes. See "Description of New Securities -- Description of New
Junior Subordinated Debentures -- Option to Extend Interest Payment Period" and
"United States Federal Income Taxation -- US Holders -- Original Issue
Discount."
Through the Guarantee, the guarantee agreement of the Corporation relating
to the Common Securities (the "Common Guarantee"), the Declaration, the Junior
Subordinated Debentures and the Indenture, taken together, the Corporation has
guaranteed or will guarantee, as the case may be, fully, irrevocably and
unconditionally, all of the Trust's obligations under the Trust Securities. See
"Effect of Obligations under the Junior Subordinated Debentures and the
Guarantee." The Old Guarantee and the Common Guarantee guarantees, and the New
Guarantee will guarantee, payments of Distributions and payments on liquidation
of the Trust or redemption of the Trust Securities, but in each case only to the
extent that the Trust holds funds on hand legally available therefor and has
failed to make such payments, as described herein. See "Description of New
Securities -- Description of New Guarantee." If the Corporation fails to make a
required payment on the Junior Subordinated Debentures, the Trust will
i
<PAGE> 4
(Continued from cover page)
not have sufficient funds to make the related payments, including Distributions,
on the Trust Securities. The Guarantee and the Common Guarantee will not cover
any such payment when the Trust does not have sufficient funds on hand legally
available therefor. In such event, a holder of Capital Securities may institute
a legal proceeding directly against the Corporation to enforce its rights in
respect of such payment. See "Description of New Securities -- Description of
New Guarantee -- General." The obligations of the Corporation under the
Guarantee, the Common Guarantee and the Junior Subordinated Debentures will rank
subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of New Securities -- Description of New Junior
Subordinated Debentures -- Subordination").
Unless a Tax Event or a Capital Treatment Event (each as defined herein)
has occurred, the Capital Securities will not be redeemable prior to March 15,
2007. If a Tax Event or a Capital Treatment Event shall occur and be continuing,
the Corporation will have the right, at any time, to either (i) redeem within 90
days following the occurrence of such Tax Event or Capital Treatment Event the
Junior Subordinated Debentures in whole (but not part), at par, plus any accrued
and unpaid interest thereon to the date of the redemption or (ii) dissolve the
Trust and, after the Trust's satisfaction of the liabilities to creditors of the
Trust (to the extent not satisfied by the Corporation), cause the Junior
Subordinated Debentures to be distributed to holders of the Capital Securities
in liquidation of the Trust. Furthermore, the right of the Corporation to redeem
the Junior Subordinated Debentures upon the occurrence of a Tax Event under
clause (i) above is subject to receipt by the Corporation of an opinion of a
nationally recognized independent counsel experienced in tax and bank regulatory
matters that, notwithstanding the exercise by the Corporation of such rights
described under clause (ii) above, either (x) such Tax Event would still exist
or (y) the Junior Subordinated Debentures would not constitute Tier 1 Capital
(or its then equivalent) of a bank holding company. Under the current applicable
capital guidelines and policies of the Board of Governors of the Federal Reserve
System (the "Federal Reserve"), the Junior Subordinated Debentures would not
constitute Tier 1 Capital upon distribution to holders of the Capital
Securities. In addition, the Junior Subordinated Debentures may be redeemed by
the Corporation, in whole or in part, at any time and from time to time on or
after March 15, 2007 (the "Optional Redemption"), at the Call Price (as defined
herein). In each case, the right of the Corporation to redeem the Junior
Subordinated Debentures is subject to the Corporation having received prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon the repayment of the Junior Subordinated Debentures held by the Trust,
whether at maturity or upon early redemption, the proceeds from such repayment
shall concurrently be applied on a pro rata basis to redeem Trust Securities
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the Junior Subordinated Debentures being repaid at a redemption price equal
to (i) $1,000 per Trust Security in the case of a redemption upon the maturity
of the Junior Subordinated Debentures or redemption of the Junior Subordinated
Debentures upon the occurrence of a Tax Event or a Capital Treatment Event,
subject to certain conditions provided herein and (ii) an amount per Trust
Security equal to the product of $1,000 and the applicable percentage used to
determine the Call Price for the Junior Subordinated Debentures being redeemed
in the case of any Optional Redemption of Junior Subordinated Debentures plus,
in all cases, accrued and unpaid distributions on such Trust Securities to the
date fixed for redemption (the price specified in clauses (i) and (ii) being
referred to herein as the "Redemption Price"); provided, however, that holders
of such Trust Securities shall be given not less than 30 nor more than 60 days'
notice of such redemption (other than at maturity of the Junior Subordinated
Debentures). See "Description of New Securities -- Description of New Capital
Securities -- Redemption" and "-- Description of New Junior Subordinated
Debentures."
The Corporation, as the holder of all of the outstanding Common Securities,
has the right at any time, subject to the receipt of prior approval by the
Federal Reserve if then required under applicable capital guidelines or policies
of the Federal Reserve, to dissolve the Trust (including, without limitation,
upon the occurrence of a Tax Event or a Capital Treatment Event) and, after the
Trust's satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Corporation), to cause the Junior Subordinated
ii
<PAGE> 5
(Continued from cover page)
Debentures to be distributed to the holders of the Trust Securities, on a pro
rata basis, in accordance with the aggregate Liquidation Amount thereof, in
liquidation of the Trust.
In the event of the voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, other than in connection with a
redemption or the maturity of the Junior Subordinated Debentures as described
above, after satisfaction of liabilities to creditors of the Trust (to the
extent not satisfied by the Corporation), holders of the Capital Securities
generally will be entitled to receive the Liquidation Amount thereof plus
accrued and unpaid distributions thereon to the date of payment, unless, in
connection with such dissolution, the Junior Subordinated Debentures held by the
Trust are distributed to the holders of the Trust Securities as would be
required in certain circumstances. See "Description of New
Securities -- Description of New Capital Securities -- Liquidation Distribution
Upon Dissolution."
------------------------
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Corporation nor the Trust has sought its own interpretive
letter and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject to the two immediately
following sentences, the Corporation and the Trust believe that New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate", as such term is defined in Rule 405 under the Securities Act
(an "Affiliate"), of the Corporation or the Trust or who intends to participate
in the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust for resale
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Corporation or the Trust,
(ii) any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Corporation and the Trust may require such holder,
as a condition to such holder's eligibility to participate in the Exchange
Offer, to furnish to the Corporation and the Trust (or an agent thereof) in
writing information as to the number of "beneficial owners" (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) on behalf
of whom such holder holds the Capital Securities to be exchanged in the Exchange
Offer. Each broker-dealer that receives New Capital
iii
<PAGE> 6
(Continued from cover page)
Securities for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal (as defined herein) states that, by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Corporation and the Trust
believe that broker-dealers who acquired Old Capital Securities for their own
accounts, as a result of market-making activities or other trading activities
("Participating Broker-Dealers"), may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
180 days after the Expiration Time (as defined herein) (subject to the right of
the Corporation to suspend such use for no more than two periods of up to 45
days each) or, if earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution."
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Capital Securities received in exchange for
Old Capital Securities pursuant to the Exchange Offer must notify the
Corporation or the Trust, or cause the Corporation or the Trust to be notified,
on or prior to the Expiration Time, that it is a Participating Broker-Dealer.
Such notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent (as defined herein) at one
of the addresses set forth herein under "The Exchange Offer -- Exchange Agent."
Any Participating Broker-Dealer who is an Affiliate of the Corporation or the
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer -- Resales of
New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein), that, upon receipt of notice from the Corporation or the Trust
of the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Capital Securities (or the New Guarantee or the New Junior
Subordinated Debentures, as applicable) pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debentures, as applicable) may
be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed the Corporation and the Trust that
iv
<PAGE> 7
(Continued from cover page)
they each currently intend to make a market in the New Capital Securities, they
are not obligated to do so, and any such market making may be discontinued at
any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. The
Corporation and the Trust currently do not intend to apply for listing of the
New Capital Securities on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System
("NASDAQ").
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration (except
for those rights which terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Corporation nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
held by them. To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on September 2, 1997 (such time on such date being
hereinafter called the "Expiration Time"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Time" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Time. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms and provisions of
the Registration Rights Agreement. Old Capital Securities may be tendered in
whole or in part having an aggregate Liquidation Amount of not less than
$100,000 (100 Old Capital Securities) or any integral multiple of $1,000
Liquidation Amount (one Old Capital Security) in excess thereof. The Corporation
has agreed to pay all expenses of the Exchange Offer. See "The Exchange
Offer -- Fees and Expenses." Holders of the Old Capital Securities whose Old
Capital Securities are accepted for exchange will not receive Distributions on
such Old Capital Securities and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
including March 20, 1997. Accordingly, holders of New Capital Securities as of
the record date for the payment of Distributions on September 15, 1997 will be
entitled to receive Distributions accumulated from and including March 20, 1997.
See "The Exchange Offer -- Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
------------------------
v
<PAGE> 8
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE PURSUANT HERETO SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................................................................. 4
Incorporation of Certain Documents by Reference....................................... 4
Summary............................................................................... 6
Risk Factors.......................................................................... 16
Summit Bancorp........................................................................ 22
Recent Developments................................................................... 23
Consolidated Summary of Selected Financial Data of the Corporation.................... 24
Capitalization........................................................................ 25
Accounting Treatment.................................................................. 26
Regulatory Treatment.................................................................. 26
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends........................................................... 26
Use of Proceeds....................................................................... 27
The Trust............................................................................. 28
The Exchange Offer.................................................................... 29
Description of New Securities......................................................... 38
Description of Old Securities......................................................... 64
Effect of Obligations under the New Junior Subordinated Debentures and the New
Guarantee........................................................................... 65
United States Federal Income Taxation................................................. 67
Plan of Distribution.................................................................. 71
ERISA Considerations.................................................................. 72
Legal Matters......................................................................... 73
Experts............................................................................... 73
</TABLE>
3
<PAGE> 9
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov.). In addition, such reports,
proxy statements and other information concerning the Corporation can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, on which certain securities of the Corporation are
listed.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the New Capital Securities because the Trust is
a newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Junior Subordinated Debentures and
issuing the Trust Securities. See "The Trust" and "Description of New
Securities." In addition, the Corporation does not expect that the Trust will
file reports under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Corporation and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the New Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996 ("Annual Report");
2. The Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997; and
3. The Corporation's Current Reports on Form 8-K dated February 27,
1997, March 7, 1997, April 30, 1997 and July 28, 1997.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the Exchange Offer shall be deemed to be incorporated by
reference into this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Such incorporation by reference will not be deemed
to specifically incorporate by reference the information referred to in Item
402(a)(8) of Regulation S-K. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
4
<PAGE> 10
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. The Corporation will provide
without charge to any person to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated by reference herein (other than exhibits not specifically
incorporated by reference into the texts of such documents). Requests for such
documents should be directed to: Richard F. Ober, Jr., Secretary, Summit
Bancorp., 301 Carnegie Center, P.O. Box 2066, Princeton, New Jersey 08543-2066
(telephone (609) 987-3442. In order to ensure timely delivery of the documents,
any request should be made by August 25, 1997.
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<PAGE> 11
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference
herein. Prospective investors should consider carefully the factors set forth
herein under "Risk Factors." As used in this Prospectus, the "Corporation"
includes Summit Bancorp. and its respective predecessors and subsidiaries
considered as a single enterprise, except as the context otherwise may require.
SUMMIT CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust dated as of March 12, 1997 (the "Initial
Declaration"), and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on March 12, 1997. The Trust's business and affairs are
conducted by its trustees: initially, The First National Bank of Chicago, as
Institutional Trustee and First Chicago Delaware Inc., as Delaware Trustee. The
Trust exists for the exclusive purposes of (i) issuing the Trust Securities,
(ii) investing the gross proceeds from the sale of the Common Securities and the
Capital Securities to acquire the Junior Subordinated Debentures, and (iii)
engaging in only those other activities necessary or incidental thereto, which
may include engaging in the Exchange Offer. Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Trust, and payments under the Junior
Subordinated Debentures will be the sole revenues of the Trust. All of the
Common Securities will be owned by the Corporation. The principal place of
business of the Trust is c/o Summit Bancorp., 301 Carnegie Center, P.O. Box
2066, Princeton, NJ 08543-2066 (telephone number (609) 987-3200).
SUMMIT BANCORP.
Summit Bancorp., a New Jersey corporation and registered bank holding
company with its principal executive offices at 301 Carnegie Center, Princeton,
New Jersey, through its wholly-owned subsidiary banks, Summit Bank (Hackensack,
NJ), Summit Bank (Bethlehem, PA) and the Bank of Mid-Jersey, operated 385
banking offices located in New Jersey and eastern Pennsylvania as of March 31,
1997. The Corporation's telephone number is (609) 987-3200. The subsidiary banks
of the Corporation are engaged in a general banking business. They offer demand
and interest bearing deposit accounts, make business, real estate, personal and
installment loans, and provide lease financing, fiduciary, investment
management, investment advisory, custodial, correspondent and treasury services
and insurance and nondeposit investment products and services. In addition, the
Corporation owns subsidiaries that are engaged in discount brokerage, commercial
finance lending, lease financing and reinsuring credit life and disability
insurance polices related to consumer loans made by the subsidiary banks.
On February 28, 1997, the Corporation announced a definitive merger
agreement to acquire Collective Bancorp, Inc. ("Collective"). Collective was
formed in 1988 as a Delaware corporation, headquartered in Cologne, New Jersey,
to acquire all of the capital stock of Collective Bank, organized in 1927.
Collective is a non-diversified unitary savings and loan holding company which
conducts its operations through its federally insured savings bank subsidiary,
Collective Bank. Collective Bank is subject to extensive regulation, supervision
and examination by the Office of Thrift Supervision, its chartering authority
and primary regulator.
At March 31, 1997, Collective operated 82 offices in 15 New Jersey
counties; 44 offices in southern New Jersey, 19 in central New Jersey and 19 in
northern New Jersey. At March 31, 1997, Collective had total assets of $5.5
billion, loans of $2.9 billion and deposits of $3.5 billion. For the fiscal year
ended June 30, 1996, Collective's net income amounted to $54.5 million. For the
nine months ended March 31, 1997, Collective's net income amounted to $35.5
million ($46.0 million without the effect of the Savings Association Insurance
Fund ("SAIF") recapitalization assessment). The transaction is anticipated to be
accounted for as a pooling-of-interests in an exchange of .895 shares of the
Corporation's common stock for each share of Collective common stock. At March
31, 1997, there were approximately 20.4 million
6
<PAGE> 12
shares of Collective common stock issued and outstanding. It is anticipated that
there will be an increase of approximately 19% of the Corporation's outstanding
shares after the consummation of the transaction. This transaction is
anticipated to be consummated in the third quarter of 1997.
The principal executive offices of the Corporation are located at 301
Carnegie Center, P.O. Box 2066, Princeton, NJ 08543-2066 (telephone number (609)
987-3200).
THE EXCHANGE OFFER
The Exchange Offer......... Up to $150,000,000 aggregate Liquidation Amount of
New Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount of
Old Capital Securities. Old Capital Securities may
be tendered for exchange in whole or in part in a
Liquidation Amount of $100,000 (100 Old Capital
Securities) or any integral multiple of $1,000 (one
Old Capital Security) in excess thereof. The
Corporation and the Trust are making the Exchange
Offer in order to satisfy their obligations under
the Registration Rights Agreement relating to the
Old Capital Securities. For a description of the
procedures for tendering Old Capital Securities,
see "The Exchange Offer -- Procedures for Tendering
Old Capital Securities."
Expiration Time............ 5:00 p.m., New York City time, on September 2,
1997, unless the Exchange Offer is extended by the
Corporation or the Trust (in which case the
Expiration Time will be the latest date and time to
which the Exchange Offer is extended). See "The
Exchange Offer -- Terms of the Exchange Offer."
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain
conditions, which may be waived by the Corporation
and the Trust in their sole discretion. The
Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to
the Exchange Offer."
The Corporation and the Trust reserve the right in
their sole and absolute discretion, subject to
applicable law, at any time and from time to time,
(i) to delay the acceptance of the Old Capital
Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions have
not been satisfied, (iii) to extend the Expiration
Time of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of
holders of Old Capital Securities to withdraw their
tendered Old Capital Securities, or (iv) to waive
any condition or otherwise amend the terms of the
Exchange Offer in any respect. See "The Exchange
Offer -- Terms of the Exchange Offer."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Time by
delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities..... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in
compliance
7
<PAGE> 13
with the specified procedures for guaranteed
delivery of Old Capital Securities. Certain
brokers, dealers, commercial banks, trust companies
and other nominees may also effect tenders by
book-entry transfer, including an Agent's Message
in lieu of a Letter of Transmittal. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Corporation or the Trust. Such
documents should only be sent to the Exchange
Agent.
Resales of New Capital
Securities............... The Corporation and the Trust are making the
Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the
Commission as set forth in certain interpretive
letters addressed to third parties in other
transactions. However, neither the Corporation nor
the Trust has sought its own interpretive letter
and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission
would make a similar determination with respect to
the Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance of the Commission, and subject
to the two immediately following sentences, the
Corporation and the Trust believe that New Capital
Securities issued pursuant to this Exchange Offer
in exchange for Old Capital Securities may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that such New Capital Securities are
acquired in the ordinary course of such holder's
business and that such holder is not participating,
and has no arrangement or understanding with any
person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital
Securities. However, any holder of Old Capital
Securities who is an Affiliate of the Corporation
or the Trust or who intends to participate in the
Exchange Offer for the purpose of distributing the
New Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the Trust
for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (a)
will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of
the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or
entitled to tender such Old Capital Securities in
the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a result
of market-making or other trading activities and
exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer must
deliver a
8
<PAGE> 14
prospectus meeting the requirements of the
Securities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required
to represent in the Letter of Transmittal or by
Agent's Message that (i) it is not an Affiliate of
the Corporation or the Trust, (ii) any New Capital
Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it
has no arrangement or understanding with any person
to participate in a distribution (within the
meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such
New Capital Securities. Each broker-dealer that
receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge
that it acquired the Old Capital Securities for its
own account as the result of market-making
activities or other trading activities and must
agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of such New Capital Securities. The
Letter of Transmittal states that, by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the
staff of the Division of Corporation Finance of the
Commission in the interpretive letters referred to
above, the Corporation and the Trust believe that
Participating Broker-Dealers who acquired Old
Capital Securities for their own accounts as a
result of market-making activities or other trading
activities may fulfill their prospectus delivery
requirements with respect to the New Capital
Securities received upon exchange of such Old
Capital Securities (other than Old Capital
Securities which represent an unsold allotment from
the original sale of the Old Capital Securities)
with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of distribution
with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of New Capital Securities
received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by
such Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain provisions
set forth in the Registration Rights Agreement and
to the limitations described below under "The
Exchange Offer -- Resales of New Capital
Securities," the Corporation and the Trust have
agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period
ending 180 days after the Expiration Time (subject
to the right of the Corporation to suspend such use
for no more than two periods of up to 45 days each)
or, if earlier, when all such New Capital
Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of
Distribution." Any Participating Broker-Dealer who
is an Affiliate of the
9
<PAGE> 15
Corporation or the Trust may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of
New Capital Securities."
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is The First National Bank of Chicago (the
"Exchange Agent"). The applicable addresses, and
telephone and facsimile numbers, of the Exchange
Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds............ Neither the Corporation nor the Trust will receive
any cash proceeds from the issuance of the New
Capital Securities offered hereby. See "Use of
Proceeds."
United States Federal
Income Taxation; ERISA
Considerations........... Holders of Old Capital Securities should review the
information set forth under "United States Federal
Income Taxation" and "ERISA Considerations" prior
to tendering Old Capital Securities in the Exchange
Offer.
THE NEW CAPITAL SECURITIES
Securities Offered......... Up to $150,000,000 aggregate Liquidation Amount of
the Trust's New Capital Securities which have been
registered under the Securities Act (Liquidation
Amount $1,000 per New Capital Security). The New
Capital Securities will be issued, and the Old
Capital Securities were issued, under the
Declaration. The New Capital Securities and any Old
Capital Securities which remain outstanding after
consummation of the Exchange Offer will vote
together as a single class for purposes of
determining whether holders of the requisite
percentage in outstanding Liquidation Amount
thereof have taken certain actions or exercised
certain rights under the Declaration. See
"Description of New Securities -- Description of
New Capital Securities -- Voting Rights" and
"-- Modification and Amendment of the Declaration."
The terms of the New Capital Securities are
identical in all material respects to the terms of
the Old Capital Securities, except that the New
Capital Securities have been registered under the
Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the
Old Capital Securities and will not provide for any
increase in the Distribution rate thereon. See "The
Exchange Offer -- Purpose of the Exchange Offer,"
"Description of New Securities" and "Description of
Old Securities."
The New Capital Securities represent undivided
beneficial interests in the Trust's assets, which
will consist solely of the New Subordinated
Debentures. The Junior Subordinated Debentures, in
which the proceeds of the Trust Securities are
invested, mature on March 15, 2027, unless the
Junior Subordinated Debentures are redeemed by the
Corporation prior to such maturity as described
under "Description of New Securities -- Description
of New Capital Securities -- Redemption" and
" -- Description of New Junior Subordinated
Debentures -- Redemption."
10
<PAGE> 16
Distributions.............. Holders of the New Capital Securities will be
entitled to receive cumulative cash distributions
at an annual rate of 8.40% on the Liquidation
Amount of $1,000 per Capital Security, accruing
from March 29, 1997 the original date of issuance
of the Old Capital Securities, and (subject to the
extension of distribution payment periods described
below) will be payable semiannually, in arrears, on
March 15 and September 15 of each year, commencing
September 15, 1997. See "Description of New
Securities -- Description of New Capital
Securities -- Distributions."
Option to Extend Interest
Payment Period........... The Corporation has the right, at any time, subject
to certain conditions, to defer payments of
interest on the Junior Subordinated Debentures for
Extension Periods, each not exceeding 10
consecutive semiannual periods; provided that no
Extension Period may extend beyond the Stated
Maturity Date of the Junior Subordinated
Debentures. During any Extension Period,
distributions on the Capital Securities would be
deferred but interest would continue to accrue at
an annual rate of 8.40% to the extent permitted by
law. Also, during any Extension Period, subject to
certain exceptions, (i) the Corporation may not
declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect
to, any of its capital stock or rights to acquire
such capital stock or make any guarantee payments
(other than payments on the Guarantee and the
Common Guarantee (as defined herein)) with respect
to the foregoing and (ii) the Corporation may not
make any payment of interest on, or principal of
(or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the
Corporation which rank pari passu with or junior to
the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment
of all amounts then due, the Corporation may
commence a new Extension Period, subject to certain
requirements. See "Description of New
Securities -- Description of New Junior
Subordinated Debentures -- Option to Extend
Interest Payment Period." Should an Extension
Period occur with respect to the Capital
Securities, holders of the Capital Securities will
continue to recognize interest income at an annual
rate of 8.40%, compounded semiannually, for United
States federal income tax purposes notwithstanding
the deferred receipt of payments which accrue
during the Extension Period. As a result, such
holders will be required to include such amounts in
gross income for United States federal income tax
purposes in advance of the receipt of cash, and
such holders will not receive the cash from the
Trust related to such income if such holders
dispose of the Capital Securities prior to the
record date for payment of distributions. See
"United States Federal Income Taxation -- US
Holders -- Original Issue Discount."
Liquidation................ The Corporation, as the holder of all of the Common
Securities, has the right at any time to dissolve
the Trust (including, without limitation, upon the
occurrence of a Tax Event or a Capital Treatment
Event), subject to certain conditions (including
the receipt of prior approval by the Federal
Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve),
with the result
11
<PAGE> 17
that, after The Trust's satisfaction of liabilities
to creditors of the Trust (to the extent not
satisfied by the Corporation), the Corporation must
cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities
on a pro rata basis in accordance with the
respective Liquidation Amounts thereof, in
liquidation of the Trust. In addition, the Trust
will be dissolved and liquidated under certain
other circumstances. See "Description of New
Securities -- Description of New Capital
Securities -- Liquidation Distribution Upon
Dissolution."
Liquidation Amount......... In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or termination
of the Trust, after The Trust's satisfaction of
liabilities to creditors of the Trust (to the
extent not satisfied by the Corporation) holders of
the Capital Securities will be entitled to receive
$1,000 per Capital Security (the "Liquidation
Amount")plus an amount equal to accrued and unpaid
distributions thereon to the date of payment,
unless the Junior Subordinated Debentures are
distributed to holders of the Trust Securities in
exchange therefor. If such liquidation distribution
can be paid only in part because the Trust has
insufficient assets available to pay in full the
aggregate liquidation distribution, then the
amounts payable directly by the Trust on the
Capital Securities shall be paid on a pro rata
basis. Holders of the Common Securities will be
entitled to receive distributions upon any such
liquidation pro rata with the holders of the
Capital Securities, except that if a Declaration
Event of Default (as defined herein) has occurred
and is continuing, the Capital Securities shall
have a priority over the Common Securities. See
"Description of New Securities -- Description of
New Capital Securities -- Liquidation Distribution
Upon Dissolution."
Maturity................... Upon the repayment of the Junior Subordinated
Debentures held by the Trust, whether at maturity
or upon early redemption as provided in the
Indenture, the proceeds from such repayment will be
applied by the Institutional Trustee to redeem a
like amount of the Trust Securities, upon the terms
and conditions described herein. See "Description
of New Securities -- Description of New Capital
Securities -- Redemption."
Optional Redemption........ The Corporation has the right to redeem the Junior
Subordinated Debentures, in whole or in part, at
any time or from time to time, on or after March
15, 2007, at the Call Price described herein,
together with accrued and unpaid interest to the
date of redemption, subject to the Corporation
having received prior approval from the Federal
Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. See
"Description of New Securities -- Description of
New Junior Subordinated Debentures -- Redemption."
Upon the redemption of the Junior Subordinated
Debentures, the proceeds of such redemption will be
applied by the Institutional Trustee to redeem a
like amount of the Trust Securities on a pro rata
basis at the applicable Redemption Price, upon the
terms and conditions described herein. See
"Description of New Securities -- Description of
New Capital Securities -- Redemption."
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<PAGE> 18
Tax Event or Capital
Treatment Event
Redemption............... If a Tax Event or a Capital Treatment Event shall
occur and be continuing, the Corporation will have
the right, subject to certain terms and conditions
provided herein, at any time, to either (i) redeem
within 90 days following the occurrence of such Tax
Event or Capital Treatment Event the Junior
Subordinated Debentures in whole (but not in part),
at par, plus any accrued and unpaid interest
thereon to the date of the redemption or (ii)
dissolve the Trust and, after the Trust's
satisfaction of liabilities to creditors of the
Trust (to the extent not satisfied by the
Corporation), cause the Junior Subordinated
Debentures to be distributed to holders of the
Capital Securities in liquidation of the Trust.
Furthermore, the right of the Corporation to redeem
the Junior Subordinated Debentures upon the
occurrence of a Tax Event under clause (i) above is
subject to receipt by the Corporation of an opinion
of a nationally recognized independent counsel
experienced in tax and bank regulatory matters
that, notwithstanding the exercise by the
Corporation of such rights described under clause
(ii) above, either (x) such Tax Event would still
exist or (y) the Junior Subordinated Debentures
would not constitute Tier 1 Capital (or its then
equivalent) of a bank holding company. Under the
current applicable capital guidelines and policies
of the Federal Reserve, the Junior Subordinated
Debentures would not constitute Tier 1 Capital upon
distribution to holders of the Capital Securities.
In each case, the right of the Corporation to
redeem the Junior Subordinated Debentures is
subject to the Corporation's having received prior
approval from the Federal Reserve, if then required
under applicable capital guidelines or policies of
the Federal Reserve. Upon the redemption of the
Junior Subordinated Debentures, the proceeds of
such redemption will be applied by the
Institutional Trustee to redeem a like amount of
the Trust Securities on a pro rata basis, upon the
terms and conditions described herein. See
"Description of New Securities -- Description of
New Capital Securities -- Redemption."
The Guarantee.............. The payment of distributions out of moneys held by
the Trust, payments on liquidation of the Trust and
payment upon the redemption of the Capital
Securities are guaranteed by the Corporation as
described herein under "Description of New
Securities -- Description of New Guarantee." The
Guarantee covers payments of distributions and
other payments on the Capital Securities only if
and to the extent that the Trust has funds
available therefor, which funds are expected to be
available only to the extent the Corporation has
made payments of principal or interest (or premium,
if any) or other payments on the Junior
Subordinated Debentures. The Guarantee, when taken
together with the Corporation's obligations under
the Junior Subordinated Debentures, the Declaration
and the Indenture (including its obligations to pay
costs, expenses, debts and other liabilities of the
Trust (other than with respect to the Trust
Securities)), provides a full and unconditional
guarantee on a subordinated basis by the
Corporation of amounts due on the Capital
Securities. The Corporation has also agreed
separately to guarantee the obligations of the
Trust with respect to the Common Securities as
described herein
13
<PAGE> 19
under "Description of New Securities -- Description
of New Guarantee -- General."
Ranking.................... The Common Securities will rank pari passu with,
and payments thereon will be made pro rata with,
the New Capital Securities and the Old Capital
Securities, except that upon the occurrence and
continuation of a Declaration Event of Default, the
rights of the holders of the Common Securities to
receive payment of distributions and payments upon
liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the
Capital Securities. See "Description of New
Securities -- Description of New Capital
Securities -- General." The Junior Subordinated
Debentures will be unsecured and subordinate and
junior in right of payment to the extent and in the
manner set forth in the Indenture to the Allocable
Amounts (as defined herein) in respect of all
Senior Indebtedness of the Corporation. See
"Description of New Securities -- Description of
New Junior Subordinated Debentures." The Guarantee
will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in
right of payment to the extent and in the manner
set forth in the Guarantee to the Allocable Amounts
in respect of all Senior Indebtedness of the
Corporation. The Corporation's obligations under
the Guarantee and the Junior Subordinated
Debentures are also effectively subordinate to
claims of creditors of the Corporation's
subsidiaries. See "Description of New
Securities -- Description of New Guarantee."
Voting Rights.............. Holders of the Capital Securities will have limited
voting rights relating generally to the
modification of the Capital Securities and the
Guarantee and the exercise of the Trust's rights as
the holder of the Junior Subordinated Debentures.
Holders of the Capital Securities will not be
entitled to appoint, remove or replace the
Institutional Trustee or the Delaware Trustee
except upon the occurrence of an Indenture Event of
Default (as defined herein). See "Description of
New Securities -- Description of New Capital
Securities -- Voting Rights" and "-- Removal of the
Issuer Trustees; Appointment of Successors."
Absence of Market for the
Capital Securities....... The New Capital Securities will be a new issue of
securities for which there is currently no market.
Although the Salomon Brothers, Inc., Citicorp
Securities, Inc., Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, the
Initial Purchasers of the Old Capital Securities
(the "Initial Purchasers") have informed the Trust
and the Corporation that they each currently intend
to make a market in the New Capital Securities,
they are not obligated to do so, and any such
market making may be discontinued at any time
without notice. There can be no assurance as to the
development or liquidity of any market for the
Capital Securities.
14
<PAGE> 20
Trading Price.............. The Capital Securities are expected to trade in the
secondary market at a price per Capital Security
plus accrued and unpaid distributions, if any, to
the date of settlement. Because the Capital
Securities pay distributions at a fixed rate based
on the fixed interest rate payable on the Junior
Subordinated Debentures, the trading price on the
Capital Securities is likely to decline if interest
rates rise.
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors."
15
<PAGE> 21
RISK FACTORS
Prospective investors in the Capital Securities should carefully review the
information contained elsewhere or incorporated by reference in this Prospectus
in connection with the Exchange Offer and the New Capital Securities offered
hereby should particularly consider the following matters:
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Corporation and the Trust do not intend to register
under the Securities Act any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement. See "Description of New
Securities -- Description of New Capital Securities -- Voting Rights" and
"-- Modification and Amendment of the Declaration."
The Old Capital Securities provide, in effect, among other things, that the
Distribution rate borne by and payable with respect to the Old Capital
Securities will increase by .25% per annum (i) if a registration statement
relating to an exchange of New Capital Securities for Old Capital Securities has
not been filed by August 17, 1997, (ii) if a registration statement relating to
an exchange of New Capital Securities for Old Capital Securities has not been
declared effective by September 16, 1997, and (iii) if an Exchange Offer
relating to an exchange of New Capital Securities for Old Capital Securities has
not been consummated by October 16, 1997; provided, however, that under no
circumstances may the aggregate increase to the Distribution rate exceed .25%
for the foregoing reasons. Any such increase in the Distribution rate payable
with respect to the Old Capital Securities will cease to accrue and be payable
(i) upon the filing of the required registration statement, if the increased
Distribution rate is payable solely due to the occurrence of the event described
in clause (i) of the preceding sentence, (ii) upon the effectiveness of the
required registration statement, if the increased Distribution rate is payable
solely due to the occurrence of the event described in clause (ii) of the
preceding sentence, and (iii) upon the consummation of the required Exchange
Offer, if the increased Distribution rate is payable solely due to the
occurrence of the event described in clause (iii) of the preceding sentence.
Upon consummation of the Exchange Offer, holders of Old Capital Securities will
not be entitled to any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Description of Old
Securities."
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Corporation believes the
Old Capital Securities are currently owned by, a relatively small number of
beneficial owners. The Old Capital Securities have not been registered under the
Securities Act and will be subject to restrictions on transferability if they
are not exchanged for the New Capital Securities. Although the New Capital
Securities generally may be resold or otherwise transferred by the holders (who
are not affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. The Corporation and the
Trust have been advised
16
<PAGE> 22
by the Initial Purchasers that the Initial Purchasers presently intend to make a
market in the New Capital Securities. However, the Initial Purchasers are not
obligated to do so and any market-making activity with respect to the New
Capital Securities may be discontinued at any time without notice. In addition,
such market-making activity will be subject to the limits imposed by the
Securities Act and the Exchange Act and may be limited during the Exchange
Offer. Accordingly, no assurance can be given that an active public or other
market will develop for the New Capital Securities or the Old Capital Securities
or as to the liquidity of or the trading market for the New Capital Securities
or the Old Capital Securities. If an active public market does not develop, the
market price and liquidity of the New Capital Securities may be adversely
affected.
If a public trading market develops for the New Capital Securities, future
trading prices will depend on many factors, including, among other things,
prevailing interest rates, the Corporation's financial condition and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Corporation, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Corporation under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to the
Allocable Amounts in respect of all present and future Senior Indebtedness of
the Corporation. No payment of principal of (including redemption payments, if
any) or interest (or premium, if any) on the Junior Subordinated Debentures may
be made if (i) any Senior Indebtedness of the Corporation is not paid when due
and any applicable grace period with respect to such default has ended with such
default not having been cured or waived or ceasing to exist or (ii) the maturity
of any Senior Indebtedness of the Corporation has been accelerated because of a
default. As of March 31, 1997, the Corporation had approximately $203.7 million
of Senior Indebtedness and $54.8 million of trade accounts payable or accrued
liabilities arising in the ordinary course of business, and its subsidiaries had
approximately $2.0 billion of liabilities (excluding deposits and liabilities
owed to the Corporation). There are no terms in the Capital Securities, the
Junior Subordinated Debentures or the Guarantee that limit the ability of the
Corporation or its subsidiaries to incur additional indebtedness, liabilities
and obligations, including such indebtedness that ranks senior to the Junior
Subordinated Debentures and the Guarantee. See "Description of New
Securities -- Description of New Guarantee -- Status of the Guarantee" and
"-- Description of New Junior Subordinated Debentures."
The Corporation is a legal entity separate and distinct from its
subsidiaries. Because the Corporation is a bank holding company, the right of
the Corporation to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. In
addition, there are various legal limitations on the extent to which a bank
subsidiary may finance or otherwise supply funds to the Corporation or its
non-bank subsidiaries. Under federal law, no bank subsidiary may, subject to
certain limited exceptions, make loans or extensions of credit to, or
investments in the securities of the Corporation or its non-bank subsidiaries or
take their securities as collateral for loans to any borrower. Each bank
subsidiary is also subject to collateral security requirements for any loans or
extensions of credit permitted by such exceptions. In addition, certain bank
regulatory limitations exist on the availability of subsidiary bank
undistributed net assets for the payment
17
<PAGE> 23
of dividends to the Corporation without the prior approval of the bank
regulatory authorities. The Federal Reserve Act, which affects Summit Bank, NJ
as a state-member bank of the Federal Reserve System, restricts the payment of
dividends in any calendar year to the net profit of the current year combined
with the retained net profits of the preceding two years. State law also limits
the ability of the Corporation's banks to pay dividends. New Jersey law
applicable to Summit Bank, NJ as a New Jersey state-chartered bank, is less
restrictive with respect to the payment of dividends than the Federal Reserve
Act. Under Pennsylvania law, Summit Bank, PA, as a Pennsylvania state-chartered
bank, may declare a dividend only if, after payment thereof, its capital would
be unimpaired and its remaining surplus would equal 100% of its capital. At
March 31, 1997, the total undistributed net assets of the Corporation's
subsidiary banks were $1.8 billion, of which $194.6 million was available, under
the most restrictive limitations, for the payment of dividends to the
Corporation.
GUARANTEE COVERS DISTRIBUTIONS AND OTHER PAYMENTS ONLY TO THE EXTENT THE TRUST
HAS AVAILABLE FUNDS; RELATED REMEDIES
The Guarantee guarantees to holders of the Capital Securities the following
payments, to the extent not paid by the Trust: (i) any accrued and unpaid
distributions required to be paid on the Capital Securities, to the extent the
Trust has funds available therefor, (ii) the Redemption Price, including all
accrued and unpaid distributions to the date of redemption, with respect to the
Capital Securities called for redemption by the Trust, to the extent the Trust
has funds available therefor, and (iii) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of the Junior Subordinated Debentures to
holders of the Capital Securities in exchange therefor), the lesser of (a) the
aggregate of the Liquidation Amount and all accrued and unpaid distributions on
the Capital Securities to the date of the payment, to the extent the Trust has
funds available therefor and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Capital Securities in liquidation
of the Trust. The Guarantee is subordinated as described under "Description of
New Securities -- Description of New Guarantee."
The holders of a majority in Liquidation Amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee (as defined herein) or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee. A holder of record of the Capital Securities may institute
a legal proceeding directly against the Corporation to enforce the Guarantee
Trustee's rights without first instituting any legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity. If the Corporation
were to default on its obligation to pay amounts payable on the Junior
Subordinated Debentures, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Capital Securities or
otherwise, and, in such event, holders of the Capital Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, each
holder of the Capital Securities would rely on the enforcement (i) by the
Institutional Trustee of its rights as registered holder of the Junior
Subordinated Debentures against the Corporation pursuant to the terms of the
Junior Subordinated Debentures or (ii) by such holder of the Capital Securities
of its right against the Corporation to enforce payments of principal and
interest (and premium, if any) on the Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of Capital
Securities of such holder. See "Description of New Securities -- Description of
New Capital Securities," "-- Description of New Guarantee" and "-- Description
of New Junior Subordinated Debentures." The Declaration provides that each
holder of the Capital Securities, by acceptance thereof, agrees to the
provisions of the Guarantee and the Indenture, including the subordination
provisions thereof.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE CAPITAL SECURITIES
If a Declaration Event of Default with respect to the Trust occurs and is
continuing, then holders of the Capital Securities would, except as provided
below, rely on the enforcement by the Institutional Trustee of its rights as
holder of the Junior Subordinated Debentures against the Corporation. The
holders of a majority in Liquidation Amount of the Capital Securities will have
the right to direct the time, method, and place of conducting any proceeding for
any remedy available to the Institutional Trustee with respect
18
<PAGE> 24
to the Capital Securities or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as holder of the Junior Subordinated Debentures. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debentures after the
holders of a majority in Liquidation Amount of the Capital Securities have so
directed the Institutional Trustee, a holder of record of the Capital Securities
may, to the fullest extent permitted by law, institute a legal proceeding
directly against the Corporation to enforce the rights of the Institutional
Trustee under the Junior Subordinated Debentures, without first instituting any
legal proceeding against such Institutional Trustee or any other person.
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Corporation to pay principal or interest (or premium, if any) on the Junior
Subordinated Debentures on the respective dates such principal or interest (or
premium, if any) is payable, after giving effect to any Extension Period (or in
the case of redemption, on the redemption date), then a holder of record of the
Capital Securities may institute directly against the Corporation a proceeding
for enforcement of payment, on or after the respective due dates specified in
the Subordinated Debt Securities, to such holder directly of the principal of or
interest on (or premium, if any) the Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Corporation will be subrogated to the rights of such holder
of the Capital Securities under the Declaration to the extent of any payment
made by the Corporation to such holder of the Capital Securities in such Direct
Action; provided, however, that no such subrogation right may be exercised so
long as a Declaration Event of Default has occurred and is continuing. Holders
of the Capital Securities will not be able to exercise directly any other remedy
available to holders of the Junior Subordinated Debentures. See "Description of
New Securities -- Description of New Capital Securities -- Declaration Events of
Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON THE CAPITAL SECURITIES
The Corporation has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period, at any time and from time to time, subject to certain conditions, for
Extension Periods, each not exceeding 10 consecutive semiannual periods,
provided that no Extension Period may extend beyond the Stated Maturity Date of
the Junior Subordinated Debentures. During any Extension Period, semiannual
distributions on the Capital Securities would also be deferred (but would
continue to accrue at an annual rate of 8.40%, despite such deferral, with
interest thereon compounded semiannually to the fullest extent permitted by law)
by the Trust. In the event that the Corporation exercises this right to defer
interest payments on the Junior Subordinated Debentures, and such deferral is
continuing, or if there shall have occurred and be continuing any Indenture
Event of Default or if the Corporation shall be in default with respect to the
payment of its obligations under the Guarantee, (a) the Corporation may not
declare or pay dividends on, or make a distribution with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of the
Corporation's capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Corporation of its obligations under any of the
Corporation's benefit plans for directors, officers or employees or under the
Corporation's dividend reinvestment and stock purchase plan, (ii) as a result of
a reclassification of the Corporation's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of capital
stock of the Corporation or rights to acquire such capital stock for another
class or series of the Corporation's capital stock or rights to acquire such
capital stock, (iii) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
and distributions made on the Corporation's capital stock or rights to acquire
such capital stock with the Corporation's capital stock or rights to acquire
such capital stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto),
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<PAGE> 25
or make guarantee payments (other than payments under the Guarantee and the
Common Guarantee) in respect of the foregoing and (b) the Corporation may not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Corporation that rank
pari passu with or junior to the Junior Subordinated Debentures. Prior to the
termination of any Extension Period, the Corporation may further extend the
interest payment period, provided that each such Extension Period, together with
all such previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Corporation may commence a new Extension Period, subject
to the terms set forth herein. See "Description of New Securities -- Description
of New Capital Securities" and "-- Description of New Junior Subordinated
Debentures."
During each Extension Period, if any, each holder of the Capital Securities
will continue to accrue income (as original issue discount ("OID")) in respect
of the deferred interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed. In
such event, each holder of the Capital Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash and
will not receive cash related to such income from the Trust if such holder
disposes its Capital Securities prior to the record date for payment of such
deferred interest. See "United States Federal Income Taxation -- US
Holders -- Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Corporation determine to exercise such right in the future, the market price of
the Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of the Corporation's right
to defer interest payments, the market price of the Capital Securities (which
represent undivided beneficial interests in the Junior Subordinated Debentures)
may be more volatile than the market price of other similar securities where the
issuer does not have such right to defer interest payments.
PROPOSED TAX LAW CHANGES
On February 6, 1997, President Clinton proposed certain tax law changes
that would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations (the "Tax Proposal") if such
debt obligations have a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. As currently
proposed, the Tax Proposal would be effective generally for instruments issued
on or after the date of first Congressional committee action. Under current law,
the Corporation will be able to deduct interest on the Junior Subordinated
Debentures and, based upon the effective date of the Tax Proposal as it is
currently proposed, it is expected that if the Tax Proposal were enacted, such
legislation would not apply retroactively to the Junior Subordinated Debentures.
However, if the Tax Proposal is enacted with retroactive effect with respect to
the Junior Subordinated Debentures, the Corporation would not be entitled to an
interest deduction with respect to the Junior Subordinated Debentures. There can
be no assurance that the Tax Proposal, if enacted, will not apply retroactively
to the Junior Subordinated Debentures or that other legislation enacted after
the date hereof will not otherwise adversely affect the ability of the
Corporation to deduct the interest payable on the Junior Subordinated
Debentures. Accordingly, there can be no assurance that a Tax Event will not
occur. See "Description of New Securities -- Description of New Capital
Securities -- Redemption" and "-- Description of New Junior Subordinated
Debentures -- Proposed Tax Law Changes."
REDEMPTION; DISTRIBUTION
The Corporation, as the holder of all of the outstanding Common Securities,
has the right at any time (including, without limitation, upon the occurrence of
a Tax Event or a Capital Treatment Event) to dissolve the Trust, and, after the
Trust's satisfaction of liabilities to creditors of the Trust (to the extent not
paid by the Corporation), cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities on a pro rata basis in
accordance with the respective Liquidation Amounts thereof,
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<PAGE> 26
in liquidation of the Trust. See "Description of New Securities -- Description
of New Capital Securities -- Liquidation Distribution Upon Dissolution." In
certain circumstances described herein, the Corporation will have the right to
redeem the Junior Subordinated Debentures, in whole or in part, in which event
the Trust will redeem the Trust Securities having an aggregate Liquidation
Amount equal to the aggregate principal amount of the Junior Subordinated
Debentures redeemed by the Corporation on a pro rata basis to the same extent as
the Junior Subordinated Debentures are redeemed by the Corporation. The exercise
of such rights is subject to the Corporation having received prior approval from
the Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve. See "Description of New
Securities -- Description of New Capital Securities -- Redemption" and
"-- Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law, a distribution of the
Junior Subordinated Debentures upon the dissolution of the Trust generally would
not be a taxable event to holders of the Capital Securities. However, a
dissolution of the Trust in which holders of the Capital Securities receive cash
would be a taxable event to such holders. See "United States Federal Income
Taxation -- US Holders -- Receipt of the Junior Subordinated Debentures or Cash
Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase or acquire, whether pursuant to the Exchange Offer made hereby or by a
purchase in the secondary market, or the Junior Subordinated Debentures that a
holder of the Capital Securities may receive on dissolution and liquidation of
the Trust, may trade at a discount to the price paid to purchase such Capital
Securities. Because the ability of the Trust to pay amounts due on the Capital
Securities is wholly dependent upon the Corporation's making payments on the
Junior Subordinated Debentures as and when required, and because holders of the
Capital Securities may receive the Junior Subordinated Debentures upon
dissolution and liquidation of the Trust, prospective purchasers of the Capital
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Subordinated Debt Securities contained herein and evaluate the
credit risk of the Corporation. See "Description of New
Securities -- Description of New Capital Securities" and "-- Description of New
Junior Subordinated Debentures."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving the Corporation that may adversely affect such holders. See
"Description of New Securities -- Description of New Junior Subordinated
Debentures."
LIMITED VOTING RIGHTS
Holders of the Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Trust's rights as the holder of the Junior Subordinated
Debentures. Holders of the Capital Securities will not be entitled to appoint,
remove or replace the Institutional Trustee or the Delaware Trustee except upon
the occurrence of an Indenture Event of Default described herein. The
Institutional Trustee and holders of a majority of the Common Securities may
amend the Declaration without the consent of holders of the Capital Securities
to ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust and will not be required to be registered as an
investment company under the 1940 Act (as defined herein), even if such action
adversely affects the interests of such holders. See "Description of New
Securities -- Description of New Capital Securities -- Voting Rights" and
"-- Removal of the Issuer Trustees; Appointment of Successors."
TRADING PRICE
Because the Capital Securities pay distributions at a fixed rate based upon
the fixed interest rate payable on the Junior Subordinated Debentures, the
trading price of the Capital Securities is likely to decline if interest rates
rise.
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<PAGE> 27
SUMMIT BANCORP.
The Corporation commenced operations on October 1, 1970, as a New Jersey
corporation and as a bank holding company registered under the Bank Holding
Corporation Act. At March 31, 1997, the Corporation had total consolidated
assets of $23.4 billion, which ranked it as the largest New Jersey-based bank
holding company, and owned three banks and several active non-bank subsidiaries.
The Corporation's bank subsidiaries are engaged in a general banking
business. Their major lines of business include commercial, retail and mortgage
banking, investment management and private banking. These lines of business
offer a wide range of financial services to individuals, businesses,
not-for-profit organizations, government entities and other financial
institutions. The Corporation's significant non-bank subsidiaries engage
primarily in asset-based lending and securities brokerage activities.
The bank subsidiaries operated 385 banking offices located in major trade
centers and suburban areas in New Jersey and Pennsylvania as of March 31, 1997.
The following table lists, as of March 31, 1997, each bank subsidiary, the
location in New Jersey or Pennsylvania of its principal office, the number of
its banking offices and, in thousands of dollars, its total assets and deposits.
Both the New Jersey and Pennsylvania subsidiaries are state banks; however, only
the New Jersey bank is a member of the Federal Reserve System.
<TABLE>
<CAPTION>
NO. OF TOTAL TOTAL
LOCATION OF PRINCIPAL OFFICES BANKING OFFICES ASSETS(1) DEPOSITS
- ----------------------------------------------- --------------- ------------ ------------
<S> <C> <C> <C>
Summit Bank, Hackensack, NJ.................... 290 $19,954,532 $16,219,548
Summit Bank, Bethlehem, PA..................... 73 2,723,747 1,992,818
The Bank of Mid Jersey, Bordentown, NJ(2)...... 22 674,233 556,197
</TABLE>
- ---------------
(1) Not adjusted to exclude interbank deposits or other transactions among the
subsidiaries.
(2) Merged into Summit Bank, Hackensack, NJ on June 6, 1997.
Summit Commercial/Gibraltar Corp., the largest of the Corporation's
non-bank subsidiaries with assets of $229.8 million at March 31, 1997, is a
commercial finance company operating in the New York and New Jersey metropolitan
areas. This subsidiary specializes in making loans secured by accounts
receivable, inventory and equipment, as well as financing sales and leases of
equipment. Summit Discount Brokerage Co., a wholly owned subsidiary of Summit
Bank, PA is engaged in the stock brokerage business and in the underwriting of
municipal bonds.
The Corporation is a legal entity separate and distinct from its
subsidiaries. Because the Corporation is a bank holding company, the right of
the Corporation to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation of reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. In
addition, there are various legal limitations on the extent to which a bank
subsidiary may finance or otherwise supply funds to the Corporation or its
non-bank subsidiaries. Under federal law, no bank subsidiary may, subject to
certain limited exceptions, make loans or extensions of credit to, or
investments in the securities of the Corporation or its non-bank subsidiaries or
take their securities as collateral for loans to any borrower. Each bank
subsidiary is also subject to collateral security requirements for any loans or
extensions of credit permitted by such exceptions. In addition, certain bank
regulatory limitations exist on the availability of subsidiary bank
undistributed net assets for the payment of dividends to the Corporation without
the prior approval of the bank regulatory authorities. The Federal Reserve Act,
which affects Summit Bank, NJ as a state-member bank of the Federal Reserve
System, restricts the payment of dividends in any calendar year to the net
profit of the current year combined with the retained net profits of the
preceding two years. State law also limits the ability of the Corporation's
banks to pay dividends. New Jersey law applicable to Summit Bank, NJ as a New
Jersey state-chartered bank, is less restrictive with respect to the payment of
dividends than the Federal Reserve Act. Under Pennsylvania law, Summit Bank, PA,
as a Pennsylvania state-chartered bank, may declare a dividend only if, after
payment thereof, its capital would be unimpaired and its remaining surplus would
equal 100% of its capital. At March 31, 1997, the total undistributed net assets
of the Corporation's subsidiary banks were $1.8 billion, of which $194.6 million
was available, under the most restrictive limitations, for the payment of
dividends to the Corporation.
22
<PAGE> 28
RECENT DEVELOPMENTS
On February 28, 1997, the Corporation announced a definitive merger
agreement to acquire Collective. Collective was formed in 1988 as a Delaware
corporation, headquartered in Cologne, New Jersey, to acquire all of the capital
stock of Collective Bank, organized in 1927. Collective is a non-diversified
unitary savings and loan holding company which conducts its operations through
its federally insured savings bank subsidiary, Collective Bank. Collective Bank
is subject to extensive regulation, supervision and examination by the Office of
Thrift Supervision, its chartering authority and primary regulator.
At March 31, 1997, Collective operated 82 offices in 15 New Jersey
counties; 44 offices in southern New Jersey, 19 in central New Jersey and 19 in
northern New Jersey. At March 31, 1997, Collective had total assets of $5.5
billion, loans of $2.9 billion and deposits of $3.5 billion. For the fiscal year
ended June 30, 1996, Collective's net income amounted to $54.5 million. For the
nine months ended March 31, 1997, Collective's net income amounted to $35.5
million ($46.0 million without the effect of the SAIF recapitalization
assessment). The transaction is anticipated to be accounted for as a
pooling-of-interests in an exchange of .895 shares of the Corporation's common
stock for each share of Collective common stock. At March 31, 1997, there were
approximately 20.4 million shares of Collective common stock issued and
outstanding. It is anticipated that there will be an increase of approximately
19% of the Corporation's outstanding shares after the consummation of the
transaction. This transaction is anticipated to be consummated in the third
quarter of 1997.
With Collective, the Corporation will have approximately 16% of New
Jersey's deposit market share. The Corporation expects the Collective
acquisition to create expense savings of $18.0 million annually, or $10.6
million after-tax, which represents approximately 25% of Collective's cost base.
A one-time restructuring charge of approximately $49.3 million, or $33.2 million
after-tax, is anticipated to be recorded upon the consummation of the
transaction. The estimates of expense savings and restructuring charges
constitute forward-looking information and are based on currently available
information as well as numerous factors and assumptions which are subject to
change and, if not realized, could result in actual expense savings and
restructuring charges differing from the estimates. The Corporation's ability to
achieve its objectives is also affected by circumstances beyond its control,
such as regional and national economies, competition, interest rates and
technology and by its ability to adapt to changing circumstances.
23
<PAGE> 29
CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA OF THE CORPORATION
The selected financial data set forth below has been derived from and
should be read in conjunction with the audited financial statements and other
financial information contained in the Annual Report and with the financial
statements contained in the Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, which are incorporated by reference herein.
Results for the first quarter are not necessarily indicative of results which
may be obtained for the full year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income................. $ 405,562 $ 387,753 $ 1,550,807 $ 1,495,617 $ 1,302,800 $ 1,236,658 $ 1,341,504
Interest expense................ 165,505 161,762 639,296 626,376 475,973 456,797 594,757
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income............ 240,057 225,991 911,511 869,241 826,827 779,861 746,747
Provision for loan losses....... 14,500 15,500 62,000 71,850 91,995 112,885 165,553
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision.................... 225,557 210,491 849,511 797,391 734,832 666,976 581,194
Noninterest income.............. 65,436 58,263 247,463 224,189 210,066 212,802 205,058
Noninterest expense............. 162,752 162,035 626,176 642,361 650,710 685,330 660,207
Non-recurring charges........... 26,500 110,700 121,759 -- 48,955 21,500 --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income tax....... 101,741 (3,981) 349,039 379,219 245,233 172,948 126,045
Federal and state income
taxes.......................... 35,256 (1,742) 119,864 136,349 88,952 48,925 35,770
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before change in
accounting principle......... 66,485 (2,239) 229,175 242,870 156,281 124,023 90,275
Cumulative effect of a change in
accounting principle........... -- -- -- -- (1,731) 9,119 --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income..................... $ 66,485 $ (2,239) $ 229,175 $ 242,870 $ 154,550 $ 133,142 $ 90,275
=========== =========== =========== =========== =========== =========== ===========
COMMON SHARE DATA
Net income...................... $ 0.68 $ (0.03) $ 2.44 $ 2.77 $ 1.80 $ 1.57 $ 1.13
Net income before non-recurring
items(1)....................... 0.85 0.72 3.26 2.77 2.22 1.61 1.13
Cash dividends declared......... 0.36 0.32 1.36 1.19 0.94 0.69 0.60
Book value at year end.......... 20.50 19.00 20.51 19.89 17.45 16.89 15.93
Market value at year end........ 43.75 37.00 43.75 35.63 24.13 24.00 24.25
Average common shares
outstanding (in thousands)..... 98,271 93,134 93,061 86,674 84,381 82,712 77,499
Common shares outstanding at
year end (in thousands)........ 98,451 93,399 93,963 88,471 85,004 83,251 82,039
BALANCE SHEET DATA (AT YEAR END)
Total assets.................... $23,439,345 $22,329,776 $22,668,012 $21,536,935 $20,894,815 $19,139,498 $19,204,120
Total deposits.................. 18,831,534 18,093,804 18,374,986 17,955,103 16,977,109 16,164,226 16,462,089
Total loans..................... 15,495,945 14,556,090 14,819,595 14,019,574 13,105,179 11,881,426 11,972,053
Shareholders' equity............ 2,017,800 1,816,922 1,926,873 1,802,316 1,533,717 1,456,527 1,356,744
Long-term debt.................. 830,257 398,605 689,977 424,862 544,936 467,501 364,762
Allowance for loan losses....... 277,011 280,590 267,719 279,034 305,330 339,028 374,639
OPERATING RATIOS
Before non-recurring items(1)
Return on average assets....... 1.46% 1.23% 1.38% 1.16% 0.94% 0.72% 0.48%
Return on average common
equity....................... 16.70 14.72 16.61 14.82 12.80 9.81 7.22
After non-recurring items(1)
Return on average assets....... 1.17 (0.04) 1.03 1.16 0.76 0.70 0.48
Return on average common
equity....................... 13.35 (0.63) 12.41 14.82 10.37 9.54 7.22
Net interest margin............. 4.59 4.52 4.52 4.60 4.53 4.56 4.46
Efficiency ratio................ 52.22 55.60 53.39 57.55 59.71 63.48 64.44
LOAN QUALITY RATIOS
Allowance for loan losses to
year-end loans................. 1.79% 1.93% 1.81% 1.99% 2.33% 2.85% 3.13%
Net charge offs to average
loans.......................... 0.37 0.57 0.56 0.78 0.73 1.25 1.49
Non-performing loans to year-end
loans.......................... 0.76 1.30 0.89 1.34 1.53 2.69 3.83
CAPITAL RATIOS
Average total equity to average
total assets................... 8.75% 8.49% 8.42% 7.97% 7.46% 7.39% 6.73%
Tier 1 capital to average assets
(leverage)..................... 8.88 7.79 8.06 7.97 7.27 7.42 7.03
Tier 1 capital to risk-adjusted
assets......................... 11.99 10.57 11.09 10.75 9.95 10.74 9.77
Total capital to risk-adjusted
assets......................... 14.57 13.23 13.75 13.46 12.69 13.78 12.45
</TABLE>
- ---------------
(1) Non-recurring items generally include the cumulative effect of a change in
accounting principle, restructuring charges and gains and losses on the sale
of acquired assets.
24
<PAGE> 30
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of March 31, 1997.
<TABLE>
<CAPTION>
ACTUAL
----------
(DOLLARS
IN
THOUSANDS)
<S> <C>
Long-term debt.................................................................. $ 680,257
Capital Trust Pass-through Securities(1)........................................ 150,000
----------
830,257
Shareholders' equity:
Common stock.................................................................. 118,141
Surplus....................................................................... 926,802
Retained earnings............................................................. 984,161
Net unrealized gain on securities, net of tax................................. (11,304)
----------
Total shareholders' equity.................................................... 2,017,800
----------
Total capitalization............................................................ $2,848,057
==========
Capital ratios:
Tier 1 capital to average assets (leverage)................................... 8.88%
Tier 1 capital to risk adjusted assets........................................ 11.99
Total capital to risk adjusted assets......................................... 14.57
</TABLE>
- ---------------
(1) As described herein, the sole assets of the Trust are $154,640,000 principal
amount of Junior Subordinated Debentures issued by the Corporation to the
Trust. The Junior Subordinated Debentures bear interest at the annual rate
of 8.40% and will mature on March 15, 2027. The Corporation owns all of the
Common Securities of the Trust.
25
<PAGE> 31
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
wholly-owned subsidiary of the Corporation and, accordingly, the accounts of the
Trust will be included in the consolidated financial statements of the
Corporation. The Capital Securities will be presented on the consolidated
balance sheets as Capital Trust Pass-through Securities or included in long-term
debt and appropriate disclosures about the Capital Securities, the Guarantee and
the Junior Subordinated Debentures will be included in the notes to the
consolidated financial statements. For financial reporting purposes, the
Corporation will record distributions payable on the Capital Securities as an
expense in the consolidated statements of income.
REGULATORY TREATMENT
As a registered bank holding company, the Corporation is required by the
Federal Reserve to maintain certain levels of capital for bank regulatory
purposes. The Corporation expects that the Capital Securities will be treated as
Tier 1 capital of the Corporation for such purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Corporation consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits.... 3.74x 0.88x 3.69x 3.95x 3.00x 3.23x 2.58x
Including Interest on Deposits.... 1.60 0.98 1.53 1.59 1.50 1.37 1.21
Earnings to Combined Fixed Charges
and
Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits.... 3.74x 0.88x 3.64x 3.89x 2.95x 3.15x 2.52x
Including Interest on Deposits.... 1.60 0.98 1.53 1.59 1.50 1.36 1.21
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, include all other interest
expense and one-third (the portion deemed representative of the interest
portion) of the net rent expense. Fixed charges including interest on deposits,
represent all interest expense, and the interest factor included in rents.
Combined fixed charges and preferred stock dividend requirements, excluding
interest on deposits, represent interest expense (except interest paid on
deposits), an amount equal to the pre-tax earnings required to meet applicable
preferred stock dividends requirements, and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
including interest on deposits, represent all interest expense, an amount equal
to the pre-tax earnings required to meet applicable preferred stock dividend
requirements, and the interest factor included in rents. For the three months
ended March 31, 1996, earnings, as defined did not cover fixed charges excluding
and including interest on deposits, by $4.0 million.
26
<PAGE> 32
USE OF PROCEEDS
Neither the Corporation or the Trust will receive any cash proceeds from
the issuance of the New Capital Securities. The Old Capital Securities
surrendered in exchange for the New Capital Securities will be returned and
cancelled.
The gross proceeds to the Trust from the sale of the Common Securities and
the Old Capital Securities were used by the Trust to purchase the Old Junior
Subordinated Debentures. The Corporation expects to use the net proceeds from
the sale of the Junior Subordinated Debentures for general corporate purposes,
including, without limitation, working capital, capital expenditures,
investments in or loans to subsidiaries, acquisitions of other financial
institutions and entities engaged in activities permissible for banks or bank
holding companies, refinancing of debt, including outstanding commercial paper
and other short-term indebtedness, and satisfaction of other obligations of the
Corporation and its subsidiaries. Although the Corporation from time to time
evaluates potential acquisitions, it currently has no understandings,
commitments or agreements with respect to any acquisitions other than the
acquisition of Collective. Pending such application, the net proceeds will be
invested in short-term, investment grade securities.
27
<PAGE> 33
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Initial Declaration (as such Initial Declaration was amended and
restated prior to the closing of the offering of the Old Capital Securities, the
"Declaration") and (ii) the filing of a certificate of trust for the Trust with
the Delaware Secretary of State on March 12, 1997. The Trust's business and
affairs are conducted by its trustees. Pursuant to the Declaration, at least one
trustee of the Trust is required to be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee") and at least
one trustee is required to be a financial institution that is unaffiliated with
the Corporation and is eligible and acts as institutional trustee, guarantee
trustee and indenture trustee pursuant to the terms set forth therein (the
"Institutional Trustee" and together with the Delaware Trustee, the "Issuer
Trustees"). The First National Bank of Chicago is initially serving as the
Institutional Trustee and First Chicago Delaware Inc. is initially serving as
the Delaware Trustee. In addition, three individuals who are employees or
officers of or affiliated with the holder of the majority of the Common
Securities, will act as administrators with respect to the Trust (the
"Administrators"). See "Description of New Securities -- Description of New
Capital Securities -- Miscellaneous." The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of such
Trust Securities in the Junior Subordinated Debentures, and (iii) engaging in
only those other activities necessary or incidental thereto, which may include
engaging in the Exchange Offer. All of the Common Securities of the Trust are
and will continue to be directly or indirectly owned by the Corporation. The
Common Securities of the Trust rank pari passu, and payments will be made
thereon on a pro rata basis, with the Capital Securities of the Trust, except
that upon the occurrence and continuation of a Declaration Event of Default, the
rights of holders of the Common Securities to payment from the Trust in respect
of distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of holders of the Capital Securities. The Corporation
will acquire the Common Securities in an aggregate Liquidation Amount equal to
not less than 3% of the total capital of the Trust. The Trust has a term of
approximately 55 years, but may earlier dissolve as provided in the Declaration.
The Corporation, as the holder of all of the outstanding Common Securities, has
the right at any time to dissolve the Trust (including, without limitation, upon
the occurrence of a Tax Event or a Capital Treatment Event), and, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Corporation), cause the Junior Subordinated Debentures to be
distributed to holders of the Trust Securities on a pro rata basis in accordance
with the respective Liquidation Amounts thereof, in liquidation of the Trust.
The Institutional Trustee holds title to the Junior Subordinated Debentures
for the benefit of holders of the Trust Securities and has the power to exercise
all rights, powers and privileges under the Indenture as the holder of the
Junior Subordinated Debentures. In addition, the Institutional Trustee maintains
exclusive control of a separate, segregated, non-interest bearing trust account
(the "Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of holders of the Trust Securities
issued by the Trust. The Institutional Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of record of the Trust Securities out of funds from the Property
Account. Holders of the Capital Securities are not entitled to appoint, remove
or replace the Institutional Trustee or the Delaware Trustee except upon the
occurrence of an Indenture Event of Default. See "Description of New
Securities -- Description of New Capital Securities -- Voting Rights" and
"-- Removal of the Issuer Trustees; Appointment of Successors." The Corporation,
as borrower under the Indenture, has covenanted to pay all costs, expenses,
debts and other obligations related to the Trust (other than in respect of the
Trust Securities) and the offering and sale of the Trust Securities. See
"Description of the Junior Subordinated Debentures -- Miscellaneous." The rights
of holders of the Capital Securities of the Trust, including economic rights,
rights to information and voting rights, are set forth in the Declaration, the
Delaware Business Trust Act, as amended (the "Trust Act"), and the Trust
Indenture Act. See "Description of the Capital Securities." The principal place
of business of the Trust is c/o Summit Bancorp., 301 Carnegie Center, P.O. Box
2066, Princeton, NJ 08543-2066 (telephone number (609) 987-3200).
28
<PAGE> 34
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Corporation and the Trust agreed to file and
to use their best efforts to cause to become effective with the Commission a
registration statement with respect to the exchange of the Old Capital
Securities for the New Capital Securities. A copy of the Registration Rights
Agreement has been filed as an Exhibit to the Registration Statement of which
this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Rights Agreement. The form
and terms of the New Capital Securities are the same as the form and terms of
the Old Capital Securities except that the New Capital Securities have been
registered under the Securities Act and will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. The Old Capital
Securities provide, in effect, among other things, that the Distribution rate
borne by and payable with respect to the Old Capital Securities will increase by
.25% per annum (i) if a registration statement relating to an exchange of New
Capital Securities for Old Capital Securities has not been filed by August 17,
1997, (ii) if a registration statement relating to an exchange of New Capital
Securities for Old Capital Securities has not been declared effective by
September 16, 1997, and (iii) if an Exchange Offer relating to an exchange of
New Capital Securities for Old Capital Securities has not been consummated by
October 16, 1997; provided, however, that under no circumstances may the
aggregate increase to the Distribution rate exceed .25% for the foregoing
reasons. Any such increase in the Distribution rate payable with respect to the
Old Capital Securities will cease to accrue and be payable (i) upon the filing
of the required registration statement, if the increased Distribution rate is
payable solely due to the occurrence of the event described in clause (i) of the
preceding sentence, (ii) upon the effectiveness of the required registration
statement, if the increased Distribution rate is payable solely due to the
occurrence of the event described in clause (ii) of the preceding sentence, and
(iii) upon the consummation of the required Exchange Offer, if the increased
Distribution rate is payable solely due to the occurrence of the event described
in clause (iii) of the preceding sentence. Upon consummation of the Exchange
Offer, holders of Old Capital Securities will not be entitled to further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Capital Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from such holder, or any person whose Old Capital
Securities are held of record by The Depository Trust Corporation ("DTC") who
desires to deliver such Old Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, promptly after the Expiration Date, the
Corporation will exchange the Old Guarantee for the New Guarantee and the Old
Junior Subordinated Debentures, in an amount corresponding to the Old Capital
Securities accepted for exchange, for a like aggregate principal amount of the
New Junior Subordinated Debentures. The New Guarantee and New Junior
Subordinated Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $150,000,000 aggregate Liquidation
29
<PAGE> 35
Amount of New Capital Securities for a like aggregate Liquidation Amount of Old
Capital Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described below. The Trust
will issue, promptly after the Expiration Date, an aggregate Liquidation Amount
of up to $150,000,000 of New Capital Securities in exchange for a like principal
amount of outstanding Old Capital Securities tendered and accepted in connection
with the Exchange Offer. Holders may tender their Old Capital Securities in
whole or in part in a Liquidation Amount of not less than $100,000 (100 Capital
Securities) or any integral multiple of $1,000 Liquidation Amount (one Capital
Security) in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$150,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY
TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER BASED ON SUCH HOLDERS OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Time" means 5:00 p.m., New York City time, on
September 2, 1997 unless the Exchange Offer is extended by the Corporation or
the Trust (in which case the term "Expiration Time" shall mean the latest date
and time to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Trust determines, in its
sole and absolute discretion, that any of the events or conditions referred to
under "-- Conditions to the Exchange Offer" have occurred or exist or have not
been satisfied, (iii) to extend the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to withdraw
their tendered Old Capital Securities as described under "-- Withdrawal Rights,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a
30
<PAGE> 36
material condition of the Exchange Offer, the Corporation and the Trust will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the holders of the Old Capital Securities, and the Corporation
and the Trust will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder does not deliver a Letter of Transmittal
or (ii) the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees or (in the case of a
book-entry transfer) an Agent's Message in lieu of the Letter of Transmittal and
(iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message transmitted by DTC to, and
received by the Exchange Agent, and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgement from the tendering
participant, which acknowledgement states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
corporation may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Trust's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "-- Withdrawal
Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender,
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<PAGE> 37
exchange, sell, assign and transfer Old Capital Securities, that the Trust will
acquire good, marketable and unencumbered title to the tendered Old Capital
Securities, free and clear of all liens, restrictions, charges and encumbrances,
and the Old Capital Securities tendered for exchange are not subject to any
adverse claims or proxies. The holder also will warrant and agree that it will,
upon request, execute and deliver any additional documents deemed by the Trust
or the Exchange Agent to be necessary or desirable to complete the exchange,
sale, assignment, and transfer of the Old Capital Securities tendered pursuant
to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or (in
the case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal with any required signature guarantees and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "-- Exchange Agent," and either (i) tendered Old Capital Securities
must be received by the Exchange Agent, or (ii) such Old Capital Securities must
be tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if this tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal or so indicate in an Agent's
Message in lieu of a Letter of Transmittal and the untendered Liquidation Amount
must be $100,000 or any integral multiple of $1,000 in excess thereof. The
entire amount of Old Capital Securities delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "-- Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Old Capital Securities must be duly endorsed
or accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or
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other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (each of
the foregoing, an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or prior to the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) or Agent's Message in lieu thereof, with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or
Agent's Message in lieu thereof, together with any required signature guarantees
and any other documents required by the Letter of Transmittal. Accordingly, the
delivery of New Capital Securities might not be made to all tendering holders at
the same time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "-- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to
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such tender have been cured or waived. Neither the Corporation, the Trust, any
affiliates or assigns of the Corporation or the Trust, the Exchange Agent nor
any other person shall be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure to give any such
notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Trust is making the Exchange Offer for the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Corporation nor the Trust
sought its own interpretive letter and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that New
Capital Securities issued pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an Affiliate of the Corporation or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(a) will not be able to rely on the interpretations of the staff of the Division
of Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate of the Corporation or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Corporation and the Trust may require such holder,
as a condition to such holder's eligibility to participate in the Exchange
Offer, to furnish to the Corporation and the Trust (or an agent thereof) in
writing information as to the number of "beneficial owners" (within the meaning
of Rule 13d-3 under the Exchange Act) on behalf of whom such holder holds the
Capital Securities to be exchanged in the
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Exchange Offer. Each broker-dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer by execution of the Letter of
Transmittal or by delivery of an Agent's Message will be deemed to have
acknowledged that it acquired the Old Capital Securities for its own account as
the result of market-making activities or other trading activities and that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that, by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Corporation and the Trust believe that Participating
Broker-Dealers who acquired Old Capital Securities for their own accounts as a
result of market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
180-days after the Expiration Date (subject to the right of the Corporation to
suspend such use for up to two periods of up to 45 days each) extension under
certain limited circumstances described below) or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
See "Plan of Distribution." However, a Participating Broker-Dealer who intends
to use this Prospectus in connection with the resale of New Capital Securities
received in exchange for Old Capital Securities pursuant to the Exchange Offer
must notify the Corporation or the Trust, or cause the Corporation or the Trust
to be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "-- Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or the Trust may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Corporation or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) pursuant to this Prospectus until the Corporation or
the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to such Participating Broker-Dealer or the Corporation or the Trust
has given notice that the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
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WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Corporation, the Trust, any affiliates or assigns of the Corporation
or the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive Distributions on such Old Capital Securities and
will be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and including March 20, 1997. Accordingly,
holders of New Capital Securities as of the record date for the payment of
Distributions on September 15, 1997 will be entitled to receive Distributions
accumulated from and including March 20, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an Affiliate of the
Corporation or the Trust) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Capital Securities are acquired in the ordinary course of such holders'
business and
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such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange
Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Trust, threatened for that purpose or any
governmental approval has not been obtained, which approval the Corporation
or the Trust shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities and will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
EXCHANGE AGENT
The First National Bank of Chicago has been appointed as Exchange Agent for
the Exchange Offer. Delivery of the Letters of Transmittal and any other
required documents, questions, requests for assistance, and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMITTER: BY HAND OR OVERNIGHT
(Registered or Certified Mail (Eligible Institutions Only) DELIVERY:
recommended) (212) 240-8938 The First National Bank of
The First National Bank of Chicago
Chicago TO CONFIRM BY TELEPHONE c/o First Chicago Trust
c/o First Chicago Trust (212) 240-8801 Company of New York
Company of New York 14 Wall Street
14 Wall Street 8th Floor, Window 2
8th Floor, Window 2 New York, New York 10005
New York, New York 10005
</TABLE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
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Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust has issued the Old
Capital Securities and the Common Securities and will issue the New Capital
Securities pursuant to the Exchange Offer. The New Capital Securities will
represent preferred beneficial interests in the Trust and the holders of the New
Capital Securities and the Old Capital Securities will be entitled to a
preference over the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "-- Subordination of Common Securities." The
Declaration Agreement has been qualified under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"). This summary of certain provisions of
the New Capital Securities and the Declaration does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Declaration, including the definitions therein of certain
terms.
General. The Declaration authorizes the Administrators to issue, on behalf
of the Trust, the Trust Securities, which represent undivided beneficial
interests in the assets of the Trust. All of the Common Securities are owned by
the Corporation. The Common Securities will have equivalent terms to and rank
pari passu, and payments will be made thereon on a pro rata basis, with the
Capital Securities (including the New Capital Securities and the Old Capital
Securities), except that upon the occurrence and continuation of a Declaration
Event of Default, the rights of holders of the Common Securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of holders of the Capital
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. Pursuant to the Declaration, the Institutional Trustee will hold
legal title to the Junior Subordinated Debentures for the benefit of holders of
the Trust Securities. The payment of distributions out of money held by the
Trust, and payments upon redemption of the Capital Securities upon liquidation
of the Trust, are guaranteed by the Corporation as described under
"-- Description of New Guarantee." The Guarantee will be held by The First
National Bank of Chicago, the Guarantee Trustee (as defined herein), for the
benefit of holders of the Capital Securities. The Guarantee does not cover any
payment, including distributions, on the Capital Securities to the extent the
Trust does not have available funds to make such payments. In such event, the
remedy of holders of the Capital Securities would be, through the vote of
holders of a majority in Liquidation Amount of the Capital Securities, to direct
the Institutional Trustee to enforce the Institutional Trustee's rights under
the Junior Subordinated Debentures except in the circumstances in which a holder
of such Capital Securities may institute a Direct Action or otherwise enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures. See
" -- Voting Rights" and "-- Declaration Events of Default."
Distributions. Distributions on each New Capital Security will be payable
in U.S. dollars at an annual rate of 8.40% (which is the same rate payable on
the Junior Subordinated Debentures) on the Liquidation Amount of $1,000 per
Capital Security, compounded semiannually to the extent permitted by law. The
term "distribution" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the New Capital Securities will be cumulative, will accrue
from March 20, 1997, (the original issue date of the Old Capital Securities) and
will be payable (subject to extension of distribution payment periods as
described herein) semiannually in arrears on March 15 and September 15 of each
year (each, a "Distribution Payment Date"), commencing September 15, 1997, when,
as and if available for payment. Distributions will be made by the Institutional
Trustee, except as otherwise described below.
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The Corporation has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time and from time to time, subject to the conditions described
below, although such interest will continue to accrue on the Junior Subordinated
Debentures at an annual rate of 8.40%, compounded semiannually to the extent
permitted by law during any Extension Period. If such right is exercised,
semiannual distributions on the New Capital Securities will also be deferred
(though such distributions will continue to accrue at an annual rate of 8.40%,
compounded semiannually to the extent permitted by law), during any Extension
Period. Such right to extend any interest payment period for the Junior
Subordinated Debentures is limited to Extension Periods, each not exceeding 10
consecutive semiannual periods, and no Extension Period may be initiated while
accrued interest from a prior, completed Extension Period is unpaid or while the
Corporation is in default on the payment of interest that has become due and
payable on the Junior Subordinated Debentures, and no Extension Period may
extend beyond the maturity of the Junior Subordinated Debentures. In the event
that the Corporation exercises this right, then during any Extension Period (a)
the Corporation shall not declare or pay dividends on, make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock or rights to acquire such capital stock
(other than (i) purchases or acquisitions of shares of any such capital stock or
rights to acquire such capital stock in connection with the satisfaction by the
Corporation of its obligations under any of the Corporation's benefit plan for
directors, officers or employees or under the Corporation's dividend
reinvestment and stock purchase plan, (ii) as a result of a reclassification of
the Corporation's capital stock or rights to acquire such capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
or rights to acquire such capital stock for another class or series of the
Corporation's capital stock or rights to acquire such capital stock, (iii) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged (iv) dividends and distributions made on
the Corporation's capital stock or rights to acquire such capital stock with the
Corporation's capital stock or rights to acquire the capital stock, or (v) any
declaration of a dividend in connection with the implementation of a shareholder
rights plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto), or make guarantee
payments (other than payments under the Guarantee and the Common Securities
Guarantee) with respect to the foregoing and (b) the Corporation shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Corporation that rank pari passu
with or junior to the Junior Subordinated Debentures. Prior to the termination
of any Extension Period in respect of the Junior Subordinated Debentures, the
Corporation may further extend the interest payment period; provided that each
such Extension Period in respect of the Subordinated Debentures, together with
all such previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period in respect of the
Junior Subordinated Debentures and the payment of all amounts then due, the
Corporation may commence a new Extension Period, subject to the above
requirements. See "-- Description of New Junior Subordinated
Debentures -- Interest" "-- Option to Extend Interest Payment Period" and
"-- Certain Covenants." If distributions are deferred, the distributions due on
such New Capital Securities shall be paid on the date that the related Extension
Period terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to holders of applicable
Capital Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date.
Distributions on the Capital Securities must be paid on the dates payable
(after giving effect to any Extension Period) to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
The Trust's funds available for distribution to holders of the Capital
Securities will be limited to payments received from the Corporation on the
Junior Subordinated Debentures. See "-- Description of New Junior Subordinated
Debentures." The payment of distributions out of moneys held by the Trust is
guaranteed by the Corporation to the extent set forth under "-- Description of
New Guarantee."
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<PAGE> 45
Distributions on the Capital Securities will be payable to holders thereof
as they appear on the books and records of the Trust on the relevant record
dates, which, as long as the Capital Securities are held solely in book-entry
only form, will be one Business Day (as defined below) prior to the relevant
Distribution Payment Dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
" -- Book-Entry Only Issuance -- The Depository Trust Company." At any time when
the Capital Securities are not held solely in book-entry only form, the
Administrators shall select record dates, which shall be 15 days prior to the
relevant Distribution Payment Date. In the event that any date on which
distributions are to be made on the Capital Securities is not a Business Day,
then payment of the distributions payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on such payment date. A "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in New York City (in the
State of New York) and Princeton (in the State of New Jersey) are permitted or
required by any applicable law to close.
Redemption. The Junior Subordinated Debentures will mature on March 15,
2027. Unless a Tax Event or a Capital Treatment Event has occurred, the New
Capital Securities will not be redeemable prior to March 15, 2007. If a Tax
Event or a Capital Treatment Event shall occur and be continuing, the
Corporation will have the right, at any time, subject to the receipt of prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve, to either (i) redeem within 90
days following the occurrence of such Tax Event or Capital Treatment Event the
Junior Subordinated Debentures in whole (but not in part) at par, plus any
accrued and unpaid interest thereon to the date of the redemption or (ii)
dissolve the Trust and, after satisfaction of the liabilities to creditors of
the Trust (to the extent not satisfied by the Corporation), cause the New Junior
Subordinated Debentures to be distributed to holders of the New Capital
Securities in liquidation of the Trust. Furthermore, the right of the
Corporation to redeem the Junior Subordinated Debentures upon the occurrence of
a Tax Event under clause (i) above is subject to receipt by the Corporation of
an opinion of a nationally recognized independent counsel experienced in tax and
bank regulatory matters that, notwithstanding the exercise by the Corporation of
such rights described under clause (ii) above, either (x) such Tax Event would
still exist or (y) the Junior Subordinated Debentures would not constitute Tier
1 Capital (or its then equivalent) of a bank holding company. Under the current
applicable capital guidelines and policies of the Federal Reserve, the Junior
Subordinated Debentures would not constitute Tier 1 Capital upon distribution to
holders of the Capital Securities. Under current United States federal income
tax law and interpretations thereof and assuming, as expected, the Trust is
treated as a grantor trust, a distribution of the Junior Subordinated Debentures
should not be a taxable event to holders of the Capital Securities. Should there
occur a change in law, a change in legal interpretation, certain Tax Events or
other circumstances, however, the distribution could be a taxable event to
holders of the Capital Securities. See "United States Federal Income
Taxation -- Receipt of the Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
If the Corporation does not elect either option described above, the New
Capital Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures, whether at maturity or Optional Redemption, and in the
event a Tax Event has occurred and is continuing, the Corporation will be
obligated to pay any additional taxes, duties, assessments and other
governmental charges (other than withholding taxes) to which the Trust has
become subject as a result of a Tax Event.
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<PAGE> 46
In addition, the Junior Subordinated Debentures may be redeemed by the
Corporation, in whole or in part, at any time and from time to time on or after
March 15, 2007, at the Call Price (expressed as a percentage of the principal
amount) specified below:
<TABLE>
<CAPTION>
IF REDEEMED DURING THE
12-MONTH PERIOD BEGINNING CALL
MARCH 15 PRICE
--------------------------------------------------------- --------
<S> <C>
2007........................................... 104.20%
2008........................................... 103.78
2009........................................... 103.36
2010........................................... 102.94
2011........................................... 102.52
2012........................................... 102.10
2013........................................... 101.68
2014........................................... 101.26
2015........................................... 100.84
2016........................................... 100.42
</TABLE>
and thereafter at 100% of the principal amount (each a "Call Price"), together,
in each case, with accrued and unpaid interest thereon to the date of
redemption. In each case, the right of the Corporation to redeem the Junior
Subordinated Debentures is subject to the Corporation having received prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon the repayment of the Junior Subordinated Debentures held by the Trust,
whether at maturity or upon early redemption, the proceeds from such repayment
shall concurrently be applied on a pro rata basis to redeem Trust Securities
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the Junior Subordinated Debentures being repaid at a redemption price equal
to (i) $1,000 per Trust Security, in the case of a redemption upon the maturity
of the Junior Subordinated Debentures or redemption of the Junior Subordinated
Debentures upon the occurrence of a Tax Event or a Capital Treatment Event,
subject to certain conditions provided herein and (ii) an amount per Trust
Security equal to the product of $1,000 and the applicable percentage used to
determine the Call Price for the Junior Subordinated Debentures being redeemed
in the case of any Optional Redemption of Junior Subordinated Debentures, plus,
in all cases, accrued and unpaid distributions on such Trust Securities to the
date fixed for redemption; provided, however, that holders of such Trust
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at maturity of the Junior Subordinated Debentures). See
"-- Description of New Junior Subordinated Debentures -- Redemption." In the
event that fewer than all of the outstanding Capital Securities are to be
redeemed, the Capital Securities held in book-entry form will be redeemed in
accordance with the procedures of DTC as described under "-- Book-Entry Only
Issuance -- The Depository Trust Corporation."
"Tax Event" means the receipt by the Institutional Trustee of an opinion of
a nationally recognized independent tax counsel to the Corporation experienced
in such matters to the effect that, as a result of (a) any amendment to,
clarification of or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any judicial decision or
official administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to,
clarification of or change in the administrative position or interpretation of
any Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment, clarification
or change is effective or such Administrative Action or decision is announced,
in each case, on or after the date of the issuance of the Offered Securities,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of
41
<PAGE> 47
the date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Junior Subordinated Debentures or subject to
more than a de minimis amount of other taxes, duties or other governmental
charges, (ii) any portion of interest payable by the Corporation to the Trust on
the Junior Subordinated Debentures is not, or within 90 days of the date thereof
will not be, deductible by the Corporation for United States federal income tax
purposes, or (iii) the Corporation could become liable to pay, on the next date
on which any amount would be payable with respect to the Junior Subordinated
Debentures, any Additional Interest (as defined herein).
For purposes of a Tax Event and the redemption procedures applicable
thereto, reference to Junior Subordinated Debentures shall include any Exchange
Securities issued in exchange therefor.
"Capital Treatment Event" means the Corporation shall have received an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment, clarification or change is effective or such pronouncement, action or
decision is announced on or after the date of the issuance of the Offered
Securities, the Corporation will not be entitled to treat the Capital Securities
or the Junior Subordinated Debentures, if the Junior Subordinated Debentures
were to be distributed following the occurrence of a Tax Event as described
herein, as "Tier 1 Capital" (or its then equivalent) for purposes of the
risk-based capital adequacy guidelines of the Federal Reserve, as then in effect
and applicable to the Corporation; provided, however, that the distribution of
the Junior Subordinated Debentures in connection with the liquidation of the
Trust by the Corporation shall not in and of itself constitute a Capital
Treatment Event unless such liquidation shall have occurred in connection with a
Tax Event.
The rights of the Corporation described above if a Tax Event or a Capital
Treatment Event occurs are in addition to the right of the Corporation, as the
holder of the Common Securities, to terminate the Trust, after satisfaction of
liabilities to creditors of the Trust and cause the Junior Subordinated
Debentures to be distributed to holders of the Trust Securities as described
above.
Redemption Procedures. The Trust may not redeem fewer than all of the
outstanding Capital Securities unless all accrued and unpaid distributions have
been paid on all such Capital Securities for all semiannual distribution periods
terminating on or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of the Capital
Securities (which notice will be irrevocable), then by 12:00 noon, New York City
time, on the redemption date, provided that the Corporation has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debentures, the Institutional
Trustee will irrevocably deposit with the Depositary (as defined herein) or its
nominee funds sufficient to pay the applicable Redemption Price and will give
the Depositary irrevocable instructions and authority to pay such Redemption
Price to the holders of such Capital Securities. See " -- Book-Entry Only
Issuance -- The Depository Trust Company." With respect to the Capital
Securities that are Certificated Securities (as defined herein), provided that
the Corporation has paid to the Institutional Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Junior
Subordinated Debentures, the Institutional Trustee will pay the applicable
Redemption Price to the holders of such Capital Securities by check mailed to
the address of each such holder appearing on the books and records of the Trust
on the redemption date. If notice of redemption shall have been given and funds
deposited as required, then, immediately prior to the close of business on the
date of such deposit, distributions will cease to accrue on the Capital
Securities and all rights of the holders of such Capital Securities will cease,
except the right of the holders of such Capital Securities to receive the
applicable Redemption Price but without interest on such Redemption Price. In
the event that any date fixed for redemption of the Capital Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on such date, except that, if such Business Day falls in
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<PAGE> 48
the next calendar year, such payment will be made on the immediately preceding
Business Day. In the event that payment of the Redemption Price in respect of
the Capital Securities is improperly withheld or refused and not paid either by
the Institutional Trustee or by the Corporation pursuant to the Guarantee,
distributions on such Capital Securities will continue to accrue at the then
applicable rate from the original redemption date to the actual date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, Capital Securities will be redeemed in accordance with the
procedures of DTC as described under " -- Book-Entry Only Issuance -- The
Depository Trust Company."
In the event of any redemption of the Capital Securities in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange any
Certificated Security during a period beginning at the opening of business 15
days before any selection for redemption of the Capital Securities and ending at
the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of the Capital Securities
to be so redeemed or (ii) register the transfer of or exchange any Certificated
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Certificated Securities being redeemed in part.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Corporation or its subsidiaries may
at any time, and from time to time, purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
Liquidation Distribution Upon Dissolution. In the event of the voluntary
or involuntary liquidation, dissolution, winding-up or termination of the Trust
(each a "Liquidation") other than in connection with a redemption of the Junior
Subordinated Debentures as previously described, the holders of the Capital
Securities will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Corporation), distributions in an amount equal to the aggregate
of the Liquidation Amount of $1,000 per Capital Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, the Junior Subordinated Debentures
in an aggregate principal amount equal to the aggregate Liquidation Amount of
the Trust Securities have been distributed on a pro rata basis to the holders of
the Trust Securities in exchange for the Trust Securities. Upon any Liquidation
in which the Junior Subordinated Debentures are distributed, if at the time of
such Liquidation the Capital Securities are rated by at least one nationally
recognized statistical rating organization, the Corporation will use its best
efforts to obtain from at least one nationally recognized statistical rating
organization a rating for the Junior Subordinated Debentures.
The Corporation, as the holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event or Capital Treatment Event), subject to the receipt by
the Corporation of prior approval from the Federal Reserve, if then required
under applicable capital guidelines or policies of the Federal Reserve, and,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Corporation), cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities on a pro rata basis in
accordance with the aggregate Liquidation Amount thereof, in liquidation of the
Trust.
Pursuant to the Declaration, the Trust shall dissolve on the first to occur
of (i) March 12, 2052, the expiration of the term of the Trust, (ii) the
bankruptcy of the Corporation, (iii) (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture, the
Declaration or the Guarantee, as the case may be) the filing of a certificate of
cancellation or its equivalent with respect to the Corporation or the Trust, or
upon the revocation of the charter of the Corporation and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) the
distribution to the holders of the Trust Securities of the Junior Subordinated
Debentures, upon exercise of the right of the holder of all of the outstanding
Common Securities of the Trust to dissolve the Trust as described above, (v) the
entry of a decree of judicial dissolution of the Corporation or the Trust, or
(vi) the redemption of all of the Trust Securities. Pursuant to the Declaration,
as soon as practicable after the dissolution of the Trust and
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<PAGE> 49
upon completion of the winding up of the Trust, the Trust shall terminate upon
the filing of a certificate of cancellation.
If a Liquidation occurs as described in clause (i), (ii), (iii) or (v) of
the preceding paragraph, the Trust shall be liquidated by the Institutional
Trustees as expeditiously as such Institutional Trustees determine to be
possible by distributing to the holders of the Trust Securities, after
satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Corporation), the Junior Subordinated Debentures, unless such
distribution is determined by the Institutional Trustee not to be practical, in
which event such holders will be entitled to receive out of the assets of the
Trust available for distribution to holders, after satisfaction of liabilities
to creditors of the Trust (to the extent not satisfied by the Corporation), an
amount equal to the Liquidation Distribution. An early Liquidation of the Trust
pursuant to clause (iv) above shall occur only if the Institutional Trustee
determines that such Liquidation is possible by distributing to the holders of
the Trust Securities, after satisfaction of liabilities to creditors of the
Trust (to the extent not satisfied by the Corporation), the Junior Subordinated
Debentures, and such distribution occurs.
If, upon any such Liquidation, 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 shall be paid to the holders of the Trust
Securities on a pro rata basis. The holders of the Common Securities issued by
the Trust will be entitled to receive distributions upon any such Liquidation
pro rata with the holders of such Capital Securities, except that if a
Declaration Event of Default has occurred and is continuing in respect of the
Trust, the Capital Securities shall have a preference over the Common Securities
with regard to such distributions.
After the date for any distribution of the Junior Subordinated Debentures
upon dissolution of the Trust, (i) the Trust Securities will be deemed to be no
longer outstanding, (ii) the Depositary or its nominee, as the record holder of
the Capital Securities issued in book-entry form, will receive a registered
Global Certificate (as defined herein) or Certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution, and (iii) any
certificates representing the Capital Securities not held by the Depositary or
its nominee will be deemed to represent the Junior Subordinated Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of such Capital Securities until such certificates are presented to the
Corporation or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the New
Capital Securities or the New Junior Subordinated Debentures that may be
distributed in exchange for the New Capital Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the New Capital Securities
that an investor may purchase, or the New Junior Subordinated Debentures that an
investor may receive if a dissolution and liquidation of the Trust were to
occur, may trade at a discount to the price paid to purchase such Capital
Securities.
Declaration Events of Default. An event of default under the Indenture in
respect of the Subordinated Debt Securities (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (each a "Declaration Event of Default"); provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Declaration Event of Default with respect to such Common Securities
until all Declaration Events of Default with respect to the Capital Securities
have been cured, waived or otherwise eliminated. Until such Declaration Events
of Default have been so cured, waived, or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Capital Securities and only the holders of such Capital
Securities will have the right to direct the Institutional Trustee with respect
to certain matters under the Declaration, and therefore the Indenture. The
holders of a majority in Liquidation Amount of the Capital Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee or to direct the exercise of
any trust or power conferred upon the Institutional Trustee under the
Declaration, including the right to direct the Institutional Trustee to exercise
the remedies available to it as holder of the Junior Subordinated Debentures. If
the Institutional Trustee fails to enforce its rights under the Junior
Subordinated
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<PAGE> 50
Debentures after the holders of a majority in Liquidation Amount of the Capital
Securities have so directed the Institutional Trustee, to the fullest extent
permitted by law, a holder of record of such Capital Securities may institute a
legal proceeding against the Corporation to enforce the Institutional Trustee's
rights under the Subordinated Debt Securities without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Corporation to pay principal or interest (or premium, if any) on the Junior
Subordinated Debentures on the respective dates such principal or interest (or
premium, if any) is payable, as deferred, if applicable (or in the case of
redemption, the redemption date), then a holder of record of such Capital
Securities may institute a Direct Action against the Corporation for payment, on
or after the respective due dates specified in the Junior Subordinated
Debentures, to such holder directly of the principal of or interest on (or
premium, if any) Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Capital Securities of
such holder. In connection with such Direct Action, the Corporation will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by the Corporation to such holder
of the Capital Securities in such Direct Action; provided, however, that no such
subrogation right may be exercised so long as a Declaration Event of Default has
occurred and is continuing. The holders of the Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, so long as it is the sole holder of the Junior Subordinated Debentures,
will have the right under the Indenture to declare the principal of and interest
on (or premium, if any) the Junior Subordinated Debentures to be immediately due
and payable. The Corporation and the Trust are each required to file annually
with the Institutional Trustee an officer's certificate as to its compliance
with all conditions and covenants under the Declaration.
Voting Rights. Except as described below, under the Trust Act and under
" -- Removal of Issuer Trustees; Appointment of Successors" and "-- Description
of New Guarantee -- Modification of the Guarantee; Assignment," and as otherwise
required by law and the Declaration, the holders of the Capital Securities will
have no voting rights.
Subject to the requirements set forth in this paragraph, the holders of a
majority in aggregate Liquidation Amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon such Institutional Trustee under the Declaration, including the
right to direct such Institutional Trustee, as holder of the Junior Subordinated
Debentures, to (i) exercise the remedies available to it under the Indenture as
a holder of the Junior Subordinated Debentures, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent on behalf of all the holders of the Capital
Securities of the Trust to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures where such consent shall be
required; provided, however, that where a consent or action under the Indenture
would require the consent or act of holders of more than a simple majority in
principal amount of the Junior Subordinated Debentures (a "Super-Majority")
affected thereby, the Institutional Trustee may only give such consent or take
such action at the written direction of the holders of at least the proportion
in aggregate Liquidation Amount of the Capital Securities outstanding which the
relevant Super-Majority represents of the aggregate principal amount of the
Junior Subordinated Debentures outstanding. If the Institutional Trustee fails
to enforce its rights under the Junior Subordinated Debentures after the holders
of a majority in Liquidation Amount of such Capital Securities (or
Super-Majority, as the case may be) have so directed the Institutional Trustee,
a holder of record of the Capital Securities may, to the fullest extent
permitted by law, institute a legal proceeding directly against the Corporation
to enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of
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<PAGE> 51
the Corporation to pay principal or interest (or premium, if any) on the Junior
Subordinated Debentures on the respective dates such principal or interest (or
premium, if any) is payable, as deferred, if applicable, (or in the case of
redemption, the redemption date) then a holder of record of the Capital
Securities may institute a Direct Action against the Corporation for payment, on
or after the respective due dates specified in the Junior Subordinated
Debentures, to such holder directly of the principal of or interest (or premium,
if any) on the Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Capital Securities of
such holder. The Institutional Trustee shall notify all holders of the Capital
Securities of any default actually known to the Institutional Trustee with
respect to the Junior Subordinated Debentures unless (x) such default has been
cured prior to the giving of such notice or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on (or premium, if any) any of the
Junior Subordinated Debentures. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, such Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in Liquidation Amount of such Trust Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
Liquidation Amount of such Trust Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Junior
Subordinated Debentures outstanding. The Institutional Trustee shall not take
any such action in accordance with the directions of the holders of such Trust
Securities unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a grantor trust for United States federal income tax
purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of the Capital Securities may
be given at a separate meeting of such holders convened for such purpose, at a
meeting of all of the holders of Trust Securities or pursuant to written
consent. The Institutional Trustee will cause a notice of any meeting at which
holders of the Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of the Capital Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of the Capital Securities will be required for the Trust to
redeem and cancel the Capital Securities or distribute the Junior Subordinated
Debentures in accordance with the Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by the Corporation or any entity directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, the Corporation, shall not entitle the holders thereof to vote or
consent and shall, for purposes of such vote or consent, be treated as if such
Capital Securities were not outstanding.
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The procedures by which holders of the Capital Securities issued in
book-entry form may exercise their voting rights are described below. See
"-- Book-Entry Only Issuance -- The Depository Trust Corporation" below.
Removal of the Issuer Trustees; Appointment of Successors. If an Indenture
Event of Default has occurred and is continuing, an Issuer Trustee may be
removed and its successor appointed by the holders of at least a majority in
Liquidation Amount of Capital Securities. In no event will the holders of the
Capital Securities have the right to vote to appoint, remove or replace the
Administrators, which voting rights are vested exclusively in the Corporation as
the holder of the Common Securities. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
Modification and Amendment of the Declaration. The Declaration may be
modified or amended from time to time by the Institutional Trustee and the
holders of a majority of the Common Securities without the consent of the
holders of the Capital Securities to: (i) cure any ambiguity; (ii) correct or
supplement any provision in such Declaration that may be defective or
inconsistent with any other provision of such Declaration; (iii) add to the
covenants, restrictions or obligations of the Corporation; (iv) modify,
eliminate or add to any provision of the Declaration to such an extent as may be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes at all times as a grantor trust and will not be required to
register as an "investment company" under the Investment Corporation Act of
1940, as amended (the "1940 Act"); (v) modify, eliminate or add to any provision
of the Declaration to such an extent as may be necessary to ensure that the
Declaration will be qualified under the Trust Indenture Act upon effectiveness
of the Exchange Offer Registration Statement with respect to the Capital
Securities; and (vi) modify, eliminate and add to any provision of such
Declaration, provided that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii), and (vi) hereof shall adversely affect
the powers, preferences or special rights of the holders of such Capital
Securities so long as they remain outstanding.
In addition, the Declaration may be modified or amended if approved by the
Institutional Trustee and the holders of a majority of the Common Securities
(and in certain circumstances the Delaware Trustee), provided that, if any
proposed amendment provides for, or the Institutional Trustee otherwise proposes
to effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to the
Declaration or otherwise or (ii) the Liquidation of the Trust other than
pursuant to the terms of the Declaration, then, in each case, the holders of the
Trust Securities voting together as a single class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the holders of at least a majority in Liquidation
Amount of the Trust Securities affected thereby; provided that if any amendment
or proposal referred to in clause (i) above would adversely affect only the
Capital Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a majority in
Liquidation Amount of such class of Trust Securities.
Notwithstanding the foregoing, no modification or amendment may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for United States federal income tax purposes as other than a
grantor trust or (ii) cause the Trust to be deemed an "investment company" which
is required to be registered under the 1940 Act.
Notwithstanding any provision of the Declaration, the provisions of Section
316(b) of the Trust Indenture Act incorporated by reference into the Declaration
provides that the right of any holder of the Capital Securities to receive
payments of distributions and other payments upon redemption or otherwise on or
after their respective due dates, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such holder, except for a deferral of
distributions as provided therein.
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Mergers, Consolidations or Amalgamations. The Trust may not consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to, any corporation or
other body, except as described below or as otherwise described in " --
Liquidation Distribution Upon Dissolution." The Trust may, with the consent of
the Institutional Trustee and without the consent of the Delaware Trustee or the
holders of the Capital Securities, consolidate, amalgamate, merge with or into,
or be replaced by, a trust organized as such under the laws of any state of the
United States; provided that (i) if the Trust is not the survivor, such
successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so that the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) a trustee of such successor entity
possessing the same powers and duties as the Institutional Trustee is appointed
as the holder of the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (iv) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of such Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in such successor entity), (v) such successor entity has a
purpose substantially identical to that of the Trust, (vi) prior to such merger,
consolidation, amalgamation or replacement, the Trust has received an opinion of
a nationally recognized independent counsel to the Trust experienced in such
matters to the effect that (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in such successor entity), (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (C)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be classified as other than a grantor trust
for United States federal income tax purposes, and (vii) the Corporation
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by, any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
Book-Entry Only Issuance -- The Depository Trust Company. The New Capital
Securities may be represented by one or more New Capital Securities in
registered, global form (collectively, the "Global New Capital Securities" and
together with the Old Capital Securities in registered global form, the "Global
Capital Securities"). The Global New Capital Securities will be deposited upon
issuance with the International Trustee as custodian for DTC, in New York, New
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant in DTC as described below.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in certificated form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a Global Certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities
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through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of the Capital Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased the
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Capital Securities, except in the
event that use of the book-entry system for the Capital Securities is
discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of the Capital Securities with DTC and their registration in the
name of Cede & Co. will effect no change in beneficial ownership. DTC will have
no knowledge of the actual Beneficial Owners of the Capital Securities. DTC's
records will reflect only the identity of the Direct Participants to whose
accounts such Capital Securities are credited, which may or may not be the
Beneficial Owners. The Direct Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate in respect of the Capital Securities, DTC or such nominee, as
the case may be, will be considered the sole owner or holder of the Capital
Securities represented thereby for all purposes under the Declaration and such
Capital Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest to exercise any rights of a holder under the Declaration.
DTC has advised the Corporation that it will take any action permitted to
be taken by a holder of the Capital Securities (including the presentation of
the Capital Securities for exchange as described below) only at the direction of
one or more Participants to whose accounts the DTC interest in the Global
Certificates is credited and only in respect of such portion of the aggregate
Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is a
Declaration Event of Default with respect to the Capital Securities, DTC will,
upon notice, exchange the Global Certificates in respect of such Capital
Securities for Certificated Securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, the Capital Securities will be redeemed by lot.
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Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the Capital Securities. Under its usual procedures, DTC
would mail an omnibus proxy to the Trust as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Capital Securities are credited
on the record date (identified in a listing attached to the omnibus proxy).
Payments in respect of the Capital Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Direct Participants and Indirect Participants and not of
DTC, the Trust or the Corporation, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments in respect of the
Capital Securities held in book-entry form to DTC are the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of the Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Corporation, the
Trust or the Issuer Trustees will have any responsibility for the performance by
DTC or its Direct Participants or Indirect Participants under the rules and
procedures governing DTC. DTC may discontinue providing its services as a
securities depositary with respect to the Capital Securities at any time by
giving notice to the Corporation and the Trust. Under such circumstances, in the
event that a successor securities depositary is not obtained, the Capital
Security certificates will be required to be printed and delivered.
Additionally, the Trust (with the consent of the Corporation) may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Capital Securities of the Trust. In
that event, certificates for such Capital Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Corporation and the Trust believes to be
reliable, but neither the Corporation nor the Trust takes responsibility for the
accuracy thereof.
Restrictions on Transfer. The New Capital Securities will be issued and
may be transferred only in blocks having an aggregate Liquidation Amount of not
less than $100,000 (100 Capital Securities). Any such transfer of the Capital
Securities in a block having an aggregate Liquidation Amount of less than
$100,000 shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Capital Securities for
any purpose, including but not limited to, the receipt of distributions on such
Capital Securities, and such transferee shall be deemed to have no interest
whatsoever in such Capital Securities.
Payment and Paying Agency. Payments in respect of the Capital Securities
represented by the Global Certificates shall be made to DTC, which shall credit
the relevant accounts at DTC on the applicable Distribution Payment Dates or, in
the case of Certificated Securities, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address shall appear on
books and records of the Trust or by wire transfers. The paying agent for the
Trust Securities (the "Paying Agent") shall initially be The First National Bank
of Chicago. The Paying Agent shall be
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permitted to resign as Paying Agent upon 30 days' written notice to the
Institutional Trustee, the Administrators and the Corporation. In the event that
The First National Bank of Chicago shall no longer be the Paying Agent, the
Institutional Trustee shall appoint a successor to act as Paying Agent (which
shall be a bank or trust company).
Registrar and Transfer Agent. The Institutional Trustee will act as
registrar and transfer agent for the Capital Securities of the Trust.
Registration of transfers or exchanges of the Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or the Corporation may require) in respect
of any tax or other government charges which may be imposed in relation to it.
In the event of any redemption of the Capital Securities in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange any
Certificated Security during a period beginning at the opening of business 15
days before any selection for redemption of the Capital Securities and ending at
the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of the Capital Securities
to be so redeemed or (ii) register the transfer of or exchange any Certificated
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Certificated Securities being redeemed in part.
Information Concerning the Institutional Trustee. The Institutional
Trustee, prior to the occurrence of a default with respect to the Trust
Securities and after the curing of any defaults that may have occurred,
undertakes to perform only such duties as are specifically set forth in the
Declaration and, after default, shall exercise such of the rights and powers
vested in it by such Declaration, and use the same degree of care and skill in
their exercise, as a prudent individual would exercise or use in the conduct of
his or her own affairs. Subject to such provisions, the Institutional Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of the Capital Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of the Capital
Securities will not be required to offer such indemnity in the event such
holders, by exercising their voting rights, direct the Institutional Trustee to
take any action it is empowered to take under the Declaration following a
Declaration Event of Default. The Institutional Trustee also serves as trustee
under the Guarantee and the Indenture.
Whenever in the exercise of its rights or powers or the performance of its
duties under the Declaration the Institutional Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or taking
any other action thereunder, the Institutional Trustee (i) may request
instructions from the holders of the Capital Securities, which instructions may
only be given by the holders of a majority, or such other proportion, in
Liquidation Amount of the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of such Capital Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in or accordance
with such instructions.
The Corporation and certain of its affiliates maintain a banking
relationship with the Institutional Trustee and certain of its affiliates.
Governing Law. The Declaration and the Capital Securities will be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to principles of conflict of laws.
Miscellaneous. The Institutional Trustee and the holders of a majority of
the Common Securities are authorized and directed to operate the Trust in such a
way so that the Trust will not be required to register as an "investment
company" under the 1940 Act nor be characterized as other than a grantor trust
for United States federal income tax purposes. The Corporation has agreed to
conduct its affairs so that the Junior Subordinated Debentures will be treated
as indebtedness of the Corporation for United
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States federal income tax purposes. In this connection, the Institutional
Trustee and the holders of a majority of the Common Securities are authorized to
take any action, not inconsistent with applicable law or the Declaration, that
the Institutional Trustee and such holders of the Common Securities determine in
their discretion to be necessary or desirable for such purposes, even if such
action adversely affects the interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued, and the New Junior
Subordinated Debentures will be issued, as separate series under the Indenture.
The Indenture has been qualified under the Trust Indenture Act. This summary of
certain terms and provisions of the New Junior Subordinated Debentures and the
Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, some of which are not otherwise defined herein,
are qualified in their entirety by reference to all of the provisions of the
Indenture and those terms made a part of the Indenture by the Trust Indenture
Act.
General. Concurrently with the issuance of the Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Old Junior Subordinated Debentures
issued by the Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures, in an amount corresponding to
the Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debentures promptly after the Expiration
Date.
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon, including Compounded Interest (as defined herein) and
Additional Interest, if any, on March 15, 2027.
If the Junior Subordinated Debentures are distributed to holders of the
Capital Securities in liquidation of such holders' interests in the Trust, the
Junior Subordinated Debentures will, with respect to the Capital Securities held
in book-entry only form, initially be issued as a Global Security (as defined
herein) having an aggregate principal amount equal to the Liquidation Amount of
such Capital Securities and, with respect to such Capital Securities held in
certificated non-book entry form, will initially be deemed to be represented by
such certificates and to have an aggregate principal amount equal to the
Liquidation Amount of such Capital Securities. As described herein, under
certain limited circumstances, Subordinated Debt Securities may be issued in
certificated non-book entry form in exchange for a Global Security. See
" -- Book-Entry Issuance and Settlement" below. The Junior Subordinated
Debentures deemed to be represented by a Capital Security certificate will be
issued in certificated form upon presentation for transfer or reissuance.
Payments on the Junior Subordinated Debentures issued as a Global Security will
be made to DTC, a successor depositary or, in the event that no depositary is
used, to a paying agent for the Junior Subordinated Debentures. In the event the
Junior Subordinated Debentures are issued in certificated non-book entry form,
principal and interest (and premium, if any) will be payable, the transfer of
the Junior Subordinated Debentures will be registrable and the Junior
Subordinated Debentures will be exchangeable for the Junior Subordinated
Debentures of other denominations of a like aggregate principal amount at the
corporate trust office of the Debt Trustee in New York, New York; provided that
payment of interest may be made, at the option of the Corporation, by check
mailed to the address of the holder entitled thereto or by wire transfer to an
account appropriately designated by the holder entitled thereto. Notwithstanding
the foregoing, so long as the holder of any Junior Subordinated Debentures is
the Institutional Trustee, the payment of principal and interest (and premium,
if any) on the Junior Subordinated Debentures held by the Institutional Trustee
will be made at such place and to such account as may be designated by the
Institutional Trustee.
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The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving the Corporation that may
adversely affect such holders.
Subordination. In the Indenture, the Corporation has covenanted and agreed
that any Junior Subordinated Debentures issued thereunder (including the New
Junior Subordinated Debentures and the Old Junior Subordinated Debentures) will
be subordinate and junior in right of payment to the Allocable Amounts in
respect of all Senior Indebtedness to the extent provided in the Indenture. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Indebtedness
will first be entitled to receive payment in full of all Allocable Amounts in
respect of such Senior Indebtedness before the holders of Junior Subordinated
Debentures will be entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
Allocable Amounts in respect of such Senior Indebtedness before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any payment
in respect of the Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Allocable Amounts," when used with respect to any Senior Indebtedness,
means all amounts due or to become due on such Senior Indebtedness less, if
applicable, any amount which would have been paid to, and retained by, the
holders of such Senior Indebtedness (whether as a result of the receipt of
payments by the holders of such Senior Indebtedness from the Corporation or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Indebtedness pursuant to any provision of such indebtedness for the payment over
of amounts received on account of such indebtedness to the holders of such
Senior Indebtedness or otherwise) but for the fact such Senior Indebtedness is
subordinate or junior in right of payment to (or subject to a requirement that
amounts received on such Senior Indebtedness be paid over to obligees on) trade
accounts payable or accrued liabilities arising in the ordinary course of
business.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Corporation for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments.
"Indebtedness Ranking on a Parity with the Junior Subordinated Debentures"
shall mean (i) Indebtedness for Money Borrowed, whether outstanding on the date
of execution of the Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks equally with and not prior to the Junior
Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation
and (ii) all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a trustee of such trust, partnership
or other entity affiliated with the Corporation that is a financing vehicle of
the Corporation (a "financing entity") in connection with the issuance by such
financing entity of equity securities or other securities guaranteed by the
Corporation pursuant to an instrument that ranks pari passu with or junior in
right of payment to the Guarantee.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" shall
mean any Indebtedness for Money Borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created,
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assumed or incurred, other than the Corporation's 8.625% Subordinated Notes due
December 10, 2002, which specifically by its terms ranks junior to and not
equally with or prior to the Junior Subordinated Debentures (and any other
Indebtedness Ranking on a Parity with the Junior Subordinated Debentures) in
right of payment upon the happening of the dissolution or winding-up or
liquidation or reorganization of the Corporation. The securing of any
Indebtedness for Money Borrowed, otherwise constituting Indebtedness Ranking on
a Parity with the Junior Subordinated Debentures or Indebtedness Ranking Junior
to the Junior Subordinated Debentures, as the case may be, shall not be deemed
to prevent such Indebtedness for Money Borrowed from constituting Indebtedness
Ranking on a Parity with the Junior Subordinated Debentures or Indebtedness
Ranking Junior to the Junior Subordinated Debentures, as the case may be.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, except Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures or Indebtedness Ranking Junior to the Junior
Subordinated Debentures, and any deferrals, renewals or extensions of such
Senior Indebtedness, including, without limitation, the Allocable Amounts in
respect of the Corporation's 8.625% Subordinated Notes due December 10, 2002 and
any deferrals, renewals or extensions thereof.
The Corporation is a legal entity separate and distinct from its
subsidiaries. Because the Corporation is a bank holding company, the right of
the Corporation to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation of reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. In
addition, there are various legal limitations on the extent to which a bank
subsidiary may finance or otherwise supply funds to the Corporation or its
non-bank subsidiaries. Under federal law, no bank subsidiary may, subject to
certain limited exceptions, make loans or extensions of credit to, or
investments in the securities of the Corporation or its non-bank subsidiaries or
take their securities as collateral for loans to any borrower. Each bank
subsidiary is also subject to collateral security requirements for any loans or
extensions of credit permitted by such exceptions. In addition, certain bank
regulatory limitations exist on the availability of subsidiary bank
undistributed net assets for the payment of dividends to the Corporation without
the prior approval of the bank regulatory authorities. The Federal Reserve Act,
which affects Summit Bank, NJ as a state-member bank of the Federal Reserve
System, restricts the payment of dividends in any calendar year to the net
profit of the current year combined with the retained net profits of the
preceding two years. State law also limits the ability of the Corporation's
banks to pay dividends. Under Pennsylvania law, Summit Bank, PA, as a
Pennsylvania state-chartered bank, may declare a dividend only if, after payment
thereof, its capital would be unimpaired and its remaining surplus would equal
100% of its capital. The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by the Corporation. The Corporation had
approximately $203.7 million of Senior Indebtedness and $54.8 million of trade
accounts payable or accrued liabilities arising in the ordinary course of
business as of March 31, 1997, and its subsidiaries had approximately $2.0
billion of liabilities (excluding deposits and liabilities owed to the
Corporation).
Redemption. The Corporation may redeem the Junior Subordinated Debentures,
in whole or in part, at any time and from time to time, on or after March 15,
2007 upon not less than 30 nor more than 60 days' notice, at the Call Price
described under "-- Description of New Capital Securities -- Redemption," plus
accrued and unpaid interest to the redemption date. In addition, the Junior
Subordinated Debentures may be redeemed by the Corporation at any time, in whole
or in part, subject to certain terms and conditions described herein, upon the
occurrence and continuation of a Tax Event or a Capital Treatment Event, to
either (i) redeem within 90 days following the occurrence of such Tax Event or
Capital Treatment Event the Junior Subordinated Debentures in whole (but not in
part), at par, plus any accrued and unpaid interest thereon to the date of the
redemption or (ii) dissolve the Trust and, after satisfaction of the claims of
creditors of the Trust (to the extent not satisfied by the Corporation), cause
the Junior Subordinated Debentures to be distributed to holders of the Capital
Securities in liquidation of the Trust. In each case, redemption prior to
maturity is subject to the receipt by the Corporation of prior approval from the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve. See "-- Description of New Capital
Securities -- Redemption."
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Interest. The New Junior Subordinated Debentures shall bear interest at an
annual rate of 8.40%, from March 20, 1997, semiannually in arrears on March 15
and September 15 of each year (each an "Interest Payment Date"), commencing
September 15, 1997, to the person in whose name such Subordinated Debt Security
is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. In the event the Junior
Subordinated Debentures are not held solely in book-entry only form, the
Corporation will select relevant record dates, which shall be at least 15 days
prior to the relevant Interest Payment Date. The term "interest" as used herein,
as such term relates to the Junior Subordinated Debentures, includes any
Compounded Interest or Additional Interest or any Special Payment payable unless
otherwise stated.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) with the same force and effect as if made on such
date.
Option to Extend Interest Payment Period. So long as the Corporation is
not in default in the payment of interest that has become due and payable on the
Junior Subordinated Debentures and no accrued interest from a prior completed
Extension Period is unpaid, the Corporation shall have the right to defer
payments of interest on the Junior Subordinated Debentures by extending the
interest payment period, at any time and from time to time, for Extension
Periods, each not exceeding 10 consecutive semiannual periods and none extending
beyond the maturity date of the Junior Subordinated Debentures, provided,
however, that on the date on which each such Extension Period ends or, if such
date is not an Interest Payment Date, on the immediately following Interest
Payment Date, the Corporation shall pay all interest then accrued and unpaid,
together with interest thereon at an annual rate of 8.40%, compounded
semiannually to the extent permitted by applicable law ("Compounded Interest").
During any Extension Period (a) the Corporation shall not declare or pay
dividends on, make any distribution with respect to, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its capital stock
or rights to acquire such capital stock (other than (i) purchases or
acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by the Corporation of its
obligations under any of the Corporation's benefit plan for directors, officers
or employees or under the Corporation's dividend reinvestment and stock purchase
plan, (ii) as a result of a reclassification of the Corporation's capital stock
or rights to acquire such capital stock or the exchange or conversion of one
class or series of the Corporation's capital stock or rights to acquire such
capital stock for another class or series of the Corporation's capital stock or
rights to acquire such capital stock, (iii) the purchase of fractional interests
in shares of the Corporation's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged (iv) dividends and distributions made on the Corporation's capital
stock or rights to acquire such capital stock with the Corporation's capital
stock or rights to acquire such capital stock, or (v) any declaration of a
dividend in connection with the implementation of a shareholder rights plan, or
the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto), or make any guarantee payments
(other than payments under the Guarantee and the Common Securities Guarantee)
with respect to the foregoing and (b) the Corporation shall not make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Corporation that rank pari passu with or junior to
the Junior Subordinated Debentures. Prior to the termination of any such
Extension Period, the Corporation may further defer payments of interest by
extending the interest payment period; provided, however, that each such
Extension Period, including all such previous and further extensions thereof,
may not exceed 10 consecutive semiannual periods or extend beyond the maturity
of the Junior Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, the Corporation may commence a
new Extension Period, subject to the terms set forth herein. No interest during
an Extension Period, except on the date on which such Extension Period
terminates (or, if such date is not an Interest Payment Date, on the immediately
following Interest Payment Date), shall be due and payable. The Corporation has
no
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present intention of exercising its right to defer payments of interest on the
Junior Subordinated Debentures.
If the Institutional Trustee shall be the sole holder of the Junior
Subordinated Debentures, the Corporation shall give the Administrators, the
Institutional Trustee and the Debt Trustee notice of its initiation of any
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Capital Securities are payable or (ii) the date the
Institutional Trustee is required to give notice to holders of the Capital
Securities (or any national securities exchange or other organization on which
the Capital Securities are listed, if any) of the record date or the
Distribution Payment Date, in each case with respect to distributions on the
Trust Securities the payment of which is being deferred. The Institutional
Trustee shall give notice of the Corporation's initiation of any Extension
Period to the holders of such Capital Securities. If the Institutional Trustee
shall not be the sole holder of the Junior Subordinated Debentures, the
Corporation shall give the holders of such Junior Subordinated Debentures notice
of its initiation of such Extension Period 10 Business Days prior to the earlier
of (i) the next succeeding Interest Payment Date or (ii) the date upon which the
Corporation is required to give notice to holders of such Junior Subordinated
Debentures (or any national securities exchange or other organization on which
the corresponding Capital Securities are listed, if any) of the record date or
Interest Payment Date, in each case with respect to interest payments the
payment of which is being deferred.
Additional Interest. If at any time the Trust shall be required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Corporation will pay as additional
interest ("Additional Interest") on the Junior Subordinated Debentures such
additional amounts as shall be required so that the net amounts received and
retained by the Trust after paying any such taxes, duties, assessments or other
governmental charges will equal the amounts the Trust and the Institutional
Trustee would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
Proposed Tax Law Changes. On February 6, 1997, President Clinton proposed
the Tax Proposal that would, among other things, generally deny corporate
issuers a deduction for interest in respect of certain debt obligations if such
debt obligations have a maximum term in excess of 15 years and are not shown as
indebtedness on the issuer's applicable consolidated balance sheet. As currently
proposed, the Tax Proposal would be effective generally for instruments issued
on or after the date of first Congressional committee action. Under current law,
the Corporation will be able to deduct interest on the Junior Subordinated
Debentures and, based upon the effective date of the Tax Proposal as it is
currently proposed, it is expected that if the Tax Proposal were enacted, such
legislation would not apply retroactively to the Junior Subordinated Debentures.
However, if the Tax Proposal is enacted with retroactive effect with respect to
the Junior Subordinated Debentures, the Corporation would not be entitled to an
interest deduction with respect to the Junior Subordinated Debentures. There can
be no assurance that the Tax Proposal, if enacted, will not apply retroactively
to the Junior Subordinated Debentures or that other legislation enacted after
the date hereof will not otherwise adversely affect the ability of the
Corporation to deduct the interest payable on the Junior Subordinated
Debentures. Accordingly, there can be no assurance that a Tax Event will not
occur. See "-- Description of the New Capital Securities -- Redemption."
Certain Covenants. If (i) there shall have occurred and be continuing any
event that would constitute an Event of Default (as defined herein) under the
Indenture, (ii) the Corporation shall be in default with respect to its payment
of any obligations under the Guarantee or the Common Securities Guarantee, or
(iii) the Corporation shall have given notice of its election to defer payments
of interest on the Junior Subordinated Debentures by extending the interest
payment period as provided in the Indenture and such period, or any extension
thereof, shall be continuing, then (a) the Corporation shall not declare or pay
any dividend on, make a distribution with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock or rights
to acquire such capital stock (other than (i) purchases or acquisitions of
shares of any such capital stock or rights to acquire such capital
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stock in connection with the satisfaction by the Corporation of its obligations
under any of the Corporation's benefit plan for directors, officers or employees
or under the Corporation's dividend reinvestment and stock purchase plan, (ii)
as a result of a reclassification of the Corporation's capital stock or rights
to acquire such capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock or rights to acquire such capital
stock for another class or series of the Corporation's capital stock or rights
to acquire such capital stock, (iii) the purchase of fractional interests in
shares of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(iv) dividends and distributions made on the Corporation's capital stock or
rights to acquire such capital stock with the Corporation's capital stock or
rights to acquire such capital stock, or (v) any declaration of a dividend in
connection with the implementation of a shareholder rights plan, or the issuance
of stock under any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto), or make any guarantee payments (other than
payments under the Guarantee and the Common Securities Guarantee) with respect
to the foregoing and (b) the Corporation shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Corporation that rank pari passu with or junior to the
Junior Subordinated Debentures.
For so long as the Trust Securities remain outstanding, the Corporation
will covenant to maintain 100% ownership of the Common Securities; provided,
however, that any permitted successor of the Corporation under the Indenture may
succeed to the Corporation's ownership of such Common Securities. The
Administrators and the holder of a majority of the Common Securities each will
covenant to use their respective reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with the distribution of
the Junior Subordinated Debentures to the holders of the Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes and (c) to use its reasonable
efforts to cause each holder of the Trust Securities to be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Limitation on Mergers and Sales of Assets. Nothing contained in the
Indenture or in the Subordinated Debt Securities shall prevent any consolidation
or merger of the Corporation with or into any other corporation (whether or not
affiliated with the Corporation) or successive consolidations or mergers in
which the Corporation or its successor or successors shall be a party, or shall
prevent any sale, conveyance, transfer or other disposition of the property of
the Corporation or its successor or successors as an entirety, or substantially
as an entirety, to any other corporation (whether or not affiliated with the
Corporation or its successor or successors) authorized to acquire and operate
the same; provided, however, that the Corporation shall, upon any such
consolidation, merger, sale, conveyance, transfer or other disposition, cause
the obligations of the Corporation under the Junior Subordinated Debentures and
under the Indenture to be expressly assumed, by supplemental indenture
satisfactory in form to the Debt Trustee and executed and delivered to the Debt
Trustee, by the successor entity formed by such consolidation or into which the
Corporation shall have been merged, or which shall have acquired such property.
Upon execution and delivery of such supplemental indenture to the Debt Trustee,
such successor entity will be substituted under the Indenture and thereupon the
Corporation will be relieved of any further liability or obligation thereunder.
Events of Default, Waiver and Notice. The Indenture provides that any one
or more of the following described events which has occurred and is continuing
with respect to the Junior Subordinated Debentures constitutes an "Event of
Default" with respect to the Junior Subordinated Debentures:
(a) default for 30 days in payment of any interest on the Junior
Subordinated Debentures, including any Compounded Interest or Additional
Interest in respect thereof or any Special Payment, when due; provided,
however, that a valid extension of the interest payment period by the
Corporation shall not constitute a default in the payment of interest for
this purpose; or
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(b) default in payment of principal or premium, if any, on the Junior
Subordinated Debentures when due either at maturity, upon redemption, by
declaration or otherwise; or
(c) default resulting in acceleration of other indebtedness of the
Corporation for borrowed money where the aggregate principal amount so
accelerated exceeds $50 million and such acceleration is not rescinded or
annulled within 30 days after the written notice thereof to the Corporation
by the Debt Trustee or to the Corporation and the Debt Trustee by the
holders of 25% in aggregate principal amount of the Junior Subordinated
Debentures then outstanding; or
(d) default by the Corporation in the performance of any other of the
covenants or agreements in the Indenture which shall not have been remedied
for a period of 90 days after notice to the Corporation by the Debt Trustee
or to the Corporation and the Debt Trustee by the holders of not less than
25% in aggregate principal amount of Junior Subordinated Debentures; or
(e) certain events of bankruptcy, insolvency or reorganization of the
Corporation; or
(f) the Liquidation of the Trust, except in connection with the
distribution of the Junior Subordinated Debentures to the holders of the
Trust Securities in liquidation of the Trust, the redemption of all of the
Trust Securities, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration.
The Indenture provides that the Debt Trustee may, under certain
circumstances, withhold from the holders notice of default with respect to the
Junior Subordinated Debentures (except for any default in payment of principal
of or interest or premium, if any, on the Junior Subordinated Debentures) if the
Trustee considers it in the interest of such holders to do so.
The Indenture provides that if an Event of Default in respect of the Junior
Subordinated Debentures shall have occurred and be continuing, either the Debt
Trustee or the holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debentures then outstanding may declare the principal of and
accrued interest on all Junior Subordinated Debentures to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults may be waived (except defaults in payment of principal of or
interest or premium on the Junior Subordinated Debentures, which must be cured
or paid in full) by the holders of a majority in aggregate principal amount of
the Junior Subordinated Debentures then outstanding.
No holder of any Junior Subordinated Debentures shall have any right to
institute any suit, action or proceeding for any remedy under the Indenture,
unless such holder previously shall have given to the Debt Trustee written
notice of a continuing Event of Default with respect to the Junior Subordinated
Debentures and unless the holders of not less than 25% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding shall have given
the Debt Trustee a written request to institute such action, suit or proceeding
and shall have offered to the Debt Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred thereby, and
the Debt Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action, suit or proceeding;
provided that no holder of the Junior Subordinated Debentures shall have any
right to prejudice the rights of any other holder of the Junior Subordinated
Debentures, obtain priority or preference over any other such holder or enforce
any right under the Indenture except as provided in the Indenture and for the
equal, ratable and common benefit of all holders of the Junior Subordinated
Debentures. Notwithstanding the foregoing, the right of any holder of any
Subordinated Debt Security to receive payment of the principal of, premium, if
any, and interest, on such Subordinated Debt Security when due, or to institute
suit for the enforcement of any such payment, shall not be impaired or affected
without the consent of such holder.
The holders of a majority in aggregate principal amount of the Junior
Subordinated Debentures then outstanding shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to,
or exercising any trust or power conferred on, the Debt Trustee under the
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Indenture; provided, however, that, except under certain circumstances, the Debt
Trustee may decline to follow any such direction if the Debt Trustee determines
that the action so directed would be unjustly prejudicial to holders not taking
part in such direction or would be unlawful or would involve the Debt Trustee in
personal liability. The Indenture requires the annual filing by the Corporation
with the Debt Trustee of a certificate as to the absence of certain defaults
under the Indenture.
An Event of Default under the Indenture also constitutes a Declaration
Event of Default. The holders of the Capital Securities of the Trust, in certain
circumstances, have the right to direct the Institutional Trustee of the Trust
to exercise its rights as the holder of the Junior Subordinated Debentures. See
"-- Description of New Capital Securities -- Declaration Events of Default" and
"-- Voting Rights." Notwithstanding the foregoing, if an Indenture Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Corporation to pay interest or principal (or premium, if any) on
the Junior Subordinated Debentures on the respective dates such interest or
principal (or premium, if any) is payable, as deferred, if applicable, (or in
the case of redemption, on the redemption date), the Corporation acknowledges
that a holder of record of the Capital Securities may institute a Direct Action
for payment, on or after the respective due dates specified in such Junior
Subordinated Debentures, to such holder directly of the principal of (or
premium, if any) or interest on the Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder. Notwithstanding any payments made to such
holder of the Capital Securities by the Corporation in connection with a Direct
Action, the Corporation shall remain obligated to pay the principal of (or
premium, if any) or interest on the Junior Subordinated Debentures, and the
Corporation shall be subrogated to the rights of such holder of such Capital
Securities under the Declaration to the extent of any payments made by the
Corporation to such holder in any Direct Action; provided, however, that no such
subrogation right may be exercised so long as a Declaration Event of Default has
occurred and is continuing. Except to the extent described above
under -- "Description of New Capital Securities -- Declaration Events of
Default" and " -- Voting Rights," the holders of the Capital Securities will not
be able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures.
Modification of the Indenture. The Indenture contains provisions
permitting the Corporation and the Debt Trustee, with the consent of the holders
of not less than a majority in principal amount of the Junior Subordinated
Debentures at the time outstanding, to modify the Indenture or any supplemental
indenture or the rights of the holders of the Junior Subordinated Debentures;
provided, however, that no such modification shall without the consent of the
holder of each Junior Subordinated Debenture so affected (i) extend the fixed
maturity of any Subordinated Debt Security, or reduce the principal amount
thereof or any redemption premium thereon, or reduce the rate or extend the time
of payment of interest thereon, or make the principal of or interest on or
premium, if any, the Junior Subordinated Debentures payable in any coin or
currency other than that provided in the Junior Subordinated Debentures, or
impair or affect the right of any holder of the Junior Subordinated Debentures
to institute suit for the payment thereof or (ii) reduce the aforesaid
percentage of Junior Subordinated Debentures the consent of the holders of which
is required for any such modification.
The Corporation and the Debt Trustee may enter into supplemental
indentures, without the consent of any holder of the Junior Subordinated
Debentures: (i) to evidence the succession of another corporation to the
Corporation and the assumption by the successor corporation of the covenants,
agreements and obligations of the Corporation pursuant to the Indenture; (ii) to
add to the covenants of the Corporation such further covenants, restrictions or
conditions for the protection of the holders of the Junior Subordinated
Debentures and to make the occurrence, or the occurrence and continuance
(including any or no grace periods), of a default in any of such additional
covenants, restrictions or conditions a default or an Event of Default
permitting the enforcement of remedies provided in the Indenture; (iii) to cure
any ambiguity or to correct or supplement any provision contained in the
Indenture or in any supplemental indenture which may be defective or
inconsistent with any other provision contained therein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under the Indenture provided that any such action shall not adversely
affect the
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interests of the holders of the Junior Subordinated Debentures in any material
respect; (iv) to modify, eliminate or add to any provision of the Indenture to
such an extent as may be necessary to ensure that the Indenture will be
qualified under the Trust Indenture Act upon effectiveness of the Exchange Offer
Registration Statement with respect to the Junior Subordinated Debentures; (v)
to add to, delete from, or revise the terms of the Subordinated Debt Securities
to provide for transfer procedures and restrictions substantially similar to
those applicable to the Capital Securities (for purposes of assuring that no
registration of the Junior Subordinated Debentures is required under the
Securities Act); (vi) to evidence and provide for the acceptance of appointment
under the Indenture by a successor Debt Trustee with respect to the Junior
Subordinated Debentures and to add to or change any of the provisions of the
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust under the Indenture by more than one Debt Trustee, pursuant to the
Indenture; (vii) to make any change that does not adversely affect the rights of
any holder of any Junior Subordinated Debenture in any material respect; or
(viii) to provide for the issuance, and establish the form and terms and
conditions, of the Junior Subordinated Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of the Indenture
or the Junior Subordinated Debentures or to add to the rights of the holders of
the Junior Subordinated Debentures.
The Debt Trustee. The Corporation and certain of its affiliates maintain a
banking relationship with the Debt Trustee and certain of its affiliates.
Book-Entry Issuance and Settlement. If distributed to holders of the Capital
Securities of the Trust in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust, the New Junior Subordinated
Debentures will, with respect to such Capital Securities held in book-entry
form, initially be issued in the form of one or more global certificates (each a
"New Global Security" and collectively with the Global Securities issued in
respect of any Old Junior Subordinated Debentures a "Global Security")
registered in the name of the Depositary or its nominee. Except under the
limited circumstances described below, the Junior Subordinated Debentures
represented by a Global Security will not be exchangeable for, and will not
otherwise be issuable as, the Junior Subordinated Debentures in certificated
form. The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in certificated form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing the Junior Subordinated
Debentures shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the Depositary or its
nominee or to a successor Depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the Depositary and, if such
Beneficial Owner is not a Participant, on the procedures of the Participant
through which such Beneficial Owner owns its interest to exercise any rights of
a holder under the Indenture.
The Depositary. If the Junior Subordinated Debentures are distributed to
holders of the Capital Securities in liquidation of such holders' interests in
the Trust, DTC will act as securities Depositary (the "Depositary") for the
Junior Subordinated Debentures issued by the Trust with respect to the Capital
Securities held in book-entry form. For a description of DTC and the specific
terms of the depositary arrangements, see -- "Description of New Capital
Securities -- Book-Entry Only Issuance -- The Depository Trust Company." As of
the date of this Offering Memorandum, the description herein of DTC's book-entry
system and DTC's practices as they relate to purchases, transfers, redemptions,
notices and
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payments with respect to the Capital Securities would apply in all material
respects to any debt obligations represented by one or more Global Securities
held by DTC. The Corporation may appoint a successor to DTC or any successor
depositary in the event DTC or such successor depositary is unable or unwilling
to continue as the Depositary for the Global Securities.
None of the Corporation, the Trust, the Institutional Trustee, the Debt
Trustee, any paying agent and any other agent of the Corporation, the Trust, the
Institutional Trustee or the Debt Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for the Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Discontinuance of the Depositary's Services. A Global Security shall be
exchangeable for the Junior Subordinated Debentures registered in the names of
persons other than the Depositary or its nominee only if (i) the Depositary
notifies the Corporation that it is unwilling or unable to continue as a
depositary for such Global Security and no successor depositary shall have been
appointed within 90 days, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the Depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed within 90 days, (iii) the Corporation, in
its sole discretion, determines that such Global Security shall be so
exchangeable or (iv) there shall have occurred an Indenture Event of Default.
Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for the Junior Subordinated Debentures registered in such
names as the Depositary shall direct. It is expected that such instructions will
be based upon directions received by the Depositary from its Participants with
respect to ownership of beneficial interests in such Global Security.
Restrictions on Transfer. The New Junior Subordinated Debentures will be
issued and may be transferred only in blocks having an aggregate principal
amount of not less that $100,000 (and integral multiples of $1,000 in excess
thereof). Any such transfer of the New Junior Subordinated Debentures in a block
having an aggregate principal amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such New Junior Subordinated Debentures for any purpose,
including but not limited to the receipt of payments on such New Junior
Subordinated Debentures, and such transferee shall be deemed to have no interest
whatsoever in such Junior Subordinated Debentures.
Governing Law. The Indenture and the New Junior Subordinated Debentures
will be governed by, and construed in accordance with, the laws of the State of
New York, without regard to conflict of laws principles.
Miscellaneous. The Indenture will provide that the Corporation will pay
all fees and expenses related to (i) the offering and sale of the Trust
Securities and the Junior Subordinated Debentures, (ii) the organization,
maintenance and dissolution of the Trust, (iii) the retention of the Issuer
Trustees and Administrators and (iv) the enforcement by the Institutional
Trustee of the rights of the holders of the Capital Securities.
The Corporation will have the right at all times to assign any of its
respective rights or obligations under the Indenture to a direct or indirect
wholly owned subsidiary of the Corporation; provided that, in the event of any
such assignment, the Corporation will remain liable for all of its obligations.
Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
Except otherwise provided in "-- Limitation on Mergers and Sales of Assets," the
Indenture provides that it may not otherwise be assigned by the parties thereto.
DESCRIPTION OF NEW GUARANTEE
The Guarantee was executed and delivered by the Corporation concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the New Capital Securities including the Old
Capital Securities and, after the completion of the Exchange Offer, the New
Capital Securities. As used herein the term "New Guarantee" refers to the
Guarantee insofar as it relates to the New Capital Securities and the term "Old
Guarantee" refers to the Guarantee insofar as it relates to the Old Capital
Securities. The New Guarantee has been qualified under the Trust Indenture Act.
This summary of certain provisions of the New Guarantee does not purport to be
complete and is subject to,
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and qualified in its entirety by reference to, all of the provisions of the New
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act.
General. Pursuant to the Guarantee, the Corporation has irrevocably and
unconditionally agreed, to the extent set forth therein, to pay in full, to the
holders of the New Capital Securities, the Guarantee Payments (as defined
herein) (except to the extent paid by the Trust), as and when due, regardless of
any defense, right of set-off or counterclaim which the Trust may have or
assert. The following payments with respect to the New Capital Securities, to
the extent not paid by the Trust (the "Guarantee Payments"), are subject to the
Guarantee (without duplication): (i) any accrued and unpaid distributions which
are required to be paid on the New Capital Securities, to the extent the Trust
shall have funds available therefor; (ii) the Redemption Price, to the extent
the Trust has funds available therefor, with respect to any New Capital
Securities called for redemption by the Trust and (iii) upon Liquidation of the
Trust (other than in connection with the distribution of the Junior Subordinated
Debentures to the holders of the New Capital Securities in exchange therefor),
the lesser of (a) the aggregate of the Liquidation Amount and all accrued and
unpaid distributions on such New Capital Securities to the date of payment, to
the extent the Trust has funds available therefor, and (b) the amount of assets
of the Trust remaining available for distribution to holders of such New Capital
Securities in liquidation of the Trust. The Corporation's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Corporation to holders of the New Capital Securities or by causing the Trust
to pay such amounts to such holders.
The Guarantee does not apply to any payment of distributions except to the
extent the Trust shall have funds available therefor, which funds are expected
to be available only to the extent the Corporation has made payments of
principal or interest (or premium, if any) or other payments on the Junior
Subordinated Debentures purchased by the Trust. See "-- Description of New
Junior Subordinated Debentures -- Certain Covenants." The Guarantee, when taken
together with the Corporation's obligations under the Junior Subordinated
Debentures, the Declaration and the Indenture, including its obligations to pay
costs, expenses, debts and other obligations of the Trust (other than with
respect to the Trust Securities), provides a full and unconditional guarantee on
a subordinated basis by the Corporation of payments due on the Capital
Securities.
Because the New Guarantee is a guarantee of payment and not of collection,
holders of the New Capital Securities may proceed directly against the
Corporation, rather than having to proceed against the Trust before attempting
to collect from the Corporation, and the Corporation waives any right or remedy
to require that any action be brought against the Trust or any other person or
entity before proceeding against the Corporation. Such obligations will not be
discharged except by payment of the Guarantee Payments in full. The New
Guarantee has been deposited with the Guarantee Trustee to be held for the
benefit of the holders of Capital Securities. Except as otherwise noted herein,
the Guarantee Trustee has the right to enforce the Guarantee on behalf of the
holders of the Capital Securities.
The Corporation has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the Trust with respect to Common
Securities (the "Common Securities Guarantee") to the same extent as the
Guarantee, except that upon the occurrence and continuance of a Declaration
Event of Default, holders of Capital Securities shall have priority over holders
of Common Securities with respect to any payments made by the Corporation on or
in respect of the Trust Securities under the Guarantee and the Common Securities
Guarantee.
Certain Covenants of the Corporation Under the New Guarantee. In the New
Guarantee, the Corporation covenants that, so long as any New Capital Securities
remain outstanding, if the Corporation shall be in default under the New
Guarantee or there shall have occurred and be continuing any event that would
constitute a Declaration Event of Default, then (a) the Corporation shall not
declare or pay any dividend on, make a distribution with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of the Corporation's
capital stock or rights to acquire such capital stock (other than (i) purchases
or acquisitions of shares of the Corporation's capital stock or rights to
acquire such capital stock in connection with the satisfaction by the
Corporation of its obligations under any of the Corporation's benefit plan for
directors, officers or employees or under the Corporation's dividend
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reinvestment and stock purchase plan, (ii) as a result of a reclassification of
the Corporation's capital stock or rights to acquire such capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
or rights to acquire such capital stock for another class or series of the
Corporation's capital stock or rights to acquire such capital stock, (iii) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (iv) dividends and distributions made on
the Corporation's capital stock or rights to acquire such capital stock with the
Corporation's capital stock or rights to acquire such capital stock, or (v) any
declaration of a dividend in connection with the implementation of a shareholder
rights plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto), or make any
guarantee payments (other than payments under the New Guarantee and the Common
Securities Guarantee) with respect to the foregoing and (b) the Corporation
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Corporation that
rank pari passu with or junior to the Junior Subordinated Debentures.
Modification of the Guarantee; Assignment. Except with respect to any
changes which do not adversely affect the rights of holders of the New Capital
Securities in any material respect (in which case no consent of such holders
will be required), the Guarantee may be amended only with the prior approval of
the holders of not less than a majority in Liquidation Amount of the outstanding
Capital Securities. All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the New Capital
Securities then outstanding.
Termination. The Guarantee will terminate as to the Capital Securities (a)
upon full payment of the Redemption Price of all Capital Securities, (b) upon
distribution of the Junior Subordinated Debentures to the holders of the Capital
Securities or (c) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Trust. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the Capital Securities must restore payment of any sums paid under such
Capital Securities or the Guarantee.
Events of Default. An event of default under the Guarantee will occur upon
the failure of the Corporation to perform any of its payment or other
obligations thereunder.
The holders of a majority in Liquidation Amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. A holder of record of the Capital Securities may
institute a legal proceeding directly against the Corporation to enforce the
Guarantee Trustee's rights under the Guarantee, without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. Pursuant to the Guarantee, the Corporation waives any right or remedy to
require that any action be brought first against the Trust or any other person
or entity before proceeding directly against the Corporation.
Status of the New Guarantee. The New Guarantee will rank pari passu with
the Old Guarantee and with all Other Guarantees issued by the Corporation. The
New Guarantee will be held for the benefit of the holders of the New Capital
Securities. The New Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the New Capital Securities of the New Junior
Subordinated Debentures. The New Guarantee does not place a limitation on the
amount of additional Senior Indebtedness that may be incurred by the
Corporation. The Corporation expects from time to time to incur additional
indebtedness constituting Senior Indebtedness.
The New Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Allocable Amounts in respect of Senior Indebtedness in the same manner as New
Junior Subordinated Debentures, except in the case of a bankruptcy or insolvency
proceeding in respect of the Corporation, in which case the New Guarantee will
rank subordinate and junior in right of payment to all liabilities (other than
Other Guarantees) of the
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Corporation. The terms of the New Capital Securities provide that each holder of
the New Capital Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto. Because the
Corporation is a bank holding company, the right of the Corporation to
participate in any distribution of assets of any of its subsidiaries upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the New Guarantee will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and claimants should look only to the assets of the Corporation
for payments thereunder. The New Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including Senior
Indebtedness of the Corporation, under any indenture that the Corporation may
enter into in the future or otherwise.
Information Concerning the Guarantee Trustee. The Guarantee Trustee, prior
to the occurrence of a default with respect to the New Guarantee, undertakes to
perform only such duties as are specifically set forth in such New Guarantee
and, after default, shall exercise such of the rights and powers vested in it by
such New Guarantee, and use the same degree of care and skill in their exercise,
as a prudent individual would exercise or use in the conduct of his or her own
affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of the powers vested in it by the New Guarantee at the request of
any holder of the Capital Securities, unless offered reasonable indemnity
against the costs, expenses and liabilities which might be incurred thereby.
The Corporation and certain of its affiliates maintain a banking
relationship with the Guarantee Trustee and certain of its affiliates.
Governing Law. The Guarantee is governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of laws
principles.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange Offer,
except under limited circumstances), the New Capital Securities will not provide
for any increase in the Distribution rate thereon and the New Junior
Subordinated Debentures will not provide for any increase in the interest rate
thereon. The Old Capital Securities provide, in effect, among other things, that
the Distribution rate borne by and payable with respect to the Old Capital
Securities will increase by .25% per annum (i) if a registration statement
relating to an exchange of New Capital Securities for Old Capital Securities has
not been filed by August 17, 1997, (ii) if a registration statement relating to
an exchange of New Capital Securities for Old Capital Securities has not been
declared effective by September 16, 1997, and (iii) if an Exchange Offer
relating to an exchange of New Capital Securities for Old Capital Securities has
not been consummated by October 16, 1997; provided, however, that under no
circumstances may the aggregate increase to the Distribution rate exceed .25%
for the foregoing reasons. Any such increase in the Distribution rate payable
with respect to the Old Capital Securities will cease to accrue and be payable
(i) upon the filing of the required registration statement, if the increased
Distribution rate is payable solely due to the occurrence of the event described
in clause (i) of the preceding sentence, (ii) upon the effectiveness of the
required registration statement, if the increased Distribution rate is payable
solely due to the occurrence of the event described in clause (ii) of the
preceding sentence, and (iii) upon the consummation of the required Exchange
Offer, if the increased Distribution rate is payable solely due to the
occurrence of the event described in clause (iii) of the preceding sentence. The
New Securities are not, and upon consummation of the Exchange Offer the Old
Securities will not be, entitled to any such additional interest or
Distributions. Accordingly, holders of Old Capital Securities should review the
information set forth under "Risk Factors -- Certain Consequences of a Failure
to Exchange Old Capital Securities" and "Description of New Securities."
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EFFECT OF OBLIGATIONS UNDER THE NEW JUNIOR SUBORDINATED DEBENTURES
AND THE NEW GUARANTEE
As set forth in the Declaration, the exclusive purposes of the Trust are to
issue and sell the Trust Securities evidencing undivided beneficial interests in
the assets of the Trust, to invest the proceeds from such issuance and sale in
the Junior Subordinated Debentures issued by the Corporation in accordance with
such Trust Securities and to engage in certain other limited activities
described herein.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the aggregate Liquidation Amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Trust Securities; (iii) the
Corporation shall pay all, and the Trust shall not be obligated to pay directly
or indirectly any, costs, expenses, debts, and other obligations of the Trust
(other than with respect to such Trust Securities); and (iv) the Declaration
further provides that the Institutional Trustees shall not take any action or
cause or permit the Trust to, among other things, engage in any activity that is
not consistent with the purposes of the Trust.
Distributions and other payments due on the New Capital Securities (to the
extent funds therefor are available to the Trust) are guaranteed by the
Corporation as described under "Description of New Securities -- Description of
New Guarantee." If the Corporation does not make payments on the Subordinated
Debt Securities, it is expected that the Trust will not have sufficient funds to
make payments, including distributions, on such Capital Securities. The
Guarantee will not apply to any payment on the Capital Securities except to the
extent that the Trust has funds available to make such payment. The Guarantee
will cover the payment of distributions and other payments on such Capital
Securities only if and to the extent that the Corporation has made payments of
principal of or interest or premium, if any, on the Junior Subordinated
Debentures held by the Trust as its sole assets. The Guarantee, when taken
together with the Corporation's obligations under the Junior Subordinated
Debentures, the Declaration and the Indenture, including its obligations to pay
costs, expenses, debts and other obligations of the Trust (other than with
respect to the Trust Securities), provide a full and unconditional guarantee on
a subordinated basis by the Corporation of amounts when due on such Capital
Securities.
If the Corporation fails to make interest or other payments on the Junior
Subordinated Debentures when due (after giving effect to any Extension Period),
the Declaration provides a mechanism whereby the holders of the Capital
Securities, using the procedures described herein under "Description of New
Securities -- Description of New Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Corporation" and "-- Voting Rights," may direct
the Institutional Trustee, to the fullest extent permitted by law to enforce its
rights under the Junior Subordinated Debentures. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debentures after a
majority in Liquidation Amount of the Capital Securities have so directed the
Institutional Trustee, a holder of record of the Capital Securities may to the
fullest extent permitted by law institute a legal proceeding against the
Corporation to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceedings against
the Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Corporation to pay principal of
or interest (or premium, if any) on the Junior Subordinated Debentures on the
respective dates such principal of or interest (or premium, if any) is payable,
as deferred, if applicable (or in the case of redemption, on the redemption
date), then a holder of record of the Capital Securities may institute a Direct
Action for payment on or after the respective due dates specified in the Junior
Subordinated Debentures. In connection with such Direct Action, the Corporation
will be subrogated to the rights of such holder of the Capital Securities under
the Declaration to the extent of any payment made by the Corporation to such
holder of the Capital Securities in such
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Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing.
Because the Corporation is a bank holding company, the Junior Subordinated
Debentures and the Guarantee are effectively subordinated to all existing and
future liabilities, including trade payables, of the Corporation's subsidiaries,
except to the extent that the Corporation is a creditor of the subsidiaries
recognized as such. The Junior Subordinated Debentures and the Guarantee are
also subordinated to the Allocable Amounts in respect of all present and future
Senior Indebtedness of the Corporation.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Brown & Wood LLP, New York, New York, counsel to the
Corporation ("Counsel"), the discussion of United States federal income taxation
which follows summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of the Capital
Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
Except as otherwise stated, this summary deals only with the Capital
Securities held as a capital asset by a holder who or which (i) purchased the
Capital Securities upon original issuance (an "Initial Holder") and (ii) is a US
Holder (as defined below). It does not deal with all aspects of United States
federal income taxation, nor with the particular United States federal income
tax (hereafter, "income tax") consequences which may be applicable to certain
classes of US Holders (such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies, brokers
and dealers in securities or currencies, other financial institutions,
tax-exempt organizations, persons holding the Capital Securities as a position
in a "straddle," as part of a "synthetic security or hedge," as part of a
"conversion transaction" or as part of any other integrated investment, persons
having a functional currency other than the U.S. Dollar and certain United
States expatriates). Further, this summary does not address (a) the income tax
consequences to shareholders in, or partners or beneficiaries of, a holder of
the Capital Securities, (b) the United States federal alternative minimum tax
consequences of the purchase, ownership or disposition of the Capital
Securities, or (c) any state, local or foreign tax consequences of the purchase,
ownership and disposition of Capital Securities.
A "US Holder" is a holder of the Capital Securities who or which is a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, or an estate the income of which is includible in its gross
income for United States federal income tax purposes without regard to its
source, or a trust if (i) a court within the United States is able to exercise
primary supervision over the administration of the trust and (ii) one or more
United States trustees have the authority to control all substantial decisions
of the trust.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for New Capital Securities will not
be a taxable event to holders for United States federal income tax purposes. The
exchange of Old Capital Securities for New Capital Securities pursuant to the
Exchange Offer will not be treated as an "exchange" for United States federal
income tax purposes because the New Capital Securities should not be considered
to differ materially in kind or extent from the Old Capital Securities and
because the exchange will occur by operation of the terms of the Old Capital
Securities. If, however, the exchange of the Old Capital Securities for the New
Capital Securities were treated as an exchange for United States federal income
tax purposes, such exchange should constitute a recapitalization for United
States federal income tax purposes. Accordingly, the New Capital Securities
should have the same issue price as the Old Capital Securities, and a holder
should have the same adjusted tax basis and holding period in the New Capital
Securities as the holder had in the Old Capital Securities immediately before
the exchange.
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US HOLDERS
Characterization of the Trust
In connection with the issuance of the Old Capital Securities, Counsel has
rendered its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration (and other
documents), and based on certain assumptions and qualifications referenced in
the opinion, the Trust will be characterized for United States federal income
tax purposes as a grantor trust and will not be characterized as an association
taxable as a corporation for such purposes. Accordingly, for income tax
purposes, each holder of the Capital Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures owned by
the Trust, and each US Holder will be required to include all income or gain
recognized for income tax purposes with respect to its allocable share of the
Junior Subordinated Debentures on its own income tax return.
Characterization of the Junior Subordinated Debentures
In connection with the issuance of the Old Junior Subordinated Debentures,
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
other documents), and based on certain assumptions and qualifications referenced
in the opinion, the Junior Subordinated Debentures will be characterized for
United States federal income tax purposes as debt of the Corporation.
Original Issue Discount
Under the terms of the Junior Subordinated Debentures, the Corporation has
the option to defer payments of interest from time to time by extending the
interest payment period for a period not exceeding 10 consecutive semiannual
periods, but not beyond the maturity of the Junior Subordinated Debentures.
Recently issued Treasury regulations under Section 1273 of the Code provide that
debt instruments like the Junior Subordinated Debentures will not be considered
issued with OID by reason of the Corporation's option to defer payments of
interest if the likelihood of deferral is "remote."
The Corporation has concluded, and this discussion assumes, that, as of the
date of this Offering Memorandum, the likelihood of exercise of that option is
"remote" within the meaning of the applicable regulations, in part because
exercising that option would prevent the Corporation from declaring dividends on
its stock and would prevent the Corporation from making any payments with
respect to debt securities that rank pari passu with or junior to the Junior
Subordinated Debentures. Therefore, the Junior Subordinated Debentures should
not be treated as issued with OID by reason of the Corporation's deferral
option. Rather, stated interest on the Junior Subordinated Debentures is
generally taxable to a US Holder as ordinary income, when paid or accrued in
accordance with that holder's method of accounting for income tax purposes. It
should be noted, however, that these regulations have not yet been addressed in
any rulings or other interpretations by the Service. Accordingly, it is possible
that the Service could take a position contrary to the interpretation described
herein.
In the event the Corporation subsequently exercised its option to defer
payments of interest, the Junior Subordinated Debentures would be treated as
reissued for OID purposes and the sum of the remaining interest payments on the
Junior Subordinated Debentures would thereafter be treated as OID, which would
accrue, and be includible in a US Holder's taxable income, on an economic
accrual basis (regardless of the US Holder's method of accounting for income tax
purposes) over the remaining term of the Junior Subordinated Debentures
(including any period of interest deferral), without regard to the timing of
payments under the Junior Subordinated Debentures. (Subsequent distributions of
interest on the Junior Subordinated Debentures generally would not be taxable.)
The amount of OID that accrues in any period would generally equal the amount of
interest that accrues on the Junior Subordinated Debentures in that period at
the stated interest rate. Consequently, during any period of interest deferral,
US Holders will include OID in gross income in advance of the receipt of cash,
and a US Holder which
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disposes of a Capital Security prior to the record date for payment of
distributions on the Junior Subordinated Debentures following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Trust with
respect to that OID.
If the Corporation's option to defer payments of interest were not treated
as remote, the Junior Subordinated Debentures would be treated as initially
issued with OID in an amount equal to the aggregate stated interest over the
term of the Junior Subordinated Debentures. That OID would generally be
includible in a US Holder's taxable income, over the term of the Junior
Subordinated Debentures, on an economic accrual basis.
Characterization of Income
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of the
Capital Securities will not be entitled to a dividends-received deduction for
any income recognized with respect to the Capital Securities.
Market Discount and Bond Premium
Holders of the Capital Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Junior Subordinated
Debentures with market discount or acquisition premium (as each phrase is
defined for income tax purposes).
Receipt of the Junior Subordinated Debentures or Cash Upon Liquidation of the
Trust
Under certain circumstances described herein (See "Description of the
Capital Securities -- Liquidation Distribution Upon Dissolution"), the
Corporation has the right to distribute the Subordinated Debt Securities to
holders in exchange for the Capital Securities and in liquidation of the Trust.
Except as discussed below, such a distribution would not be a taxable event for
income tax purposes, and each US Holder would have an aggregate adjusted basis
in its Junior Subordinated Debentures for income tax purposes equal to such
holder's aggregate adjusted basis in its Capital Securities. For income tax
purposes, a US Holder's holding period in the Junior Subordinated Debentures
received in such a liquidation of the Trust would include the period during
which the Capital Securities were held by the holder. If, however, the relevant
event is a Tax Event which results in the Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Capital Securities for income tax purposes.
Under certain circumstances described herein (see "Description of the
Capital Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for income tax
purposes, and a US Holder would recognize gain or loss as if it had sold the
Capital Securities for cash. See " -- Sales of the Capital Securities" below.
Sales of the Capital Securities
A US Holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted basis in the Capital Securities and the
amount realized on the sale of such Capital Securities. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition, and decreased by payments received on
the Capital Securities (other than any interest received with respect to the
period prior to the effective date of the Corporation's first exercise of its
option to defer payments of interest). Any such gain or loss generally will be
capital gain or loss, and
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generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than one year.
A holder who disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Junior Subordinated Debentures through the date of
disposition in its taxable income for income tax purposes (notwithstanding that
the holder may receive a separate payment from the purchaser with respect to
accrued interest), and to deduct that amount from the sales proceeds received
(including the separate payment, if any, with respect to accrued interest) for
the Capital Securities (or as to OID only, to add such amount to such holder's
adjusted tax basis in its Capital Securities). To the extent the selling price
is less than the holder's adjusted tax basis (which will include accrued but
unpaid OID, if any), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for income tax purposes.
NON-US HOLDERS
The following discussion applies to an Initial Holder who is not a US
Holder (a "Non-US Holder").
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
Beneficial Owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Corporation entitled to vote, (b) the Beneficial
Owner of the Capital Security is not a controlled foreign corporation that is
related to the Corporation through stock ownership, and (c) either (i) the
Beneficial Owner of the Capital Securities certifies to the Trust or its agent,
under penalties of perjury, that it is a Non-US Holder and provides its name and
address, or (ii) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution"), and holds the Capital Security in such
capacity, certifies to the Trust or its agent, under penalties of perjury, that
such a statement has been received from the Beneficial Owner by it or by another
Financial Institution between it and the Beneficial Owner in the chain of
ownership, and furnishes the Trust or its agent with a copy thereof.
As discussed above (see "Description of New Securities -- Description of
New Capital Securities -- Redemption"), changes in legislation affecting the
income tax consequences of the Junior Subordinated Debentures are possible, and
could adversely affect the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could adversely affect Non-US Holders by characterizing income derived from the
Junior Subordinated Debentures as dividends, generally subject to a 30% income
tax (on a withholding basis) when paid to a Non-US Holder, rather than as
interest which, as discussed above, is generally exempt from income tax in the
hands of a Non-US Holder.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
A Non-US Holder which holds the Capital Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Junior Subordinated Debentures.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Capital Securities held by a noncorporate
US Holder within the United States. In addition, payments made on, and payments
of the proceeds from the sale of, the Capital Securities to or through the
United States office of a broker are subject to information reporting unless the
holder thereof certifies as to its non-United States status or otherwise
establishes an exemption from information reporting and backup withholding. See
"-- Backup Withholding." Taxable income on the Capital Securities for a calendar
year should be reported to US Holders on Forms 1099 by the following January
31st.
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BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's income tax liability, or refunded,
provided the required information is provided to the Service.
* * *
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CAPITAL SECURITIES. POTENTIAL HOLDERS OF THE CAPITAL SECURITIES ARE URGED
TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Capital Securities for a period ending 180 days after the Expiration
Date (subject to the right of the Corporation to suspend such use for up to two
periods of up to 45 days each) or, if earlier, when all such New Capital
Securities have been disposed of by such Participating Broker-Dealer. However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of New Capital Securities received in exchange for Old Capital
Securities pursuant to the Exchange Offer must notify the Corporation or the
Trust, or cause the Corporation or the Trust to be notified, on or prior to the
Expiration Date, that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at one of the addresses set forth herein
under "The Exchange Offer -- Exchange Agent." See "The Exchange Offer -- Resales
of New Capital Securities."
The Corporation or the Trust will not receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. New Capital Securities
received by broker-dealers for their own accounts in connection with the
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were received by
it for its own account in connection with the Exchange Offer and any broker or
dealer that participates in a distribution of such New Capital Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of New Capital Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
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ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(5) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in such Trust
and no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Trust, less than 25% of the value of each class of equity interests in the Trust
were held by Plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and entities
holding assets deemed to be "plan assets" of any Plan (collectively, "Benefit
Plan Investors"). No assurance can be given by the Initial Purchasers that the
value of the Capital Securities held by Benefit Plan investors will be less than
25% of the total value of such Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. All
of the Common Securities will be purchased and held by the Corporation.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities of the Trust were acquired
with "plan assets" of such Plan and assets of the Trust were deemed to be "plan
assets" of Plans investing in the Trust. For example, if the Corporation is a
Party in Interest with respect to an investing Plan (either directly or by
reason of its ownership of its subsidiaries), extensions of credit between the
Corporation and the Trust (as represented by the Junior Subordinated Debentures
and the Guarantees) would likely be prohibited by Section 406(a)(1)(B) of ERISA
and Section 4975(c)(1)(B) of the Code, unless exemptive relief were available
under an applicable administrative exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Trust were deemed to be "plan assets" of Plans investing in the
Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1
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(for certain transactions involving insurance company separate accounts), and
PTCE 84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or holder of the Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that it either (a) is not a Plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any Plan or (b) is eligible for the exemptive relief available under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or holding. See
"Notice to Investors" herein.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Trust were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14.
LEGAL MATTERS
The validity of the Trust Securities, New Guarantee and the New Junior
Subordinated Debentures and related matters will be passed upon for the
Corporation by Brown & Wood LLP, New York, New York. Certain United States
federal income tax matters will be passed upon for the Corporation and Trust by
Brown & Wood LLP, New York, New York.
EXPERTS
The consolidated financial statements of Summit Bancorp and subsidiaries as
of December 31, 1996 and 1995 and for each of the years in the three-year period
ended December 31, 1996 included in Summit's Annual Report on Form 10-K,
incorporated by reference herein and in the Registration Statement, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KMPG Peal Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Collective Bancorp, Inc. and
subsidiary as of June 30, 1996 and for the year then ended included in Summit's
Report on Form 8-K dated July 28, 1997 incorporated by reference herein and in
the Registration Statement, have been incorporated by reference herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Collective Bancorp, Inc. and
subsidiary as of June 30, 1995 and for each of the two years in the period then
ended included in Summit's Report on Form 8-K dated July 28, 1997, incorporated
by reference herein and in the Registration Statement, have been audited by
Deloitte & Touche LLP, independent certified public accountants, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon such report given upon the authority of said firm
as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
With respect to the indemnification of directors and officers, Section 5 of
Article IX of the By-Laws of Summit Bancorp. provide:
Section 5. Indemnification and Insurance (a) Each person who was or
is made a party or is threatened to be made a party to or is involved in
any proceeding, by reason of the fact that he or she is or was a corporate
agent of the Corporation, whether the basis of such proceeding is alleged
action in an official capacity as a corporate agent or in any other
capacity while serving as a corporate agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the laws of
the State of New Jersey 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 said law permitted the Corporation to provide prior to such
amendment), against all expenses and liabilities in connection therewith,
and such indemnification shall continue as to a person who has ceased to be
a corporate agent and shall inure to the benefit of such corporate agent's
heirs, executors, administrators and other legal representatives; provided,
however, that except as provided in Section 5(c) of this By-Law, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this By-Law shall be a
contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its
final disposition, such advances to be paid by the Corporation within 20
days after the receipt by the Corporation of a statement or statements from
the claimant requesting such advance or advances from time to time;
provided, however, that the advancement of counsel fees to a claimant other
than a claimant who is or was a director or Executive Vice President or
higher ranking officer of the Corporation shall be made only when the Board
of Directors or the General Counsel of the Corporation determines that
arrangements for counsel are satisfactory to the Corporation; and provided,
further, that if the laws of the State of New Jersey so require, the
payment of such expenses incurred by a corporate agent in such corporate
agent's capacity as a corporate agent (and not in any other capacity in
which service was or is rendered by such person while a corporate agent,
including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such
corporate agent to repay all amounts so advanced if it shall ultimately be
determined that such corporate agent is not entitled to be indemnified
under this By-Law or otherwise.
(b) To obtain indemnification under this By-Law, a claimant shall
submit to the Corporation a written request, including therein or therewith
such documentation and information as is reasonably available to the
claimant and is reasonably necessary to determine whether and to what
extent the claimant is entitled to indemnification. Upon written request by
a claimant for indemnification pursuant to the first sentence of this
Section 5(b), a determination, if required by applicable law, with respect
to the claimant's entitlement thereto shall be made as follows: (1) if
requested by a claimant who is or was a director or Executive Vice
President or higher ranking officers of this Corporation, by independent
counsel (as hereinafter defined) in a written opinion to the Board of
Directors, a copy of which shall be delivered to the claimant; or (2) if
the claimant is not a person described in Section 5(b)(1), or is such a
person and if no request is made by such a claimant for a determination by
independent counsel, (A) by the Board of Directors by a majority vote of a
quorum consisting of disinterested directors (as hereinafter defined), or
(B) if a quorum of the Board of Directors consisting of disinterested
directors is not obtainable or, even if obtainable, such quorum of
disinterested directors so directs, by independent counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
the claimant. In the event the determination of
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entitlement to indemnification is to be made by independent counsel at the
request of the claimant, the independent counsel shall be selected by the
Board of Directors and paid by the Corporation. If it is so determined that
the claimant is entitled to indemnification, payment to the claimant shall
be made within 20 days after such determination.
(c) If a claim under Section 5(a) of this By-Law is not paid in full
by the Corporation within thirty days after a written claim pursuant to
Section 5(b) of this By-Law has been received by the Corporation, the
claimant may at anytime thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim, including attorney's fees. It shall be a defense to
any such act (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been tendered to
the Corporation) that the claimant has not met the standard of conduct
which makes it permissible under the laws of the State of New Jersey for
the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors or independent
counsel) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth
in the laws of the State of New Jersey, nor an actual determination by the
Corporation (including its Board of Directors or independent counsel) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met
the applicable standard of conduct.
(d) If a determination shall have been made pursuant to Section 5(b)
of this By-Law that the claimant is entitled to indemnification, the
Corporation shall be bound by such determination in any judicial proceeding
commenced pursuant to Section 5(c) of this By-Law.
(e) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this By-Law shall not be exclusive of any other rights which any person may
have or hereafter acquire under any statute, provisions of the Certificate
of Incorporation, By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise. No repeal or modification of this By-Law shall in
any way diminish or adversely affect the rights of any corporate agent of
the Corporation hereunder in respect of any occurrence or matter arising
prior to any such repeal or modification.
(f) The Corporation may maintain insurance, at its expense, to protect
itself and any corporate agent of the Corporation or other enterprise
against any expense or liability, whether or not the Corporation would have
the power to indemnify such person against such expense or liability under
the laws of the State of New Jersey.
(g) If any provision or provisions of this By-Law shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, (1) the
validity, legality and enforceability of the remaining provisions of this
By-Law (including, without limitation, each portion of any section of this
By-Law containing any such provision held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and
(2) to the fullest extent possible, the provisions of this By-Law
(including, without limitation, each such portion of any section of this
By-Law containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
(h) For purposes of this By-Law:
(1) "disinterested director" means a director of the Corporation
who is not and was not a party to or otherwise involved in the matter in
respect of which indemnification is sought by the claimant.
(2) "independent counsel" means a law firm, a member of a law firm,
or an independent practitioner that is experienced in matters of
corporation law and shall include any person who,
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under the applicable standards of professional conduct then prevailing,
would not have a conflict of interest in representing either the
Corporation or the claimant in an action to determine the claimant's
rights under this By-Law.
(3) "corporate agent" means any person who is or was a director,
officer, employee or agent of the Corporation or of any constituent
corporation absorbed by the Corporation in a consolidation or merger and
any person who is or was a director, officer, trustee, employee or agent
of any subsidiary of the Corporation or of any other enterprise, serving
as such at the request of this Corporation, or of any such constituent
corporation, or the legal representative of any such director, officer,
trustee, employee or agent;
(4) "other enterprise" means any domestic or foreign corporation,
other than the Corporation, and any partnership, joint venture, sole
proprietorship, trust or other enterprise, whether or not for profit,
served by a corporate agent;
(5) "expenses" means reasonable costs, disbursements and counsel
fees;
(6) "liabilities" means amounts paid or incurred in satisfaction of
settlements, judgements, fines and penalties;
(7) "proceeding" means any pending, threatened or completed civil,
criminal, administrative, legislative, investigative or arbitrative
action, suit or proceeding, and any appeal therein and any inquiry or
investigation which could lead to such action, suit or proceeding; and
(8) References to "other enterprises" include employee benefit
plans; references to "fines" include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to
"serving at the request of the indemnifying corporation" include any
service as a corporate agent which imposes duties on, or involves
services by, the corporate agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner the person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interest of the corporation."
(i) Any notice, request or other communication required or permitted
to be given to the Corporation under this By-Law shall be in writing and
either delivered in person or sent by facsimile, telex, telegram, overnight
mail or courier service, or certified or registered mail, postage prepaid,
return receipt requested, to the Secretary of the Corporation and shall be
effective only upon receipt by the Secretary.
(j) This By-Law shall be implemented and construed to provide any
corporate agent described above who is found to have acted in good faith
and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation the maximum indemnification,
advancement of expenses, and reimbursement for liabilities and expenses
allowed by law.
Such provision is consistent with Section 14A:3-5 of the Business
Corporation Act of the State of New Jersey, the state of Summit's incorporation,
which permits the indemnification of officers and directors, under certain
circumstances and subject to specified limitations, against liability which any
officer or director may incur in such capacity.
Article 7 of Summit's Restated Certificate of Incorporation provides that:
Except to the extent prohibited by law, no Director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders
provided that a Director or officer shall not be relieved from liability for any
breach of duty based upon an act or omission (a) in breach of such persons duty
of loyalty to the Corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt of an improper
personal benefit. Neither the amendment or repeal of this Article 7, nor the
adoption of any provision of this Restated Certificate of Incorporation
inconsistent with this Article 7, shall eliminate or reduce the effect of this
Article 7 in respect of any matter which occurred, or any cause of action, suit
or claim which but for this Article 7 would have accrued or arisen, prior to
such amendment, repeal or adoption.
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Summit carries officers' and directors' liability insurance policies which
provide coverage against judgments, settlements and legal costs incurred because
of actual or asserted acts of such officers and directors of Summit arising out
of their duties as such, subject to certain exceptions, including, but not
limited to, damages based upon illegal personal profits or adjudicated
dishonesty of the person seeking indemnification. The policies provide coverage
of $40,000,000 in the aggregate.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
This Registration Statement includes the following exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------
<C> <S>
4.1* Indenture between Summit Bancorp. and The First National Bank of Chicago dated as
of March 20, 1997.
4.2* First Supplemental Indenture between Summit Bancorp. and The First National Bank
of Chicago dated as of March 20, 1997.
4.3* Form of Certificate of New Junior Subordinated Debenture (included as in Article
VI of Exhibit 4.2).
4.4* Certificate of Trust of Summit Capital Trust I dated March 12, 1997.
4.5* Amended and Restated Declaration of Trust for Summit Capital Trust I dated March
20, 1997.
4.6* Form of New Capital Security Certificate for Summit Capital Trust I (included
Exhibit A-1 to Exhibit 4.5).
4.7* Form of Guarantee of Summit Bancorp relating to the New Capital Securities.
4.8* Registration Rights Agreement among Summit Bancorp, Summit Capital Trust I and
the Initial Purchasers, dated March 20, 1997.
5.1 Opinion of Brown & Wood LLP as to legality of the New Capital Securities to be
issued by Summit Capital Trust I and the New Junior Subordinated Debentures and
the New Guarantee to be issued by Summit Bancorp.
8 Opinion of Brown & Wood LLP as to certain federal income tax matters.
12.1* Computation of ratio of earnings to combined fixed charges and preferred stock
dividends.
23.1 Consent of KPMG Peat Marwick LLP (for Summit).
23.2 Consent of KPMG Peat Marwick LLP (for Collective).**
23.3 Consent of Deloitte & Touche LLP.**
23.4 Consent of Brown & Wood LLP (included in Exhibit 5.1).
23.5 Consent of Brown & Wood LLP (included in Exhibit 8).
24.1* Power of Attorney of T. Joseph Semrod, Robert G. Cox, John R. Haggerty, William
J. Healy, Robert L. Boyle, James C. Brady, Jr., John G. Collins, T. J. Dermot
Dunphy, Anne Evans Estabrook, Elinor J. Ferdon, John R. Howell, Francis J. Mertz,
George L. Miles, Jr., Henry S. Patterson II, Raymond Silverstein, Orin R. Smith
and Joseph M. Tabak. (included on signature page of original filing).
24.2 Power of Attorney of S. Rodgers Benjamin, Fred G. Harvey and Douglas G. Watson.
25.1* Form T-1 Statement of Eligibility of The First National Bank of Chicago to act as
trustee under the Indenture.
25.2* Form T-1 Statement of Eligibility of The First National Bank of Chicago to act as
trustee under the Amended and Restated Declaration of Trust of Capital Trust.
25.3* Form T-1 Statement of Eligibility of The First National Bank of Chicago to act as
trustee under the New Guarantee for the benefit of the holders of New Capital
Securities of Capital Trust.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agent Agreement.
</TABLE>
- ---------------
* Previously Filed.
** Filed with Summit's Report on Form 8-K dated July 28, 1997.
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(B) FINANCIAL STATEMENT SCHEDULES
All financial statement schedules either are not required or are included
in the notes to the financial statements incorporated by reference herein.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 3(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 therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (b)(1)(i) and (b)(1)(ii) of this
section do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3 and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions set forth in response to Item 20
hereof, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-5
<PAGE> 84
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-6
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Summit Capital
Trust I certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-4 and it has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of West Windsor, and the State of New Jersey, on the
30th day of July, 1997.
SUMMIT CAPITAL TRUST I
By: /s/ DENNIS A. WILLIAMS
------------------------------------
DENNIS A. WILLIAMS,
as Administrator
II-7
<PAGE> 86
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement No. 333-29019 and
333-29019-01 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of West Windsor, and the State of New Jersey on the
30th of July, 1997.
SUMMIT BANCORP.
By: *
------------------------------------
T. JOSEPH SEMROD
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement Nos. 333-29019 and 333-29019-01 has been signed
below on the 30th day of July 1997 by the following persons in the capacities
indicated.
<TABLE>
<C> <S>
* Chairman of the Board of Directors (Chief
- ------------------------------------------ Executive Officer)
T. JOSEPH SEMROD
* President and Director
- ------------------------------------------
ROBERT G. COX
* Senior Executive Vice President -- Finance
- ------------------------------------------ (Principal Financial Officer)
JOHN R. HAGGERTY
* Executive Vice President and Comptroller
- ------------------------------------------ (Principal Accounting Officer)
WILLIAM J. HEALY
* Director
- ------------------------------------------
S. RODGERS BENJAMIN
* Director
- ------------------------------------------
ROBERT L. BOYLE
* Director
- ------------------------------------------
JAMES C. BRADY, JR.
* Director
- ------------------------------------------
JOHN G. COLLINS
* Director
- ------------------------------------------
T.J. DERMOT DUNPHY
* Director
- ------------------------------------------
ANNE EVANS ESTABROOK
</TABLE>
II-8
<PAGE> 87
<TABLE>
<C> <S>
* Director
- ------------------------------------------
ELINOR J. FERDON
* Director
- ------------------------------------------
FRED G. HARVEY
* Director
- ------------------------------------------
JOHN R. HOWELL
* Director
- ------------------------------------------
FRANCIS J. MERTZ
* Director
- ------------------------------------------
GEORGE L. MILES, JR.
* Director
- ------------------------------------------
HENRY S. PATTERSON II
* Director
- ------------------------------------------
RAYMOND SILVERSTEIN
* Director
- ------------------------------------------
ORIN R. SMITH
* Director
- ------------------------------------------
JOSEPH M. TABAK
* Director
- ------------------------------------------
DOUGLAS G. WATSON
</TABLE>
* Richard F. Ober, Jr. by signing his name hereto, does sign the document on
behalf of each of the persons indicated above pursuant to the powers of
attorney executed by such persons, filed with the Securities and Exchange
Commission.
<TABLE>
<C> <S>
/s/ RICHARD F. OBER, JR.
- ------------------------------------------
RICHARD F. OBER, JR.
</TABLE>
II-9
<PAGE> 88
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------- -----
<C> <S> <C>
4.1* Indenture between Summit Bancorp. and The First National Bank of Chicago
dated as of March 20, 1997..................................................
4.2* First Supplemental Indenture between Summit Bancorp. and The First National
Bank of Chicago dated as of March 20, 1997..................................
4.3* Form of Certificate of New Junior Subordinated Debenture (included as in
Article VI of Exhibit 4.2)..................................................
4.4* Certificate of Trust of Summit Capital Trust I dated March 12, 1997.........
4.5* Amended and Restated Declaration of Trust for Summit Capital Trust I dated
March 20, 1997..............................................................
4.6* Form of New Capital Security Certificate for Summit Capital Trust I
(included Exhibit A-1 to Exhibit 4.5).......................................
4.7* Form of Guarantee of Summit Bancorp relating to the New Capital
Securities..................................................................
4.8* Registration Rights Agreement among Summit Bancorp, Summit Capital Trust I
and the Initial Purchasers, dated March 20, 1997............................
5.1 Opinion of Brown & Wood LLP as to legality of the New Capital Securities to
be issued by Summit Capital Trust I and the New Junior Subordinated
Debentures and the New Guarantee to be issued by Summit Bancorp.............
8 Opinion of Brown & Wood LLP as to certain federal income tax matters........
12.1* Computation of ratio of earnings to combined fixed charges and preferred
stock dividends.............................................................
23.1 Consent of KPMG Peat Marwick LLP (for Summit)...............................
23.2** Consent of KPMG Peat Marwick LLP (for Collective)...........................
23.3** Consent of Deloitte & Touche LLP............................................
23.4 Consent of Brown & Wood LLP (included in Exhibit 5.1).......................
23.5 Consent of Brown & Wood LLP (included in Exhibit 8).........................
24.1* Power of Attorney of T. Joseph Semrod, Robert G. Cox, John R. Haggerty,
Willian J. Healy, Robert L. Boyle, James C. Brady, Jr., John G. Collins, T.
J. Dermot Dunphy, Anne Evans Estabrook, Elinor J. Ferdon, John R. Howell,
Francis J. Mertz, George L. Miles, Jr., Henry S. Patterson II, Raymond
Silverstein, Orin R. Smith and Joseph M. Tabak. (included on signature page
of original filing).........................................................
24.2 Power of Attorney of S. Rodgers Benjamin, Fred G. Harvey and Douglas G.
Watson......................................................................
25.1* Form T-1 Statement of Eligibility of The First National Bank of Chicago to
act as trustee under the Indenture..........................................
25.2* Form T-1 Statement of Eligibility of The First National Bank of Chicago to
act as trustee under the Amended and Restated Declaration of Trust of
Capital Trust...............................................................
25.3* Form T-1 Statement of Eligibility of The First National Bank of Chicago to
act as trustee under the New Guarantee for the benefit of the holders of New
Capital Securities of Capital Trust.........................................
99.1* Form of Letter of Transmittal...............................................
99.2* Form of Notice of Guaranteed Delivery.......................................
99.3 Form of Exchange Agent Agreement............................................
</TABLE>
- ---------------
* Previously Filed.
** Filed with Summit's Report on Form 8-K dated July 28, 1997.
<PAGE> 1
EXHIBIT 5.1
July 30 , 1997
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Ladies and Gentlemen:
We have acted as counsel to Summit Bancorp., a New Jersey corporation
(the "Corporation"), and Summit Capital Trust I, a trust formed under the
laws of the State of Delaware (the "Trust"), in connection with the filing of a
registration statement (File No. 333-29019 and 333-29019-01) on Form S-4
under the Securities Act of 1933, as amended (the "Securities Act"), which was
declared effective by the Securities and Exchange Commission on July 30,
1997, relating to the offer to exchange (the "Exchange Offer") (i) $150,000,000
aggregate Liquidation Amount of the Trust's 8.40% Series B Capital
Securities (the "New Capital Securities") for a like Liquidation Amount of
the Trust's 8.40% Capital Securities (the "Old Capital Securities"), (ii) the
Corporation's guarantee of payments of cash distributions and payments on
liquidation of the Trust or redemption of the New Capital Securities (the
"New Guarantee") for a like guarantee in respect of the Old Capital Securities
(the "Old Guarantee") and (iii) all of the Corporation's 8.40% Series B
Junior Subordinated Deferrable Interest Debentures due March 15, 2027 (the
"New Junior Subordinated Debentures") for a like aggregate principal amount of
the Corporation's 8.40% Junior Subordinated Deferrable Interest Debentures
due March 15, 2027 (the "Old Junior Subordinated Debentures").
We are familiar with the Indenture, dated as of March 20, 1997 (the
"Indenture"), between the Corporation and The First National Bank of Chicago, as
Debenture Trustee, including the provisions of the Indenture setting forth the
conditions precedent to the exchange of the New Junior Subordinated
Debentures for the Old Junior Subordinated Debentures. We are also familiar
with the Amended and Restated Declaration of Trust, dated as of March 20,
1997 (the "Declaration"), among the Corporation, as Sponsor, The First
National Bank of Chicago, as Property Trustee, First Chicago Delaware Inc., as
Delaware Trustee, and the Administrators named therein, including the
provisions of the Declaration setting forth the conditions precedent to the
exchange of the New Capital Securities for the Old Capital Securities. We
have also examined such other documents, certificates and records and made
such investigation as we have deemed appropriate or necessary in connection
with expressing an informed opinion upon the matters set forth below.
We have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. In making our examination of
documents executed by parties other than the Corporation or the Trust, we
have assumed that such parties had the power, corporate or other, to enter
into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents, and the validity and binding
effect thereof on such parties. We have also assumed that the Exchange Offer
has been consummated. In addition, we have relied, as to certain factual
matters, on certificates of responsible officers of the Corporation and others.
<PAGE> 2
Based upon the foregoing, it is our opinion that:
(a) The New Junior Subordinated Debentures have been duly authorized
for issuance by the Corporation and, when executed, authenticated and
delivered in the manner provided for in the Indenture will constitute valid
and binding obligations of the Corporation in accordance with their terms,
except to the extent enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
(b) The New Capital Securities have been duly authorized for issuance
by the Trust and, when executed, authenticated and delivered in the manner
provided for in the Declaration, will represent legally issued, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust and
will entitle the holders thereof to the benefits of the Declaration, except to
the extent that enforcement thereof may be limited by bankruptcy,insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (regardless of
whether considered in a proceeding in equity or at law).
(c) The New Guarantee has been duly authorized, executed and delivered
by the Corporation and constitutes a valid and binding agreement of the
Corporation, enforceable against the Corporation in accordance with its
terms, except to the extent enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
(d) The New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures have been registered under Section 5 of the
Securities Act.
(e) Each of the Declaration, the New Guarantee and the Indenture has
been qualified under the Trust Indenture Act of 1939, as amended.
(f) All conditions precedent to the exchange of the New Junior
Subordinated Debentures for the Old Junior Subordinated Debentures in
accordance with the provisions of the Indenture have been complied with.
(g) All conditions precedent to the exchange of the New Capital
Securities for the Old Capital Securities in accordance with the provisions
of the Declaration have been complied with.
We are members of the Bar of the State of New York, and we express no
opinion as to the laws of any jurisdiction other than the laws of the State
of New York and the federal laws of the United States of America.
This opinion is solely for your benefit and may not be relied upon in
any manner whatsoever by any other person or entity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" contained in the Prospectus included therein.
Very truly yours,
/s/ Brown & Wood LLP
--------------------
Brown & Wood LLP
<PAGE> 1
EXHIBIT 8
July 30, 1997
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Re: Summit Bancorp Summit Capital Trust I
Registration Statement on Form S-4
File Nos. 333-29019 and 333-29019-01
Dear Sirs:
We have acted as special tax counsel for Summit Bancorp, (the
"Corporation") and Summit Capital Trust I (the "Trust") in connection with the
offer to exchange up to U.S. $150,000,000 of the Trust's 8.40% Series B Capital
Securities which have been registered under the Securities Act of 1933, as
amended, for a like Liquidation Amount of the Trust's outstanding 8.40% Capital
Securities. In rendering our opinion, we have examined the Amended and Restated
Declaration of Trust dated as of March 20, 1997 (the "Trust Agreement") and
have assumed that the Issuer Trustees will conduct the affairs of the Trust in
accordance with the Trust Agreement. We hereby confirm the opinions described
under the caption "United States Federal Income Taxation" in the prospectus
(the "Prospectus") that is part of the Registration Statement on Form S-4 filed
by the Corporation and the Trust with the Securities and Exchange Commission on
June 12, 1997. Capitalized terms used herein but not defined have the meanings
as provided in the Prospectus.
We hereby consent to the use of our name under the caption "United
States Federal Income Taxation" in the Prospectus. The issuance of such a
consent does not concede that we are an "Expert" for the purposes of the
Securities Act of 1933.
/s/ Brown & Wood LLP
-------------------------
Brown & Wood LLP
<PAGE> 1
EXHIBIT 23.1
AUDITORS' CONSENT
Board of Directors
Summit Bancorp:
We consent to the use of our report relating to the consolidated financial
statements of Summit Bancorp and subsidiaries dated January 20, 1997, except as
to the third paragraph of note 2, which is as of February 28, 1997,
incorporated herein by reference in Registration Statement Nos. 333-29019
and 333-29019-01 on Form S-4, and to the reference to our Firm under the
heading "Experts" in the registration statement/prospectus.
/s/ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
July 29, 1997
<PAGE> 1
EXHIBIT 24.2
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of West Windsor, and the
State of New Jersey on the 30th of July, 1997.
SUMMIT BANCORP.
By:
------------------------------------
T. JOSEPH SEMROD
Chairman of the Board of Directors
KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints T. Joseph Semrod, Robert G. Cox, John R.
Haggerty, William J. Healy and Richard F. Ober, Jr., and each of them, the
undersigned's true lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 30th day of July 1997 by the
following persons in the capacities indicated.
<TABLE>
<C> <S>
Chairman of the Board of Directors (Chief
- ------------------------------------------ Executive Officer)
T. JOSEPH SEMROD
President and Director
- ------------------------------------------
ROBERT G. COX
Senior Executive Vice President -- Finance
- ------------------------------------------ (Principal Financial Officer)
JOHN R. HAGGERTY
Executive Vice President and Comptroller
- ------------------------------------------ (Principal Accounting Officer)
WILLIAM J. HEALY
/s/ S. RODGERS BENJAMIN Director
- ------------------------------------------
S. RODGERS BENJAMIN
Director
- ------------------------------------------
ROBERT L. BOYLE
Director
- ------------------------------------------
JAMES C. BRADY, JR.
</TABLE>
<PAGE> 2
<TABLE>
<C> <S>
- ------------------------------------------ Director
JOHN G. COLLINS
Director
- ------------------------------------------
T.J. DERMOT DUNPHY
Director
- ------------------------------------------
ANNE EVANS ESTABROOK
Director
- ------------------------------------------
ELINOR J. FERDON
/s/ FRED G. HARVEY Director
- ------------------------------------------
FRED G. HARVEY
Director
- ------------------------------------------
JOHN R. HOWELL
Director
- ------------------------------------------
FRANCIS J. MERTZ
Director
- ------------------------------------------
GEORGE L. MILES, JR.
Director
- ------------------------------------------
HENRY S. PATTERSON II
Director
- ------------------------------------------
RAYMOND SILVERSTEIN
Director
- ------------------------------------------
ORIN R. SMITH
Director
- ------------------------------------------
JOSEPH M. TABAK
/s/ DOUGLAS G. WATSON Director
- ------------------------------------------
DOUGLAS G. WATSON
</TABLE>
<PAGE> 1
Exhibit 99.3
_____, 1997
The First National Bank of Chicago
One First National Plaza
Chicago,Illinois 60670
Ladies and Gentlemen:
Summit Bancorp., a New Jersey corporation, as Depositor ("Summit") and
Summit Capital Trust I, a trust formed under the laws of the State of Delaware
(the "Trust") hereby appoint THE FIRST NATIONAL BANK OF CHICAGO to act as
exchange agent (the "Exchange Agent") in connection with an exchange offer by
Summit and the Trust to exchange up to $150,000,000 aggregate Liquidation Amount
of the Trust's 8.40% Capital Securities due March 15, 1997 (the "New
Securities"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act") for a like aggregate Liquidation Amount of the
Trust's outstanding 8.40% Capital Securities due March 15, 1997 (the "Old
Securities"). The terms and conditions of the exchange offer are set forth in a
Prospectus dated _______ 1997 (as the same may be amended or supplemented from
time to time, the "Prospectus") and in the related Letter of Transmittal, which
together constitute the "Exchange Offer." The registered holders of the Capital
Securities are hereinafter referred to as the "Holders." Capitalized terms used
herein and not defined shall have the respective meanings assigned thereto in
the Prospectus.
The Exchange Offer is expected to be commenced by the Trust on or about
_______, 1997. The Letter of Transmittal accompanying the Prospectus (or in the
case of book-entry securities, the ATOP system) is to be used by the holders of
the Old Securities to accept the Exchange Offer and contains instructions with
respect to (i) the delivery of certificates for Old Securities tendered in
connection therewith and (ii) the book-entry transfer of Old Securities to the
Exchange Agent's account.
The Exchange Offer shall expire at 5:00 p.m. New York City time, on _____,
1997, or on such later date or time to which the Trust may extend the Exchange
Offer from time to time by giving oral (to be confirmed in writing) or written
notice to the Exchange Agent before 9:00 a.m., New York City time, on the
business day following the previously scheduled Expiration Date.
The Trust expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange and Old Securities not theretofore
accepted for exchange, based upon any conditions of the Exchange Offer described
in the Prospectus. The Trust will give oral (to be confirmed in writing) or
written notice of any amendment, termination or nonacceptance of Old Securities
to the Exchange Agent promptly after any amendment, termination or
nonacceptance.
<PAGE> 2
On the basis of the representations, warranties and agreements of Summit,
the Trust and the Exchange Agent contained herein and subject to the terms and
conditions hereof, the following sets forth the agreement between Summit, the
Trust and the Exchange Agent for the Exchange Offer:
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. Summit and the Trust hereby authorize and appoint The First National
Bank of Chicago to act as Exchange Agent in connection with the Exchange Offer
and The First National Bank of Chicago agrees to act as Exchange Agent in
connection with the Exchange Offer. As Exchange Agent, The First National Bank
of Chicago will perform those services as are specifically set forth in the
section of the Prospectus captioned "The Exchange Offer" and as are outlined
herein.
b. Summit and the Trust acknowledge and agree that The First National Bank
of Chicago has been retained pursuant to this Agreement to act solely as
Exchange Agent in connection with the Exchange Offer, and in such capacity, the
Exchange Agent shall perform such duties in good faith.
c. The Exchange Agent will establish an account with respect to the Old
Securities at The Depository Trust Company ("DTC") for the purposes of the
Exchange Offer within two business days after the date of the Prospectus, and
any financial institution that is a participant in DTC's system may make
book-entry delivery of the Old Securities by causing DTC to transfer such Old
Securities into the Exchange Agent's account in accordance with DTC's procedure
for such transfer.
d. The Exchange Agent will examine each of the Letters of Transmittal and
certificates for Old Securities and any book-entry confirmations and any other
documents delivered or mailed to the Exchange Agent by or for Holders of the Old
Securities to ascertain whether: (i) the Letters of Transmittal and any such
other documents are duly executed and properly completed in accordance with the
instructions set forth therein and that such book-entry confirmations are in due
and proper form and contain the information required to be set forth therein,
(ii) the Old Securities have otherwise been properly tendered, and (iii) Holders
have provided their correct Tax Identification Number or required certification.
Determination of all questions as to validity, form, eligibility and acceptance
for exchange of any Old Securities shall be made by Summit or the Trust, whose
determination shall be final and binding. In each case where the Letters of
Transmittal or any other documents have been improperly completed or executed or
where book-entry confirmations are not in due and proper form or omit certain
information, or any of the certificates for Old Securities are not in proper
form for transfer or some other irregularity in connection with the tender of
the Old Securities exists, the Exchange Agent will endeavor to advise the
tendering Holders of the irregularity and to take any other action may be
necessary or advisable as to cause such irregularity to be corrected.
Notwithstanding the foregoing, the Exchange Agent shall not incur any liability
for failure to give any such notification.
2
<PAGE> 3
e. With the approval of any Administrator of the Trust or any person
designated in writing by Summit (a "Designated Officer") (such approval, if
given orally, to be confirmed in writing) or any other party designated by any
such Administrator or Designated Officer, the Exchange Agent is authorized to
waive any irregularities in connection with any tender of Old Securities
pursuant to the Exchange Offer.
f. Tenders of Old Securities may be made only as set forth in the Letter
of Transmittal and in the section of the Prospectus captioned "The Exchange
Offer" and Old Securities shall be considered properly tendered only when
tendered in accordance with the procedures set forth therein. Notwithstanding
the provisions of this paragraph, Old Securities which any Administrator or
Designated Officer shall approve (such approval, if given orally, to be
confirmed in writing) as having been properly tendered shall be considered to be
properly tendered.
g. The Exchange Agent shall advise Summit and the Trust with respect to
any Old Securities received after 5:00 p.m., New York City time, on the
Expiration Date and accept their instructions with respect to disposition of
such Old Securities.
h. The Exchange Agent shall accept tenders:
(a) in cases where the Old Securities are registered in two or more
names only if signed by all named Holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only
when proper evidence of such person's authority so to act is submitted;
and
(c) from persons other than the registered Holder of Old Securities
provided that customary transfer requirements, including any applicable
transfer taxes, are fulfilled.
The Exchange Agent shall accept partial tenders of Old Securities where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Old Securities to the transfer agent for split-up and return any untendered
Old Securities or Old Securities which have not been accepted by Summit and the
Trust to the Holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
i. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Trust will notify the Exchange Agent (such notice if given orally, to
be confirmed in writing) of its acceptance, promptly after the Expiration Date,
of all Old Securities properly tendered and the Exchange Agent, on behalf of the
Trust, will exchange such Old Securities for New Securities and cause such Old
Securities to be canceled. Delivery of New Securities will be made on behalf of
the Trust by the Exchange Agent at the rate of $1,000 liquidation amount of
3
<PAGE> 4
the corresponding series of Old Securities tendered promptly after notice (such
notice if given orally, to be confirmed in writing) of acceptance of said Old
Securities by the Trust; provided, however, that in all cases, Old Securities
tendered pursuant to the Exchange Offer will be exchanged only after timely
receipt by the Exchange Agent of certificates for such Old Securities (or
confirmation of book-entry transfer into the Exchange Agent's account at DTC), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) or Agent's Message in lieu thereof), with any required signature
guarantees and any other required documents. You shall issue New Securities only
in denominations of $1,000 or any integral multiple thereof.
j. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and the conditions set forth in the Prospectus and the
Letter of Transmittal, Old Securities tendered pursuant to the Exchange Offer
may be withdrawn at any time on or prior to the Expiration Date.
k. The Trust shall not be required to exchange any Old Securities tendered
if any of the conditions set forth in the Exchange Offer are not met. Notice of
any decision by Summit and the Trust not to exchange any Old Securities tendered
shall be given by Summit or the Trust orally (and confirmed in writing) to the
Exchange Agent.
l. If, pursuant to the Exchange Offer, Summit and the Trust do not accept
for exchange all or part of the Old Securities tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the caption "The Exchange Offer--Conditions to the Exchange Offer" or otherwise,
the Exchange Agent shall promptly after the expiration or termination of the
Exchange Offer return such certificates for unaccepted Old Securities (or effect
appropriate book-entry transfer), together with any related required documents
and the Letters of Transmittal relating thereto that are in the Exchange Agent's
possession, to the persons who deposited such certificates.
m. Certificates for reissued Old Securities, New Securities shall be
forwarded by (a) first-class certified mail, return receipt requested under a
blanket surety bond obtained by the Exchange Agent protecting the Exchange
Agent, Summit and the Trust from loss or liability arising out of the
non-receipt or non-delivery or such certificates or (b) by registered mail
insured by the Exchange Agent separately for the replacement value of each such
certificate.
n. The Exchange Agent is not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, commercial
bank, trust company or other persons or to engage or use any person to solicit
tenders.
o. As Exchange Agent, The First National Bank of Chicago:
(i) shall have no duties or obligations other than those
specifically set forth in the section of the Prospectus captioned "The
Exchange Offer," the Letter of Transmittal or herein or as may be
subsequently agreed to in writing;
4
<PAGE> 5
(ii) will make no representations and will have no responsibilities
as to the validity, value or genuineness of any of the certificates for
the Old Securities deposited pursuant to the Exchange Offer, and will not
be required to and will make no representation as to the validity, value
or genuineness of the Exchange Offer;
(iii) shall not be obligated to take any legal action hereunder
which might in the Exchange Agent's reasonable judgment involve any
expense or liability, unless the Exchange Agent shall have been furnished
with reasonable indemnity;
(iv) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to the Exchange Agent and
reasonably believed by the Exchange Agent to be genuine and to have been
signed by the proper party or parties;
(v) may reasonably act upon any tender, statement, request,
agreement or other instrument whatsoever not only as to its due execution
and validity and effectiveness of its provisions, but also as to the truth
and accuracy of any information contained therein, which the Exchange
Agent believes in good faith to be genuine and to have been signed or
represented by a proper person or persons;
(vi) may rely on and shall be protected in acting upon written or
oral instructions from any Administrator or Designated Officer;
(vii) may consult with its own counsel with respect to any questions
relating to the Exchange Agent's duties and responsibilities and the
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken
by the Exchange Agent hereunder in good faith and in accordance with the
advice or opinion of such counsel;
(viii) shall not advise any person tendering Old Securities pursuant
to the Exchange Offer as to whether to tender or refrain from tendering
all or any portion of its Old Securities or as to the market value,
decline or appreciation in market value of any Old Securities or as to the
market value of the New Securities; and
(ix) The Exchange Agent shall take such action as may from time to
time be requested by Summit or the Trust to furnish copies of the
Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery or
such other forms as may be approved from time to time by Summit and the
Trust, to all persons requesting such documents and to accept and comply
with telephone requests for information relating to the procedures for
accepting (or withdrawing from) the Exchange Offer. Summit and the Trust
will furnish you with copies of such documents at your request.
p. The Exchange Agent shall advise by facsimile transmission or telephone
and promptly thereafter confirm in writing to Summit and the Trust and such
other persons as
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Summit and the Trust may request, daily (and more frequently during the week
immediately preceding the Expiration Date and if otherwise requested), up to and
including the Expiration Date, the aggregate liquidation amount of Old
Securities which have been tendered pursuant to the Exchange Offer and the items
received by the Exchange Agent pursuant to the Exchange Offer and this
Agreement, reporting separately and cumulatively as to items properly received
and items improperly received. In addition, the Exchange Agent will also
provide, and cooperate in making available to Summit and the Trust or any such
other persons as requested from time to time, such other information in its
possession as Summit and the Trust may reasonably request. Such cooperation
shall include, without limitation, the granting by the Exchange Agent to Summit
and the Trust, and such persons as Summit and the Trust may request, of access
to those persons on the Exchange Agent's staff who are responsible for receiving
tenders, in order to ensure that immediately prior to the Expiration Date Summit
and the Trust shall have received information in sufficient detail to enable
Summit and the Trust to decide whether to extend the Exchange Offer. The
Exchange Agent shall prepare a final list of all persons whose tenders were
accepted, the aggregate liquidation amount of Old Securities tendered and the
aggregate liquidation amount of Old Securities accepted and deliver said list to
Summit and the Trust.
q. Letters of Transmittal, book-entry confirmation and Notices of
Guaranteed Delivery shall be stamped by the Exchange Agent as to the date and
time of receipt thereof and shall be preserved by the Exchange Agent for a
period of time at least equal to the period of time the Exchange Agent preserves
other records pertaining to the transfer of securities, or one year, whichever
is longer, and thereafter shall be delivered by the Exchange Agent to Summit and
the Trust. The Exchange Agent shall dispose of unused Letters of Transmittal and
other surplus materials by returning them to Summit or the Trust.
r. The Exchange Agent hereby expressly waives any lien, encumbrance or
right of set-off whatsoever that the Exchange Agent may have respect to funds
deposited with it for the payment of transfer taxes by reasons of amounts, if
any, borrowed by Summit or the Trust, of any of its or their subsidiaries or
affiliates pursuant to any loan or credit agreement with the Exchange Agent or
for compensation owed to the Exchange Agent hereunder or for any other matter.
s. The Exchange Agent hereby acknowledges receipt of the Prospectus and
the Letter of Transmittal and the Notice of Guaranteed Delivery and further
acknowledges that it has examined each of them. Any inconsistency between this
Agreement, on the one hand, and the Prospectus and the Letter of Transmittal and
the Notice of Guaranteed Delivery (as they may be amended or supplemented from
time to time), on the other hand, shall be resolved in favor of the latter three
documents, except with respect to the duties, liabilities and indemnification of
the Exchange Agent which shall be controlled by this Agreement.
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2. COMPENSATION
For services rendered as Exchange Agent hereunder, the Exchange Agent
shall be entitled to such compensation as is set forth on Schedule I attached
hereto.
3. INDEMNIFICATION
a. The Trust hereby agrees to indemnify and hold harmless the Exchange
Agent against and from any and all costs, losses, liabilities and expenses
(including reasonable counsel fees and disbursements) arising out of or in
connection with any act, omission, delay or refusal made by the Exchange Agent
in reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by the Exchange Agent to be valid, genuine and sufficient and in accepting any
tender or effecting any transfer of Old Securities reasonably believed by the
Exchange Agent in good faith to be authorized, and in delaying or refusing in
good faith to accept any tenders or effect any transfer of Old Securities.
Anything in this Agreement to the contrary notwithstanding, neither Summit nor
the Trust shall be liable for indemnification or otherwise for any loss,
liability, cost or expense to the extent arising out of the Exchange Agent's bad
faith, gross negligence or willful misconduct. In no case shall the Trust be
liable under this indemnity with respect to any claim against the Exchange Agent
until the Trust shall be notified by the Exchange Agent, by letter, of the
written assertion of a claim against the Exchange Agent or of any other action
commenced against the Exchange Agent, promptly after the Exchange Agent shall
have received any such written assertion or notice of commencement of action.
The Trust shall be entitled to participate at its own expense in the defense of
any such claim or other action, and, if the Trust so elects, the Trust may
assume the defense of any pending or threatened action to enforce any such
claim. In the event that the Trust shall assume the defense of any such suit or
threatened action in respect of which indemnification may be sought hereunder,
the Trust shall not be liable for the fees and expenses incurred thereafter of
any additional counsel retained by the Exchange Agent so long as the Exchange
Agent consents to the Trust's retention of counsel, which consent may not be
unreasonably withheld; provided, however, that the Trust shall not be entitled
to assume the defense of any such action if the named parties to such action
include Summit or the Trust and the Exchange Agent and representation of the
parties by the same legal counsel would, in the written opinion of counsel for
the Exchange Agent, be inappropriate due to actual or potential conflicting
interests among them. It is understood that neither Summit nor the Trust shall
be liable under this paragraph for the fees and disbursements of more than one
legal counsel for the Exchange Agent. In the event that the Trust shall assume
the defense of any such suit with counsel reasonably acceptable to the Exchange
Agent, the Trust shall not thereafter be liable for the fees and expenses of any
counsel retained by the Exchange Agent.
b. The Exchange Agent agrees that, without the prior written consent of
the Trust (which consent shall not be unreasonably withheld), it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could
be sought in accordance with the indemnification provision of
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this Agreement (whether or not the Exchange Agent, Summit or the Trust or any of
its directors, officers and controlling persons is an actual or potential party
to such claim, action or proceeding), unless such settlement, compromise or
consent includes an unconditional release of Summit or the Trust and its
directors, officers and controlling persons form all liability arising out of
such claim, action or proceeding.
4. TAX INFORMATION
a. The Exchange Agent shall arrange to comply with all requirements under
the tax laws of the United States, including those relating to missing Tax
Indemnification Numbers, and shall file any appropriate reports with the
Internal Revenue Service. Summit and the Trust understand that the Exchange
Agent is required, in certain instances,to deduct 31% with respect to interest
paid on the New Securities and proceeds from the sale, exchange, redemption or
retirement of the New Securities from Holders who have not supplied their
correct Taxpayer Identification Number or required certification. Such funds
will be turned over to the Internal Revenue Service in accordance with
applicable regulations. The Exchange Agent shall notify Summit and the Trust of
any Holder who has failed to supply such Taxpayer Identification Number or
certification.
b. The Exchange Agent shall notify the Trust of the amount of any transfer
taxes payable in respect of the exchange of Old Securities and, upon receipt of
written approval from the Trust, the Exchange Agent shall deliver or cause to be
delivered, in a timely manner to each governmental authority to which any
transfer taxes are payable in respect of the exchange of Old Securities, its
check in the amount of all transfer taxes so payable, and the Trust shall
reimburse the Exchange Agent for the amount of any and all transfer taxes
payable in respect of the exchange of Old Securities; provided, however, that
the Exchange Agent shall reimburse the trust for amounts refunded to the
Exchange Agent in respect of you payment of any such transfer taxes, as such
time as such refund is received by the Exchange Agent.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that state without regard to conflicts of
laws principles.
6. NOTICES. Any communication or notice provided for hereunder shall be in
writing and shall be given (and shall be deemed to have been given upon receipt)
by delivery in person, telecopy, or overnight delivery or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the address indicated below:
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If to Summit:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone: 609-987-3200
Telecopy: 609-987-3481
If to the Trust:
Summit Capital Trust I
c/o Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone: 609-987-3200
Telecopy: 609-987-3481
If to the Exchange Agent:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Telephone: 312-407-3344
Telecopy: 312-407-4653
Attention: Deborah Randle
or, as to each party, at such other address as shall be designated by such party
in a written notice complying as to delivery with the terms of this Section.
7. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto and their successors and assigns and noting
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. Without limitation to the foregoing, the parties
hereto expressly agree that no holder of Old Securities or New Securities shall
have any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
8. COUNTERPARTS; SEVERABILITY. This Agreement may be executed in one or more
counterparts, and each of such counterparts shall together constitute one and
the same agreement. If any term or other provision of this Agreement or the
application thereto is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other
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provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the agreements contained herein is
not affected in any manner adverse to any party. Upon such determination that
any term or provision or the application thereof is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the agreements contained
herein may be performed as originally contemplated to the fullest extent
possible.
9. CAPTIONS. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended or modified nor may any provision hereof be
waived except in writing signed by each party to be bound thereby.
11. TERMINATION. This Agreement shall terminate upon the earlier of (a) the
90th day following the expiration, withdrawal, or termination of the Exchange
Offer, (b) the close of business on the date of actual receipt of written notice
by the Exchange Agent from Summit and the Trust stating that this agreement is
terminated, (c) one year following the date of this Agreement, or (d) the time
and date on which this Agreement shall be terminated by mutual consent of the
parties hereto. Notwithstanding the foregoing, Paragraphs 2, 3 and 4 shall
survive termination of this Agreement.
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Kindly indicate the Exchange Agent's acceptance of the foregoing
provisions by signing in the space provided below for that purpose and returning
to Summit a copy of this Agreement so signed, whereupon this Agreement and the
Exchange Agent's acceptance shall constitute a binding agreement between the
Exchange Agent, Summit and the Trust.
Very truly yours,
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
_________________________________________
By:______________________________________
Name:____________________________________
Title: Administrator
Accepted and agreed to as of
the date first written above:
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________________________
Name:____________________________________
Title:___________________________________
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SCHEDULE I
THE FIRST NATIONAL BANK OF CHICAGO
FEE SCHEDULE
EXCHANGE AGENT SERVICES
SUMMIT CAPITAL TRUST I
I. Exchange Agency
A fee for the receipt of exchanged ___% Capital Trust Pass-Through
Securities of Summit Capital Trust I will be charged at $6.50 per letter
of transmittal. The total charge will be subject to a minimum of $2,000
and maximum of $5,000.
This fee covers examination and execution of all required documentation,
receipt of transmittal letters,reporting as required to the Company and
communication with DTC.
II. Miscellaneous
Fees for services not specifically covered in this schedule will be
assessed in amounts commensurate with the services rendered.
_____, 1997
