PROSPECTUS
Filed pursuant to Rule 424(b)(3)
File Nos. 333-25829
333-25829-01
U. S. BANCORP CAPITAL I
OFFER TO EXCHANGE ITS
8.27% CAPITAL SECURITIES, SERIES B
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.27% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
U. S. BANCORP
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON JULY 21, 1997, UNLESS EXTENDED.
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U. S. Bancorp Capital I, a statutory business trust created 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 $300,000,000 aggregate Liquidation Amount of its
8.27% Capital Securities, Series B (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
8.27% Capital Securities, Series A (the "Old Capital Securities"), of which
$300,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, U. S. Bancorp, an Oregon 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 8.27% Junior Subordinated Deferrable
Interest Debentures due December 15, 2026, to be
(Continued on the following page)
SEE "RISK FACTORS" COMMENCING ON PAGE 17 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is June 20, 1997.
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(Continued from the previous page)
issued pursuant to an indenture to be entered into between U. S. Bancorp and The
First National Bank of Chicago, as trustee (the "New Junior Subordinated
Debentures") for a like aggregate principal amount of its 8.27% Junior
Subordinated Deferrable Interest Debentures due December 15, 2026, issued
pursuant to an Indenture dated December 24, 1996, between U. S. Bancorp and The
First National Bank of Chicago, as trustee (the "Old Junior Subordinated
Debentures"). The New Guarantee and New Junior Subordinated Debentures have also
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 (i) 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 and (ii)
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, in each case in connection with the
Exchange Offer. 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 U. S. Bancorp and the Trust under the
Registration Rights Agreement dated as of December 24, 1996 (the "Registration
Rights Agreement") among U. S. Bancorp, the Trust and Goldman Sachs & Co.,
Lehman Brothers Inc., and Salomon Brothers Inc (the "Initial Purchasers"). 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 Trust Agreement.
The New Capital Securities and the Old Capital Securities (collectively,
the "Capital Securities") represent preferred undivided beneficial interests in
the assets of the Trust. U. S. Bancorp 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 Property 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 December 15, 2026, subject to
U. S. Bancorp's right to shorten the maturity (the "Stated Maturity"). See
"Description of New Securities--Description of New Capital Securities--Right to
Shorten Maturity." 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--Subordination of Common
Securities." The Capital Securities are issuable, and may be held or
transferred, only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities). Accordingly, any holder must own at least 100
Capital Securities. Any transfer, sale or other disposition of New Capital
Securities in a block having a Liquidation Amount of less than $100,000, or
resulting in a holder's holding New Capital Securities in a block having a
Liquidation Amount of less than $100,000, will be deemed to be void and of no
legal effect whatsoever.
As used herein, (i) the "New Indenture" means the indenture to be entered
into between U. S. Bancorp and The First National Bank of Chicago, as Trustee
(the "Debenture Trustee"), as amended and supplemented from time to time,
relating to the New Junior Subordinated Debentures, (ii) the "Old Indenture"
means the Indenture, dated as of December 24, 1996, as amended and supplemented
from time to time, between U. S. Bancorp and The First National Bank of Chicago,
as Debenture Trustee,
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(Continued from the previous page)
relating to the Old Junior Subordinated Debentures, and (iii) the "Trust
Agreement" means the Amended and Restated Trust Agreement, dated as of December
24, 1996, among U. S. Bancorp, as Depositor, the First National Bank of Chicago
as Property Trustee (the "Property Trustee"), First Chicago Delaware Inc., as
Delaware Trustee (the "Delaware Trustee"), and the Administrative Trustees named
therein (collectively, with the Property Trustee and the 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, (ii)
the term "Indenture includes the Old Indenture and the New Indenture, and (iii)
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 June 15, 1997, and payable
semi-annually in arrears on June 15 and December 15 of each year, commencing
December 15, 1997, at the annual rate of 8.27% of the Liquidation Amount of
$1,000 per New Capital Security ("Distributions"). Subject to certain
exceptions, as described herein, U. S. Bancorp has the right to defer payment 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. Upon the termination of any such
Extension Period and the payment of all amounts then due, U. S. Bancorp 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 Capital Securities
will also be deferred and U. S. Bancorp will not be permitted, subject to
certain exceptions described herein, to declare or pay any dividends,
distributions or other payments with respect to, or repay, repurchase, redeem or
otherwise acquire, U. S. Bancorp's capital stock or debt securities 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 Capital
Securities are entitled will accumulate) at the rate of 8.27% per annum,
compounded semi-annually, and holders of Capital 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 Defer Interest Payments" and "--Restrictions on Certain
Payments" and "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
Through the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures, the Indenture, and the Expense Agreement (as defined herein), taken
together, U. S. Bancorp has guaranteed or will guarantee, as the case may be,
fully, irrevocably and unconditionally, all of the Trust's obligations under the
Capital Securities. See "Relationship Among the New Capital Securities, the New
Junior Subordinated Debentures, the New Guarantee and the Expense
Agreement--Full and Unconditional Guarantee." The Old Guarantee guarantees, and
the New Guarantee will guarantee, payments of Distributions and payments on
liquidation or redemption of the Capital Securities, but in each case only to
the extent that the Trust holds funds on hand available therefor and has failed
to make such payments, as described herein. See "Description of New
Securities--Description of New Guarantee." If U. S. Bancorp fails to make a
required payment on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on the
Capital Securities. The Guarantee will not cover any such payment when the Trust
does not have funds sufficient to make such payments. In such event, a holder of
Capital Securities may institute a legal proceeding directly against U. S.
Bancorp to enforce its rights in respect of such payment. See "Description of
New Securities--Description of New Junior Subordinated Debentures--Enforcement
of Certain Rights by Holders of New Capital Securities." The obligations of U.
S. Bancorp under the Guarantee and the Junior Subordinated Debentures will be
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<PAGE>
(Continued from the previous page)
unsecured and subordinate and junior in right of payment to all Senior Debt (as
defined in "Description of New Securities--Description of New Junior
Subordinated Debentures--Subordination") of U. S. Bancorp.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at Stated Maturity or
their earlier redemption. Subject to U. S. Bancorp having received prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") to do so if then required under applicable capital guidelines or
policies of the Federal Reserve, the Junior Subordinated Debentures are
redeemable prior to their Stated Maturity at the option of U. S. Bancorp (i) on
or after December 15, 2006, in whole at any time or in part from time to time or
(ii) in whole (but not in part), at any time within 90 days following the
occurrence and continuation of a Tax Event or a Capital Treatment Event (each as
defined herein). For a description of redemption prices for the Capital
Securities pursuant to clause (i) or (ii) above, see "Description of New
Securities--Description of New Capital Securities--Redemption."
Under certain circumstances in which a Tax Event would otherwise occur, U.
S. Bancorp also has the right, subject to prior approval of the Federal Reserve
if then required under applicable capital guidelines or policies of the Federal
Reserve, to shorten the maturity of the Junior Subordinated Debentures to a date
not earlier than June 24, 2016, which will result in redemption of the Capital
Securities as of such earlier maturity. See "Description of New
Securities--Description of New Capital Securities--Right to Shorten Maturity."
U. S. Bancorp, as the holder of the outstanding Common Securities, has the
right at any time to terminate the Trust, subject to U. S. Bancorp having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve. In the event
of the termination of the Trust, after satisfaction of liabilities to creditors
of the Trust as required by applicable law and subject to the Expense Agreement,
the holders of the Capital Securities will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a distribution of
such amount in Junior Subordinated Debentures in exchange therefor, subject to
certain exceptions. See "Description of New Securities--Description of New
Capital Securities--Liquidation Distribution Upon Termination."
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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 U. S. Bancorp 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, U. S. Bancorp 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 U. S. Bancorp 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
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(Continued from the previous page)
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 U. S. Bancorp 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, U. S. Bancorp and the Trust may require such holder, as
a condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to U. S. Bancorp 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 (the "Exchange
Act")) on behalf of whom such holder holds the Old Capital Securities to be
exchanged in the Exchange Offer. Each broker-dealer that receives New Capital
Securities for its own account pursuant to the Exchange Offer must acknowledge
that it 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, U. S. Bancorp 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, U. S. Bancorp 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 (as defined herein) (subject to 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
U. S. Bancorp or the Trust, or cause U. S. Bancorp or the Trust to be notified,
on or prior to the Expiration Date, that it is a Participating Broker-Dealer.
Such notice may
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(Continued from the previous page)
be given in the space provided for that purpose in the Letter of Transmittal or
may be delivered to the Exchange Agent at its address set forth herein under
"The Exchange Offer--Exchange Agent and Information Agent." Any Participating
Broker-Dealer who is an Affiliate of U. S. Bancorp 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, that, upon receipt of notice from U.
S. Bancorp 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 U. S. Bancorp 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 U. S. Bancorp 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. If U. S. Bancorp
or the Trust gives such notice to suspend the sale of the New Capital Securities
(or the New Guarantee or the New Junior Subordinated Debentures, as applicable),
it shall extend the 180-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of New Capital Securities by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Capital
Securities or to and including the date on which U. S. Bancorp or the Trust has
given notice that the sale of 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. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Capital Securities. U. S. Bancorp and the
Trust currently do not intend to apply for listing of the New Capital Securities
on any securities exchange or for inclusion in The Nasdaq Stock Market, the
Electronic Securities Market operated by the National Association of Securities
Dealers, Inc. ("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 Trust Agreement
(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 U. S. Bancorp 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."
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(Continued from the previous page)
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THE 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 July 21, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by U. S. Bancorp or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by U. S. Bancorp 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 in a Liquidation Amount of $100,000 (100 Capital Securities) or
any integral multiple of $1,000 (one Capital Security) in excess thereof;
provided that, if any Old Capital Securities are tendered for exchange in part,
the untendered Liquidation Amount thereof must be $100,000 (100 Capital
Securities) or any integral multiple of $1,000 (one Capital Security) in excess
thereof. U. S. Bancorp 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 any
further Distributions on such Old Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Old Capital Securities
accumulated from and after June 15, 1997. Accordingly, holders of New Capital
Securities as of the record date for payment of Distributions on December 15,
1997, will be entitled to receive Distributions accumulated from and after June
15, 1997. See "The Exchange Offer--Distributions on New Capital Securities."
Neither U. S. Bancorp 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."
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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 U. S. BANCORP OR THE TRUST. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF U. S. BANCORP 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 TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
Page
Available Information .......................................................8
Incorporation of Certain Documents by Reference..............................9
Summary.....................................................................10
Risk Factors................................................................17
U. S. Bancorp Capital I.....................................................23
U. S. Bancorp...............................................................23
Certain Regulatory Considerations...........................................24
Ratio of Earnings to Fixed Charges..........................................25
Use of Proceeds.............................................................25
Capitalization..............................................................26
The Exchange Offer..........................................................27
Description of New Securities...............................................37
Description of Old Securities...............................................63
Relationship Among the New Capital Securities, the New Junior Subordinated
Debentures, the New Guarantee and the Expense Agreement...................64
Certain Federal Income Tax Consequences.....................................65
Certain ERISA Considerations................................................69
Plan of Distribution........................................................70
Validity of New Securities..................................................71
Experts.....................................................................71
AVAILABLE INFORMATION
U. S. Bancorp is subject to the informational requirements of 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).
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No separate financial statements of the Trust have been included herein.
U. S. Bancorp and the Trust do not consider that such financial statements would
be material to holders of the 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 "U. S. Bancorp Capital I" and "Description of
New Securities." In addition, U. S. Bancorp 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 U. S. Bancorp 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 U. S. Bancorp, 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 U. S. Bancorp with the Commission are
incorporated into this Prospectus by reference:
1. U. S. Bancorp's Annual Report on Form 10-K for the year ended December
31, 1996;
2. U. S. Bancorp's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; and
3. U. S. Bancorp's Current Reports on Form 8-K dated March 26, 1997 and
June 17, 1997.
All documents subsequently filed by U. S. Bancorp 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 offering of the New Securities offered hereby 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. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. 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. U. S. Bancorp 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: Investor Relations, U. S. Bancorp, P.O. Box
8837, Portland, Oregon 97208. Telephone requests may be directed to Investor
Relations at (503) 275-5834.
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information appearing elsewhere in this
Prospectus.
U. S. BANCORP
U. S. Bancorp is a regional multi-bank holding company headquartered in
Portland, Oregon. At December 31, 1996, U. S. Bancorp was the 26th largest bank
holding company in the United States with consolidated total assets of $33.3
billion. U. S. Bancorp is engaged in a general retail and commercial banking
business in the states of Oregon, Washington, Idaho, California, Nevada, and
Utah through its banking subsidiaries. Other subsidiaries of U. S. Bancorp
provide financial services related to banking including lease financing,
consumer and commercial finance, discount brokerage, investment advisory
services, and insurance agency and credit life insurance services.
On March 20, 1997, U. S. Bancorp and First Bank System Inc. ("FBS")
announced the signing of a definitive agreement for FBS to acquire U. S. Bancorp
for stock valued at approximately $9 billion. The resulting company, which will
be called U. S. Bancorp and will be headquartered in Minneapolis, Minnesota,
will create the 14th largest banking organization in the United States based on
combined assets of approximately $70 billion. The combined company will serve
nearly 4 million households and 475,000 businesses in 17 contiguous states. The
merger is subject to regulatory and shareholder approvals and is expected to
close in the third quarter of 1997. Pro forma financial statements reflecting
the pending merger are incorporated herein by reference to U. S. Bancorp's
Current Report on Form 8-K dated June 17, 1997. See "Incorporation of Certain
Documents by Reference."
U. S. BANCORP CAPITAL I
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State and governed by the Trust Agreement. The Trust's business and affairs are
conducted by its trustees: currently, The First National Bank of Chicago, as
Property Trustee, First Chicago Delaware Inc., as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of U. S.
Bancorp. The Trust exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures and (iii) engaging in
only those other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures and the right to reimbursement under the Expense
Agreement are and will continue to be the sole assets of the Trust, and payments
under the Junior Subordinated Debentures and the Expense Agreement will be the
sole source of revenues of the Trust. All of the Common Securities are owned by
U. S. Bancorp.
THE EXCHANGE OFFER
The Exchange Offer. . . . . . . Up to $300,000,000 aggregate Liquidation
Amount of New Capital Securities are being
offered in exchange for a like aggregate
Liquidation Amount of Old Capital
Securities. Old Capital Securities may be
tendered for exchange in whole or in part in
a Liquidation Amount of $100,000 (100
Capital Securities) or any integral multiple
of $1,000 (one Capital Security) in excess
thereof; provided that, if any Old Capital
Securities are tendered for exchange in
part, the untendered Liquidation Amount
thereof must be $100,000 (100 Capital
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Securities) or any integral multiple of
$1,000 (one Capital Security) in excess
thereof. U. S. Bancorp 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 Date. . . . . . . . 5:00 p.m., New York City time on July 21,
1997, unless the Exchange Offer is extended
by U. S. Bancorp or the Trust (in which case
the Expiration Date 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 U. S.
Bancorp 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."
Offer. . . . . . . . . . . . . . U. S. Bancorp 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 Date of the Exchange Offer and
retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject,
however, to the right of holders of Old
Capital Securities to withdraw their
tendered Old Capital Securities, or (iv) to
waive any condition or otherwise amend the
terms of the Exchange Offer in any respect.
See "The Exchange Offer--Terms of the
Exchange Offer."
Withdrawal Rights. . . . . . . . Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to the Exchange
Agent (as defined below) in conformity with
certain procedures set forth below under
"The Exchange Offer--Withdrawal Rights."
Procedures for Tendering Old
Capital Securities. . . . . . . Brokers, dealers, commercial banks, trust
companies and other nominees who hold Old
Capital Securities through The Depository
Trust Company ("DTC") may effect tenders by
book-entry transfer in accordance with DTC's
Automated Tender Offer Program ("ATOP").
Holders of such 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. In order for Old Capital
Securities to be tendered by a means other
than by book- entry transfer, a Letter of
Transmittal must be completed and signed in
accordance with the instructions contained
therein. The Letter of Transmittal and any
other documents required by the Letter of
Transmittal must be delivered to the
Exchange Agent by mail, facsimile, hand
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<PAGE>
delivery or overnight courier and either
such Old Capital Securities must be
delivered to the Exchange Agent or specified
procedures for guaranteed delivery must be
complied with. See "The Exchange
Offer--Procedures for Tendering Old Capital
Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should
not be sent to U. S. Bancorp or the Trust.
Such documents should only be sent to the
Exchange Agent.
Resales of New Capital
Securities. . . . . . . . . . . U. S. Bancorp 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 U. S. Bancorp 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, U. S. Bancorp 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 U. S. Bancorp 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 prospectus
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<PAGE>
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 U. S. Bancorp 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,
U. S. Bancorp 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,"
U. S. Bancorp 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
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<PAGE>
Securities for a period ending 180 days
after the Expiration Date (subject to
extension under certain limited
circumstances) 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 which is an Affiliate of U. S.
Bancorp 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 address,
and telephone and facsimile numbers, of the
Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent and
Information Agent" and in the Letter of
Transmittal.
Use of Proceeds. . . . . . . . . Neither U. S. Bancorp nor the Trust will
receive any cash proceeds from the issuance
of the New Capital Securities offered
hereby. See "Use of Proceeds."
Certain Federal Income
Tax Consequences; ERISA
Considerations. . . . . . . . . Holders of Old Capital Securities should
review the information set forth under
"Certain Federal Income Tax Consequences"
and "Certain ERISA Considerations" prior to
tendering Old Capital Securities in the
Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered. . . . . . . Up to $300,000,000 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
Trust Agreement. 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; Amendment of the Trust
Agreement." 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, 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 in connection with the Exchange
Offer. See "The Exchange Offer--Purpose of
the Exchange Offer," "Description of New
Securities" and "Description of Old
Securities."
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<PAGE>
Distribution Dates. . . . . . . June 15 and December 15 of each year,
commencing December 15, 1997.
Extension Periods. . . . . . . . Distributions on the New Capital Securities
will be deferred for the duration of any
Extension Period elected by U. S. Bancorp
with respect to the payment of interest on
the New Junior Subordinated Debentures. No
Extension Period will exceed 10 consecutive
semi- annual periods or extend beyond the
Stated Maturity of the New Junior
Subordinated Debentures (December 15, 2026).
There is no limitation on the number of
times that U. S. Bancorp may elect to begin
an Extension Period. During an Extension
Period, U. S. Bancorp will not be permitted
to pay any cash distributions with respect
to its capital stock or take certain other
actions, subject to certain exceptions. See
"Description of New Securities--Description
of New Junior Subordinated
Debentures--Option to Defer Interest
Payments" and "Certain Federal Income Tax
Consequences--Interest Income and Original
Issue Discount."
Ranking. . . . . . . . . . . . . The New Capital Securities will rank pari
passu, and payments thereon will be made pro
rata, with the Old Capital Securities and
the Common Securities except as described
under "Description of New
Securities--Description of New Capital
Securities--Subordination of Common
Securities." The New Junior Subordinated
Debentures will rank pari passu with the Old
Junior Subordinated Debentures and will be
unsecured and subordinate and junior in
right of payment to the extent and in the
manner set forth in the New Indenture to all
Senior Debt (as defined herein). See
"Description of New Securities--Description
of New Junior Subordinated
Debentures--Subordination." The New
Guarantee will rank pari passu with the Old
Guarantee and will constitute an unsecured
obligation of U. S. Bancorp and will rank
subordinate and junior in right of payment
to the extent and in the manner set forth in
the Guarantee Agreement to be entered into
between U. S. Bancorp and The First National
Bank of Chicago, as trustee (the "Guarantee
Agreement"). See "Description of New
Securities--Description of New Guarantee."
Redemption. . . . . . . . . . . The Trust Securities are subject to
mandatory redemption (i) at the Stated
Maturity upon repayment of the Junior
Subordinated Debentures, (ii)
contemporaneously with the optional
redemption at any time in whole (but not in
part) by U. S. Bancorp of the Junior
Subordinated Debentures upon the occurrence
and continuation of a Tax Event or Capital
Treatment Event and (iii) at any time on or
after December 15, 2006, contemporaneously
with the optional redemption by U. S.
Bancorp in whole at any time or in part from
time to time of the Junior Subordinated
Debentures, in each case at the applicable
Redemption Price. See "Description of New
Securities--Description of New Capital
Securities--Redemption."
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<PAGE>
Shorten Maturity. . . . . . . . Under certain circumstances upon the
occurrence of a Tax Event, U. S. Bancorp has
the right to shorten the maturity of the
Junior Subordinated Debentures to a date not
earlier than June 24, 2016, which will
result in redemption of the Capital
Securities as of such earlier maturity. See
"Description of New Securities-- Description
of New Capital Securities-- Right to Shorten
Maturity."
Ratings. . . . . . . . . . . . . The New Capital Securities are expected to
be rated "a2" by Moody's Investors Service,
Inc. and "BBB+" by Standard & Poor's Ratings
Services. A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning
rating organization.
Transfer Restrictions. . . . . . The New Capital Securities are issuable, and
may be transferred, only in blocks having a
Liquidation Amount of not less than $100,000
(100 New Capital Securities). Any transfer,
sale or other disposition of New Capital
Securities in a block having a Liquidation
Amount of less than $100,000, or resulting
in a holder's holding New Capital Securities
in a block having a Liquidation Amount of
less than $100,000, will be deemed to be
void and of no legal effect whatsoever.
Absence of Market for
the New Capital Securities. . . The New Capital Securities will be a new
issue of securities for which there
currently is no market. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the New Capital
Securities. The Trust and U. S. Bancorp do
not intend to apply for listing of the New
Capital Securities on any securities
exchange or for inclusion in NASDAQ. See
"Plan of Distribution."
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<PAGE>
RISK FACTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters in connection with the Exchange Offer and the New Capital Securities
offered hereby.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of U. S. Bancorp under the Guarantee issued by U. S.
Bancorp for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debentures are unsecured and rank subordinate and junior in
right of payment to all Senior Debt of U. S. Bancorp. At March 31, 1997, the
aggregate principal amount of outstanding Senior Debt of U. S. Bancorp was
approximately $604 million. Because U. S. Bancorp is a bank holding company, its
rights and the rights of its creditors to participate in any distribution of
assets of any subsidiary upon the latter's liquidation or reorganization or
otherwise (and thus the ability of holders of the Capital Securities to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary (including depositors in the case of bank subsidiaries),
except to the extent that U. S. Bancorp may itself be a creditor with recognized
claims against that subsidiary. At March 31, 1997, the subsidiaries of U. S.
Bancorp had total liabilities (excluding liabilities owed to U. S. Bancorp) of
approximately $29 billion. There are also various legal limitations on the
extent to which certain of U. S. Bancorp's subsidiaries may extend credit, pay
dividends or otherwise supply funds to, or engage in transactions with, U. S.
Bancorp or certain of its other subsidiaries. Accordingly, the Junior
Subordinated Debentures and the Guarantee will be effectively subordinated to
all existing and future liabilities of U. S. Bancorp's subsidiaries, and holders
of Junior Subordinated Debentures and the Guarantee should look only to the
assets of U. S. Bancorp for payments on the Junior Subordinated Debentures and
the Guarantee. See "Certain Regulatory Considerations." None of the Indenture,
the Guarantee, the Trust Agreement or the Expense Agreement places any
limitation on the amount of secured or unsecured debt, including Senior Debt,
that may be incurred by U. S. Bancorp. See "Description of New
Securities--Description of New Guarantee--Status of New Guarantee" and
"--Description of New Junior Subordinated Debentures--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon U. S. Bancorp making payments on the Junior Subordinated
Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
So long as no event of default under the Indenture has occurred and is
continuing, U. S. Bancorp has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such deferral, semi-annual Distributions on the Capital Securities by the Trust
will also be deferred (and the amount of Distributions to which holders of the
Capital Securities are entitled will accumulate additional Distributions thereon
at the rate of 8.27% per annum, compounded semi-annually from the relevant
payment date for such Distributions) during any such Extension Period.
Prior to the termination of any such Extension Period, U. S. Bancorp may
further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity
of the Junior Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of 8.27%, compounded semi-annually from the
interest payment date for such interest, to the extent permitted by applicable
law), U. S. Bancorp may elect to begin a new Extension Period, subject to the
above requirements. There is no limitation on the number of times that U. S.
Bancorp may elect to begin an Extension Period. See "Description of New
Securities--Description of New Capital
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<PAGE>
Securities--Distributions" and "--Description of New Junior Subordinated
Debentures--Option to Defer Interest Payments."
Should an Extension Period occur, a holder of Capital Securities will be
required to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Junior Subordinated Debentures held by the Trust for
United States federal income tax purposes. As a result, a holder of Capital
Securities will be required to include such income in gross income for United
States federal income tax purposes in advance of the receipt of cash
attributable to such income, and will not receive the cash related to such
income from the Trust if the holder disposes of the Capital Securities prior to
the record date for the payment of Distributions. See "Certain Federal Income
Tax Consequences--Interest Income and Original Issue Discount" and "--Sale or
Redemption of Capital Securities."
U. S. Bancorp has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debentures. However, should U.
S. Bancorp elect to exercise such right in the future, the market price of the
Capital Securities is likely to be affected adversely. 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 U. S. Bancorp's
right to defer interest payments, the market price of the Capital Securities
(which represent preferred undivided beneficial interests in the Trust) may be
more volatile than the market prices of other securities on which original issue
discount accrues that are not subject to such deferrals.
TAX EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event or Capital
Treatment Event, U. S. Bancorp has the right to redeem the Junior Subordinated
Debentures in whole (but not in part) at any time within 90 days following the
occurrence of such Tax Event or Capital Treatment Event and thereby cause a
mandatory redemption of the Capital Securities. The exercise of such right is
subject to U. S. Bancorp having received prior approval of the Federal Reserve
to do so if then required under applicable capital guidelines or policies of the
Federal Reserve.
In addition, if the Tax Event relates to the deductibility of interest
payable by U. S. Bancorp on the Junior Subordinated Debentures, and if the
opinion referred to in the definition of Tax Event states that the risk of
nondeductibility would be avoided if the maturity of the Junior Subordinated
Debentures were shortened, U. S. Bancorp will have the right to shorten the
maturity of the Junior Subordinated Debentures by the amount stated in such
opinion to be the minimum extent required in order to avoid such risk, but in no
event may U. S. Bancorp shorten the maturity to a Stated Maturity earlier than
June 24, 2016. In such event, the Capital Securities would be redeemed as of
such earlier Stated Maturity of the Junior Subordinated Debentures. In addition,
upon the exercise of the right to shorten the maturity of the Junior
Subordinated Debentures, U. S. Bancorp will no longer have the right to redeem
the Junior Subordinated Debentures prior to the new Stated Maturity upon the
occurrence of a Tax Event or to further shorten the maturity of the Junior
Subordinated Debentures.
A "Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such proposed
change, pronouncement or decision is announced on or after December 24, 1996,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by U. S. Bancorp on the Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion, will not be,
deductible by U. S. Bancorp in whole or in part, for United
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States federal income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of the opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
A "Capital Treatment Event" means the reasonable determination by U. S.
Bancorp that, as a result of any amendment to, or change (including any proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement, action or decision is announced on or
after December 24, 1996, there is more than an insubstantial risk that U. S.
Bancorp will not be entitled to treat an amount equal to the Liquidation Amount
of the Capital Securities as "Tier I Capital" (or the then equivalent thereof)
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to U. S. Bancorp. See "Capitalization."
On February 6, 1997, as part of the Clinton Administration's Fiscal 1998
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate issuers
a deduction for interest in respect of certain debt obligations, such as the New
Junior Subordinated Debentures, issued on or after the date "of first committee
action," if such debt obligations had a maximum term in excess of 15 years and
are not shown as indebtedness on the issuer's applicable consolidated balance
sheet. The Proposed Legislation has not yet been introduced by any member of the
105th Congress. If other legislation is enacted by Congress and if it gives rise
to a Tax Event, U. S. Bancorp, upon approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve,
would be permitted to cause a redemption of the Capital Securities prior to
December 15, 2006, or to shorten the maturity of the Junior Subordinated
Debentures to a date not earlier than June 24, 2016, which would result in the
redemption of the Capital Securities on such date. See "Description of New
Securities--Description of New Capital Securities--Redemption," "--Description
of New Junior Subordinated Debentures--Redemption" and "Certain Federal Income
Tax Consequences--Proposed Tax Legislation."
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holder(s) of all of the outstanding Common Securities will have the
right at any time to terminate the Trust and, after satisfaction of liabilities
to creditors of the Trust as required by applicable law and subject to the
Expense Agreement, cause the Junior Subordinated Debentures to be distributed to
the holders of the Capital Securities and the Common Securities in exchange
therefor upon liquidation of the Trust. The exercise of such right is subject to
U. S. Bancorp having received prior approval of 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--Liquidation Distribution Upon Termination."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Trust will not be classified as an association
taxable as a corporation, a distribution of the Junior Subordinated Debentures
upon a liquidation of the Trust should not be a taxable event to holders of the
Capital Securities. However, if a Tax Event were to occur which would cause the
Trust to be subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, a distribution of the
Junior Subordinated Debentures by the Trust could be a taxable event to the
Trust and the holders of the Capital Securities. See "Certain Federal Income Tax
Consequences--Distribution of the Junior Subordinated Debentures to Holders of
Capital Securities."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for New Capital
Securities or New Junior Subordinated Debentures that may be distributed in
exchange for New Capital Securities upon liquidation of the Trust. Accordingly,
the New Capital Securities or the New Junior Subordinated Debentures may
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trade at a discount from the price that the investor paid to purchase the New
Capital Securities offered hereby. As a result of the existence of U. S.
Bancorp's right to defer interest payments, the market price of the New Capital
Securities (which represent preferred undivided beneficial interests in the
Trust) may be more volatile than the market prices of other securities that are
not subject to such optional deferrals. Because holders of Capital Securities
may receive Junior Subordinated Debentures in liquidation of the Trust and
because Distributions are otherwise limited to payments on the Junior
Subordinated Debentures, prospective purchasers of New Capital Securities are
also making an investment decision with regard to the New Junior Subordinated
Debentures and should carefully review all the information regarding the New
Junior Subordinated Debentures contained herein. See "Description of New
Securities--Description of New Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Old Guarantee guarantees, and the New Guarantee will guarantee, as the
case may be, to the holders of the Capital Securities the following payments, to
the extent not paid by the Trust: (i) any accumulated and unpaid Distributions
required to be paid on the Capital Securities, to the extent that the Trust has
funds on hand available therefor at such time, (ii) the applicable Redemption
Price with respect to any Capital Securities called for redemption, to the
extent that the Trust has funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary dissolution, winding up or liquidation of
the Trust (unless the Junior Subordinated Debentures are distributed to holders
of the Capital Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Trust has funds on hand available therefor at such time, and
(b) the amount of assets of the Trust remaining available for distribution to
holders of the Capital Securities after payment of creditors of the Trust as
required by applicable law and subject to the Expense Agreement. The First
National Bank of Chicago will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The First
National Bank of Chicago will also act as Debenture Trustee for the Junior
Subordinated Debentures and as Property Trustee, and First Chicago Delaware Inc.
will act as Delaware Trustee under the Trust Agreement.
The Guarantee is subordinate as described under "--Ranking of Subordinated
Obligations Under the Guarantee and the Junior Subordinated
Debentures" above.
The holders of not less than 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 Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power conferred
upon the Guarantee Trustee under the Guarantee. Any holder of the Capital
Securities may institute a legal proceeding directly against U. S. Bancorp to
enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If U. S. Bancorp were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Trust would not have
sufficient funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such event, holders
of the Capital Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, if an event of default under the Indenture has
occurred and is continuing and such event is attributable to the failure of U.
S. Bancorp to pay interest or premium, if any, on or principal of the Junior
Subordinated Debentures on the applicable payment date, then a holder of Capital
Securities may institute a legal proceeding directly against U. S. Bancorp
pursuant to the terms of the Indenture for enforcement of payment to such holder
of the principal of or interest or premium, if any, on such Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder (a "Direct Action"). In connection with
such Direct Action, U. S. Bancorp will have a right of set-off under the
Indenture to the extent of any payment made by U. S. Bancorp to such holder of
Capital Securities in the Direct Action. Except as described herein, holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or to assert
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directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of New Securities--Description of New Junior Subordinated
Debentures--Enforcement of Certain Rights of Holders of Capital Securities" and
"--Debenture Events of Default" and "--Description of New Guarantee." The Trust
Agreement and the New Capital Securities provide that each holder of Capital
Securities by acceptance thereof agrees to the provisions of the Guarantee, the
Expense Agreement and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Trust's rights as holder of Junior Subordinated Debentures.
Holders of Capital Securities will not be entitled to vote to appoint, remove or
replace the Property Trustee, the Delaware Trustee or any Administrative
Trustee, and such voting rights are vested exclusively in the holder(s) of the
Common Securities except, with respect to the Property Trustee and the Delaware
Trustee, upon the occurrence of certain events described herein. The Property
Trustee, the Administrative Trustees, and the holder(s) of all the outstanding
Common Securities, subject to certain conditions, may amend the Trust Agreement
without the consent of holders of Capital Securities to cure any ambiguity or to
make other provisions not inconsistent with existing provisions of the Trust
Agreement or to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust unless such action materially and
adversely affects the interests of such holders. See "Description of New
Securities--Description of New Capital Securities--Voting Rights; Amendment of
the Trust Agreement" and "--Removal of Issuer Trustees."
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). U. S. Bancorp 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; Amendment of
the Trust Agreement."
Upon consummation of the Exchange Offer, holders of Old Capital Securities
will not be entitled to any increase in the Distribution rate thereon or 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 U. S. Bancorp believes such
securities are currently owned by, a relatively small number of beneficial
owners. The Old Capital Securities have not been
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<PAGE>
registered under the Securities Act and will be subject to significant
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 U. S. Bancorp 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. 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 to 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, U. S. Bancorp's financial results and the market for
similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of U. S.
Bancorp, 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 of U. S. Bancorp 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."
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<PAGE>
U. S. BANCORP CAPITAL I
U. S. Bancorp Capital I (the "Trust") is a statutory business trust
created under Delaware law pursuant to the filing of a certificate of trust with
the Delaware Secretary of State and governed by the Trust Agreement executed by
U. S. Bancorp, as Depositor, The First National Bank of Chicago, as Property
Trustee, First Chicago Delaware Inc., as Delaware Trustee, and the
Administrative Trustees named therein. The Trust's business and affairs are
conducted by its trustees: The First National Bank of Chicago, as Property
Trustee, First Chicago Delaware Inc., as Delaware Trustee, and two individual
Administrative Trustees who are employees or officers of U. S. Bancorp
(collectively, the "Issuer Trustees"). The First National Bank of Chicago, as
Property Trustee, will act as sole indenture trustee under the Trust Agreement.
The First National Bank of Chicago will also act as indenture trustee under the
Guarantee and the Indenture. The Trust exists for the exclusive purposes of (i)
issuing and selling the Capital Securities and Common Securities, (ii) using the
proceeds from the sale of such Trust Securities to acquire Junior Subordinated
Debentures issued by U. S. Bancorp, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Capital Securities). Accordingly, the Junior Subordinated Debentures and the
right to reimbursement under the Expense Agreement will be the sole assets of
the Trust, and payments under the Junior Subordinated Debentures and the Expense
Agreement will be the sole source of revenues of the Trust. All of the Common
Securities will be owned by U. S. Bancorp. The Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Capital Securities,
except that upon the occurrence and continuance of an event of default under the
Trust Agreement resulting from an event of default under the Indenture, the
rights of U. S. Bancorp as holder of the Common Securities to payment in respect
of Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Capital Securities. See
"Description of New Securities--Description of New Capital
Securities--Subordination of Common Securities." U. S. Bancorp has acquired
Common Securities in an aggregate Liquidation Amount equal to more than 3% of
the total capital of the Trust. The Trust has a term of 55 years, but may
terminate earlier as provided in the Trust Agreement. The principal executive
office of the Trust is c/o U. S. Bancorp, 111 S.W. Fifth Avenue, Portland,
Oregon 97204, Attention: Corporate Secretary Division, and its telephone number
is (503) 275-6111.
It is anticipated that the Trust will not be subject to the reporting
requirements under the Exchange Act.
U. S. BANCORP
U. S. Bancorp is a regional multi-bank holding company headquartered in
Portland, Oregon. At December 31, 1996, U. S. Bancorp was the 26th largest bank
holding company in the United States in terms of total assets, with total
consolidated assets of $33.3 billion, deposits of $25.0 billion, and total
shareholders' equity of $2.7 billion.
U. S. Bancorp is engaged in a general retail and commercial banking
business in the states of Oregon, Washington, Idaho, California, Nevada, and
Utah through its banking subsidiaries. Other subsidiaries of U. S. Bancorp
provide financial services related to banking including lease financing,
consumer and commercial finance, discount brokerage, investment advisory
services, and insurance agency and credit life insurance services. The principal
executive offices of U. S. Bancorp are located at 111 S.W. Fifth Avenue,
Portland, Oregon 97204, telephone number (503) 275-6111.
On March 20, 1997, U. S. Bancorp and First Bank System Inc. ("FBS")
announced the signing of a definitive agreement for FBS to acquire U. S. Bancorp
for stock valued at approximately $9 billion. The resulting company, which will
be called U. S. Bancorp and will be headquartered in Minneapolis, Minnesota,
will create the 14th largest banking organization in the United States based on
combined assets of approximately $70 billion. The combined company will serve
nearly 4 million households and 475,000 businesses in 17 contiguous states. The
merger is subject to regulatory and shareholder approvals and is
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expected to close in the third quarter of 1997. Pro forma financial statements
reflecting the pending merger are incorporated herein by reference to U. S.
Bancorp's Current Report on Form 8-K dated June 17, 1997. See "Incorporation of
Certain Documents by Reference."
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
U. S. Bancorp is a legal entity, separate and distinct from its bank
subsidiaries. The principal sources of U. S. Bancorp's revenues are dividends
and fees from its subsidiaries. There are various legal limitations on the
extent to which U. S. Bancorp's bank subsidiaries may extend credit, pay
dividends, or otherwise supply funds to U. S. Bancorp or U. S. Bancorp's other
affiliates. In particular, U. S. Bancorp's bank subsidiaries are subject to
certain restrictions imposed by federal law on extensions of credit to U. S.
Bancorp or its affiliates, on investments in stock or other securities thereof
and on the taking of such securities as collateral for loans. Such restrictions
prohibit U. S. Bancorp or such other affiliates from borrowing from U. S.
Bancorp's bank subsidiaries unless the loans are secured by specified
collateral. Further, such secured loans and investments by a U. S. Bancorp bank
subsidiary are limited in amount as to U. S. Bancorp or to any other such
affiliate to 10% of the bank subsidiary's capital stock and surplus and as to U.
S. Bancorp and all such affiliates to an aggregate of 20% of the bank
subsidiary's capital stock and surplus.
In addition, there are certain limitations on the payment of dividends to
U. S. Bancorp by its bank subsidiaries. A national bank may not pay dividends in
an amount greater than its net profits then on hand after deducting statutory
bad debt in excess of the bank's allowance for loan losses. The prior approval
of the United States Comptroller of the Currency (the "Comptroller") is required
if the total of all dividends declared by a national bank subsidiary in any
calendar year will exceed the total of such subsidiary's net profits (as defined
by regulation) for that year combined with its retained net profits for the
preceding two calendar years, less any required transfers to surplus or to a
fund for the retirement of any preferred stock. As of December 31, 1996, U. S.
Bancorp's banking subsidiaries could have declared dividends without approval of
the Comptroller of up to an aggregate of $56 million. The payment of dividends
by U. S. Bancorp's national bank subsidiaries may be affected by other factors,
such as requirements for the maintenance of adequate capital. The Comptroller
also has the authority to prohibit a national bank from engaging in what, in the
Comptroller's opinion, constitutes an unsafe or unsound practice in conducting
its business. The payment of a dividend by a bank could, depending upon the
financial condition of such bank and other factors, be construed by the
Comptroller to be such an unsafe or unsound practice. The Comptroller has stated
that a dividend by a national bank should bear a direct correlation to the level
of the bank's current and expected earnings stream, the bank's need to maintain
an adequate capital base and the marketplace's perception of the bank and should
not be governed by the financing needs of the bank's parent corporation. In
addition, the Comptroller has issued a policy statement which provides that
national banks should generally pay dividends only out of current operating
earnings. U. S. Bancorp's nonbank subsidiaries are also subject to limitations
on the payment of dividends. Also, under the Federal Deposit Insurance
Corporation Improvement Act of 1991, an FDIC-insured depository institution
cannot make a capital distribution (including a payment of dividends) or pay any
management fees to its holding company or pay any dividend if it is
undercapitalized or if such payment would cause it to become undercapitalized.
If the ability of its bank subsidiaries to pay dividends to U. S. Bancorp were
to become restricted, U. S. Bancorp would need to rely on alternative means of
raising funds to satisfy its cash requirements, which might include, but would
not be restricted to, nonbank subsidiary dividends, asset sales or other capital
market transactions.
In the event that a depository institution subsidiary becomes
undercapitalized (as that term is defined by the federal bank regulatory
agencies), U. S. Bancorp may be required to guarantee compliance by the
subsidiary with a capital restoration plan. U. S. Bancorp's aggregate liability
under any such guarantee may
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not exceed the lesser of 5% of the subsidiary's total assets when it became
undercapitalized or the amount of the capital deficiency at such time as it
fails to comply with the plan.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth U. S. Bancorp's ratio of earnings to fixed
charges and ratio of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated.
<TABLE>
<CAPTION>
U. S. BANCORP AND SUBSIDIARIES(a)
Three Months Ended March 31, Year Ended December 31,
1997 1996 1996 1995 1994 1993 1992
Ratio of earnings to fixed charges:
<S> <C> <C> <C> <C> <C> <C> <C>
Excluding interest on deposits 3.63x 3.74x 3.86x 2.72x 2.58x 3.74x 2.77x
Including interest on deposits 1.71x 1.69x 1.72x 1.51x 1.48x 1.71x 1.47x
Ratio of earnings to combined
fixed charges and preferred
stock dividends:
Excluding interest on deposits 3.47x 3.55x 3.66x 2.61x 2.47x 3.49x 2.70x
Including interest on deposits 1.70x 1.68x 1.71x 1.50x 1.47x 1.69x 1.47x
</TABLE>
(a) For purposes of computing these ratios, earnings represent consolidated
income before income taxes and accounting changes plus consolidated fixed
charges, less capitalized interest. Fixed charges represent interest, whether
expensed or capitalized, including interest on deposits where indicated, imputed
interest on capital leases and approximately one-third of all other rent expense
(such amount approximating the interest component of such expense), but
excluding interest income on federal funds sold, which approximates interest
expense related to federal funds purchased transactions having a purpose other
than to fund operations. Preferred stock dividend requirements represent the
amount required to cover preferred stock dividends.
USE OF PROCEEDS
Neither U. S. Bancorp nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and canceled.
The proceeds to the Trust (without giving effect to expenses of the
offering payable by U. S. Bancorp) from the offering of the Old Capital
Securities was $300,000,000. All of the proceeds from the sale of Old Capital
Securities was invested by the Trust in the Junior Subordinated Debentures. U.
S. Bancorp intends that the net proceeds from the sale of the Old Junior
Subordinated Debentures will be used for general corporate purposes, including
the potential redemption of U. S. Bancorp's 8-1/8% Cumulative Preferred Stock,
Series A (which first becomes redeemable on July 23, 1997) and investments in,
or extensions of credit to, U. S. Bancorp's subsidiaries. The precise amount and
timing of the application of such net proceeds used for such corporate purposes
will depend on the funding requirements and the availability of other funds to
U. S. Bancorp and its subsidiaries. Pending such application by U. S. Bancorp,
such net proceeds have been temporarily invested in short-term interest-bearing
securities.
The Capital Securities will be eligible to qualify as Tier I capital under
the capital guidelines of the Federal Reserve.
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CAPITALIZATION
The following table sets forth the consolidated capitalization of U. S.
Bancorp and its subsidiaries as of March 31, 1997, which reflects the issuance
of the Old Securities. The issuance of the New Securities in the Exchange Offer
will have no effect on the capitalization of U. S. Bancorp.
CAPITALIZATION TABLE
MARCH 31, 1997
(DOLLAR AMOUNTS IN MILLIONS)
Long-term debt:
U. S. Bancorp (parent company only):
Medium-term notes due 1997-2001 $ 244.8
Floating rate notes due 1999 200.0
8.125% subordinated notes due 2002 149.5
7.00% subordinated notes due 2003 149.8
6.75% subordinated notes due 2005 297.0
7.50% subordinated debentures due 2026 198.6
Bank Subsidiaries:
Bank notes due 1997 13.8
FHLB notes due 1997-2025 446.7
Floating rate notes due 2000 250.0
--------
Total long-term debt 1,950.2
--------
Company-obligated mandatory redeemable
capital securities of subsidiary trust (a) 300.0
Shareholders' equity:
Preferred stock, no par value,
Authorized--50,000,000 shares;
Issued--6,000,000 shares 150.0
Common stock, $5 par value,
Authorized--250,000,000 shares;
Issued--148,175,994 shares 740.9
Capital surplus 199.5
Retained earnings 1,715.0
Net unrealized loss on securities available
for sale, net of tax (23.3)
--------
Total shareholders' equity 2,782.1
--------
Total capitalization $5,032.3
========
(a) As described herein, the sole assets of the Trust will be the Junior
Subordinated Debentures issued by U. S. Bancorp to the Trust and the right to
reimbursement under the Expense Agreement. The Junior Subordinated Debentures
will mature on December 15, 2026. U. S. Bancorp owns all of the Common
Securities of the Trust.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, U. S. Bancorp
and the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which U. S. Bancorp and the Trust agreed to file and to
use their reasonable 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
U. S. Bancorp 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, will not be subject to certain restrictions
on transfer applicable to the Old Capital Securities, and will not provide for
an increase in the Distribution rate in the event that a registration statement
relating to the Exchange Offer is not filed or declared effective by specified
dates. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate thereon
or 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."
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 the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
Pursuant to the Exchange Offer, promptly after the Expiration Date, U. S.
Bancorp 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 $300,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date 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
$300,000,000 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 $100,000 (100 Capital Securities) or any
integral multiple of $1,000 (one Capital Security) in excess thereof; provided
that, if any Old Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount thereof must be $100,000 (100 Capital Securities)
or any integral multiple of $1,000 (one Capital Security) in excess thereof.
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The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$300,000,000 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. U.
S. Bancorp will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER U. S. BANCORP, THE BOARD OF DIRECTORS OF U. S. BANCORP NOR ANY
ISSUER 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 Date" means 5:00 p.m., New York City time, on July
21, 1997 unless the Exchange Offer is extended by U. S. Bancorp or the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
U. S. Bancorp 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
U. S. Bancorp and the Trust to constitute a material change, or if U. S. Bancorp
and the Trust waive a material condition of the Exchange Offer, U. S. Bancorp
and the Trust will promptly disclose such waiver or amendment by means of a
prospectus supplement that will be distributed to the holders of the Old Capital
Securities, and U. S. Bancorp and the Trust will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
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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 U. S. Bancorp and the Trust may choose to make any public
announcement and subject to applicable law, U. S. Bancorp 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, (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. See "--Procedures for Tendering Old Capital Securities--Book-Entry
Transfer." 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 acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and U. S.
Bancorp may enforce such Letter of Transmittal against such participant.
The New Capital Securities will be issued in minimum blocks of at least
100 (representing a minimum of $100,000 aggregate Liquidation Amount) and the
New Capital Securities must at all times be held in blocks of at least 100. Any
transfer, sale or other disposition of New Capital Securities in a block having
a Liquidation Amount of less than $100,000, or resulting in a holder's holding
New Capital Securities in a block having a Liquidation Amount of less than
$100,000, will be deemed to be void and of no legal effect whatsoever.
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."
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Pursuant to an Agent's Message or the Letter of Transmittal, a holder of
Old Capital Securities will warrant and agree in the Letter of Transmittal that
it has full power and authority to tender, exchange, sell, assign and transfer
Old Capital Securities, that the 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), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at its address set forth under "--Exchange Agent
and Information 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 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. 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, an Agent's Message or Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other required documents, must in any case be
delivered to and received by the Exchange Agent at its address set forth under
"--Exchange Agent and Information 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
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duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
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), 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), 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 U. S. Bancorp and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. U. S. Bancorp 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 U. S. Bancorp and the Trust, be unlawful. U. S.
Bancorp 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
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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 U. S. Bancorp 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 such tender have been cured or waived. Neither U. S. Bancorp,
the Trust, any affiliates or assigns of U. S. Bancorp 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 U. S. Bancorp
and the Trust, proper evidence satisfactory to U. S. Bancorp 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 owner 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 U. S. Bancorp 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, U. S. Bancorp 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 U. S. Bancorp 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 U. S. Bancorp
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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, U. S. Bancorp and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to U. S. Bancorp 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 Exchange Offer. 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, U. S. Bancorp
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, U. S. Bancorp 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 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 U. S. Bancorp
or the Trust, or cause U. S. Bancorp 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 its address set forth herein under
"--Exchange Agent and Information Agent." Any Participating Broker-Dealer who is
an Affiliate of U. S. Bancorp 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, that, upon receipt of notice from U.
S. Bancorp 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
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the New Guarantee or the New Junior Subordinated Debentures, as applicable)
pursuant to this Prospectus until U. S. Bancorp 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 U. S. Bancorp 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. If U. S. Bancorp
or the Trust gives such notice to suspend the sale of the New Capital Securities
(or the New Guarantee or the New Junior Subordinated Debentures, as applicable),
it shall extend the 180-day period referred to above during which Participating
Broker-Dealers are entitled to use this Prospectus in connection with the resale
of New Capital Securities by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Capital
Securities or to and including the date on which U. S. Bancorp or the Trust has
given notice that the sale of New Capital Securities (or the New Guarantee or
the New Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth under "--Exchange Agent and Information
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 U. S. Bancorp, the Trust, any affiliates or assigns of U. S. Bancorp 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
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any Distributions on such Old Capital Securities accumulated from and after June
15, 1997. Accordingly, holders of New Capital Securities as of the record date
for the payment of Distributions on December 15, 1997, will be entitled to
receive Distributions accumulated from and after June 15, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, U. S. Bancorp 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 has occurred or exists or has 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 U. S. Bancorp 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 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 U. S. Bancorp 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 U. S. Bancorp
or the Trust, threatened for that purpose, or any governmental approval has not
been obtained, which approval U. S. Bancorp or the Trust, in its sole
discretion, deems necessary for the consummation of the Exchange Offer as
contemplated hereby.
If U. S. Bancorp 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, U. S. Bancorp 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.
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EXCHANGE AGENT AND INFORMATION 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:
BY REGISTERED OR CERTIFIED MAIL, HAND OR OVERNIGHT DELIVERY:
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
Attn: Corporate Trust Administration
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 240-8801
FACSIMILE TRANSMISSIONS:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 240-8938
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
The Information Agent for the Exchange Offer is:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
(212) 269-5550
or
Call Toll Free: (800) 758-5378
FEES AND EXPENSES
U. S. Bancorp 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. U. S. Bancorp 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.
Neither U. S. Bancorp nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trustees on
behalf of the Trust have 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 undivided beneficial
interests in the Trust and the holders of the New Capital Securities and the Old
Capital Securities will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption of the Capital
Securities or liquidation of the Trust over the Common Securities, as well as
other benefits as described in the Trust Agreement. The Trust Agreement has been
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The following summary of certain provisions of the New Capital
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms.
GENERAL
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) are limited to $300,000,000 aggregate Liquidation Amount at
any one time outstanding. The New Capital Securities will rank pari passu, and
payments will be made thereon pro rata, with the Old Capital Securities and the
Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Junior Subordinated Debentures will be held by
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The New Guarantee will be a guarantee on a subordinated basis with
respect to the Capital Securities but will not guarantee payment of
Distributions or amounts payable on redemption of the New Capital Securities or
liquidation of the Trust when the Trust does not have funds available to make
such payments. See "--Description of New Guarantee."
DISTRIBUTIONS
Distributions on the New Capital Securities will be cumulative, will
accumulate from June 15, 1997, and will be payable at the annual rate of 8.27%
of the stated Liquidation Amount of $1,000, payable semi-annually in arrears on
June 15 and December 15 of each year (each a "Distribution Date"), commencing
December 15, 1997, to the holders of the New Capital Securities as they appear
in the register of the Trust on the relevant record dates. The record dates will
be the June 1 or December 1, as the case may be, next preceding the relevant
Distribution Date. The amount of Distributions payable for any period less than
a full Distribution period will be computed on the basis of a 360-day year of
twelve 30-day months and the actual days elapsed in a partial month in such
period. Distributions payable for each full Distribution period will be computed
by dividing the rate per annum by two. If any date on which Distributions are
payable on the New Capital Securities is not a Business Day (as defined below),
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional Distributions
or other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable.
So long as no Debenture Event of Default (as defined below) has occurred
and is continuing, U. S. Bancorp will have the right under the New Indenture to
defer payment of interest on the New Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity of the New Junior Subordinated Debentures.
As a consequence of any such deferral of interest payments by U. S. Bancorp,
semi-annual Distributions on the New Capital Securities by the Trust will also
be deferred during any such Extension Period. Distributions to which holders of
the New
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Capital Securities are entitled during any such Extension Period will accumulate
additional Distributions thereon at the rate per annum of 8.27% thereof,
compounded semi-annually from the relevant Distribution Date, computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. Additional Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by two. The
term "Distributions" as used herein includes any such additional Distributions.
During any such Extension Period, U. S. Bancorp may not, and may not
permit any subsidiary of U. S. Bancorp to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of U. S. Bancorp's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of U. S. Bancorp that rank pari passu with or junior in interest
to the New Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by U. S. Bancorp of the debt securities of any
subsidiary of U. S. Bancorp if such guarantee ranks pari passu with or junior in
interest to the New Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of U. S. Bancorp, (b) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan or
the issuance of rights, stock, or other property thereunder or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
and (d) repurchases, redemptions or other acquisitions of common stock of U. S.
Bancorp in connection with any employment contract, benefit plan or similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment and stock
purchase plan, or in connection with the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction entered into prior to an Extension Period).
Prior to the termination of any such Extension Period, U. S. Bancorp may
further defer the payment of interest on the New Junior Subordinated Debentures,
provided that no Extension Period may exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity of the New Junior Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the rate of
8.27% compounded semi-annually, to the extent permitted by applicable law), U.
S. Bancorp may elect to begin a new Extension Period. There is no limitation on
the number of times that U. S. Bancorp may elect to begin an Extension Period.
See "--Description of New Junior Subordinated Debentures--Option to Defer
Interest Payments" and "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
U. S. Bancorp believes that the likelihood of its exercising its right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures is remote.
The revenue of the Trust available for distribution to holders of the New
Capital Securities will be limited to payments under the New Junior Subordinated
Debentures. If U. S. Bancorp does not make interest payments on the New Junior
Subordinated Debentures, the Trust will not have funds available to pay
Distributions on the New Capital Securities. The payment of Distributions (if
and to the extent the Trust has funds legally available for the payment of such
Distributions) will be guaranteed by U. S. Bancorp on a limited basis as set
forth herein under "--Description of New Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the New Junior
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the New Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined
below) of the New Capital Securities, upon not less than 30 nor more than 60
days' prior notice, at a redemption price (the "Redemption Price") equal to the
aggregate Liquidation Amount of such New Capital Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption Date")
and the related amount of the premium, if any, paid by U. S. Bancorp upon the
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concurrent redemption of the New Junior Subordinated Debentures. See
"--Description of New Junior Subordinated Debentures--Redemption." If less than
all of the New Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the New Capital Securities and the
Common Securities. The amount of premium, if any, paid by U. S. Bancorp upon the
redemption of all or any part of the New Junior Subordinated Debentures to be
repaid or redeemed on a Redemption Date shall be allocated to the redemption pro
rata of the New Capital Securities and the Common Securities.
U. S. Bancorp will have the right to redeem the New Junior Subordinated
Debentures prior to their Stated Maturity (i) on or after December 15, 2006, in
whole at any time or in part from time to time, or (ii) in whole (but not in
part), at any time within 90 days following the occurrence and during the
continuation of a Tax Event or Capital Treatment Event, in either case subject
to receipt of prior approval by the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve. A redemption
of the Junior Subordinated Debentures would cause a mandatory redemption of a
Like Amount of the Capital Securities and Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated Distributions to but excluding the
Redemption Date, if redeemed during the 12-month period beginning December 15:
Redemption
Year Price
2006....................................................... 104.1350%
2007....................................................... 103.7215
2008....................................................... 103.3080
2009....................................................... 102.8945
2010....................................................... 102.4810
2011....................................................... 102.0675
2012....................................................... 101.6540
2013....................................................... 101.2405
2014....................................................... 100.8270
2015....................................................... 100.4135
and at 100% on or after December 15, 2016.
The Redemption Price, in the case of a redemption prior to December 15,
2006, following a Tax Event or Capital Treatment Event as described under (ii)
above, will equal for each New Capital Security the Make-Whole Amount for a
corresponding $1,000 principal amount of New Junior Subordinated Debentures
together with accumulated Distributions to but excluding the Redemption Date.
The "Make-Whole Amount" will be equal to the greater of (i) 100% of the
principal amount of such New Junior Subordinated Debentures or (ii) as
determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable as part of the Redemption
Price with respect to an optional redemption of such New Junior Subordinated
Debentures on December 15, 2006, together with the present values of the
scheduled payments of interest from the Redemption Date to December 15, 2006
(the "Remaining Life"), in each case discounted to the Redemption Date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate (as defined below).
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate (as defined below) plus (i) 1.30% if such Redemption Date occurs
on or before December 15, 1997 or (ii) 0.50% if such Redemption Date occurs
after December 15, 1997.
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A "Business Day" means any day other than a Saturday or a Sunday, or a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or a day on which the corporate trust
office of the Debenture Trustee is closed for business.
A "Capital Treatment Event" means the reasonable determination by U. S.
Bancorp that, as a result of any amendment to, or change (including any proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement, action or decision is announced on or
after December 24, 1996, there is more than an insubstantial risk that U. S.
Bancorp will not be entitled to treat an amount equal to the Liquidation Amount
of the New Capital Securities as "Tier I Capital" (or the then equivalent
thereof) for purposes of the capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to U. S. Bancorp.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after December 15, 2006, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of the Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes, and (ii) with respect to a distribution of
Junior Subordinated Debentures to holders of Trust Securities in connection with
a dissolution or liquidation of the Trust, Junior Subordinated Debentures having
a principal amount equal to the Liquidation Amount of the Trust Securities of
the holder to whom such Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Quotation Agent" means Goldman, Sachs & Co. and its successors; provided,
however, that if the foregoing shall cease to be a primary U. S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), U. S. Bancorp
shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with U. S. Bancorp.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing
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authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after December 24, 1996, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by U. S. Bancorp on the Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
U. S. Bancorp, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the week immediately prior to the calculation date, appearing in
the most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.
Payment of Additional Sums. If a Tax Event described in clause (i) or (ii)
of the definition of Tax Event above has occurred and is continuing and the
Trust is the holder of all of the Junior Subordinated Debentures, U. S. Bancorp
will pay Additional Sums (as defined below), if any, on the Junior Subordinated
Debentures.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding Trust Securities will not be reduced as a result of any additional
taxes, duties and other governmental charges to which the Trust has become
subject as a result of a Tax Event.
RIGHT TO SHORTEN MATURITY
If a Tax Event occurs which relates to the deductibility of interest
payable by U. S. Bancorp on the Junior Subordinated Debentures, and if the
opinion relating to such Tax Event and referred to in the definition of Tax
Event above states that the risk of non-deductibility would be avoided if the
maturity of the Junior Subordinated Debentures were shortened, U. S. Bancorp
shall have the right to shorten the maturity of the Junior Subordinated
Debentures by the amount stated in such opinion to be the minimum extent
required in order to avoid such risk, but in no event may U. S. Bancorp shorten
the maturity of the Junior Subordinated Debentures to a Stated Maturity earlier
than June 24, 2016. In such event, the Capital Securities would be redeemed as
of such earlier Stated Maturity of the Junior Subordinated Debentures. In
addition, upon the exercise of the right to shorten the maturity of the Junior
Subordinated Debentures, U. S. Bancorp will no longer have the right to redeem
the Junior Subordinated Debentures prior to the new Stated Maturity upon the
occurrence of a Tax Event or to further shorten the maturity of the Junior
Subordinated Debentures.
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REDEMPTION PROCEDURES
New Capital Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the New Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds on hand available
for the payment of such Redemption Price. See "--Subordination of Common
Securities."
If the Trust gives a notice of redemption in respect of the New Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of New Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the New
Capital Securities. See "--Book-Entry, Delivery and Form." With respect to New
Capital Securities not held in book-entry form, the Property Trustee, to the
extent funds are available, will irrevocably deposit with the paying agent for
the New Capital Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing the New Capital Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any New
Capital Securities called for redemption shall be payable to the holders of such
New Capital Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of such
New Capital Securities so called for redemption will cease, except the right of
the holders of the New Capital Securities to receive the Redemption Price, but
without interest on such Redemption Price, and the New Capital Securities will
cease to be outstanding. If any date fixed for redemption of New 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), except
that, if such Business Day falls in 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 New Capital Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by U. S.
Bancorp pursuant to the New Guarantee as described under "--Description of New
Guarantee," Distributions on New Capital Securities will continue to accumulate
at the then applicable rate, from the Redemption Date originally established by
the Trust to the date such Redemption Price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), U. S. Bancorp 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.
If less than all of the Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of such Trust Securities
to be redeemed shall be allocated pro rata to the Capital Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Capital Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Capital Securities not previously called for redemption, by
such method as the Property Trustee shall deem fair and appropriate or, if the
Capital Securities are then held in book-entry form, in accordance with DTC's
customary procedures, provided, in each case, that each holder of any Capital
Securities has at least 100 Capital Securities remaining after the redemption.
The Property Trustee shall promptly notify the trust registrar in writing of the
Capital Securities selected for redemption and, in the case of any Capital
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Capital Securities shall
relate, in the case of any Capital Securities redeemed or to be redeemed only in
part, to the portion of the aggregate Liquidation Amount of Capital Securities
which has been or is to be redeemed.
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Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless U. S. Bancorp defaults in payment of
the Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Capital Securities is withheld or refused and not paid either by
the Trust or U. S. Bancorp pursuant to the Guarantee, Distributions will cease
to accumulate on the Capital Securities or portions thereof) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by U. S.
Bancorp to pay amounts in respect of Junior Subordinated Debentures when due, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all of the outstanding Capital Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
In the case of any Event of Default (as defined below) under the Trust
Agreement resulting from a Debenture Event of Default, U. S. Bancorp as holder
of the Common Securities will be deemed to have waived any right to act with
respect to any such Event of Default under the Trust Agreement until the effect
of all such Events of Default with respect to Capital Securities have been
cured, waived or otherwise eliminated. See "--Events of Default; Notice" and
"--Description of New Junior Subordinated Debentures--Debenture Events of
Default." Until all such Events of Default under the Trust Agreement with
respect to the Capital Securities have been so cured, waived or otherwise
eliminated, the Property Trustee will act solely on behalf of the holders of the
Capital Securities and not on behalf of U. S. Bancorp as holder of the Common
Securities, and only the holders of the Capital Securities will have the right
to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The amount payable on the Capital Securities in the event of any
liquidation of the Trust is $1,000 per Capital Security plus accumulated and
unpaid Distributions, which amount may be paid in the form of a distribution of
a Like Amount in Junior Subordinated Debentures, subject to certain exceptions.
Subject to U. S. Bancorp having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies of the Federal Reserve, the holder(s) of all the outstanding Common
Securities have the right at any time to terminate the Trust and, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law, to cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in exchange therefor upon liquidation of the
Trust.
Pursuant to the Trust Agreement, the Trust will automatically terminate
upon expiration of its term or, if earlier, will terminate on the first to occur
of: (i) certain events of bankruptcy, dissolution or liquidation of the
holder(s) of all the outstanding Common Securities; (ii) the distribution of a
Like Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if U. S. Bancorp, as Depositor, has given written direction to the
Property Trustee to terminate the Trust (subject to U. S. Bancorp having
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received prior approval of the Federal Reserve if so required under applicable
capital guidelines or policies of the Federal Reserve); (iii) redemption of all
of the Trust Securities as described under "--Redemption"; and (iv) the entry of
an order for the dissolution of the Trust by a court of competent jurisdiction.
If an early termination of the Trust occurs as described in clause (i),
(ii) or (iv) above, the Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to the holders of the Trust Securities in exchange therefor a
Like Amount of the Junior Subordinated Debentures, unless such distribution is
determined by the Property 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 as required by applicable law, an amount equal to, in the case of holders
of Capital Securities, the aggregate of the Liquidation Amount plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on its Capital Securities shall be paid on a pro rata basis. The holder(s)
of the Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
a Debenture Event of Default has occurred and is continuing as a result of any
failure by U. S. Bancorp to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Capital Securities shall have priority
over the Common Securities.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures (i) the Capital Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to the Capital Securities held by DTC or its nominee
and (iii) any certificates representing the Capital Securities not held by DTC
or its nominee will be deemed to represent Junior Subordinated Debentures having
a principal amount equal to the stated Liquidation Amount of such Capital
Securities, and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Capital Securities until such
certificates are presented to the trust registrar for cancellation, whereupon U.
S. Bancorp will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Junior Subordinated Debentures.
If U. S. Bancorp does not redeem the Junior Subordinated Debentures prior
to maturity and the Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Capital Securities.
There can be no assurance as to the market prices for the New Capital
Securities or the New Junior Subordinated Debentures that may be distributed in
exchange for New Capital Securities if a termination 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 on termination and liquidation of the Trust, may trade at a discount to
the price that the investor paid to acquire the New Capital Securities offered
hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
the Trust Agreement with respect to the Capital Securities (whatever the reason
for such Event of Default and whether it is voluntary or involuntary or effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The occurrence of a Debenture Event of Default under the Indenture
(see "--Description of New Junior Subordinated Debentures--Debenture
Events of Default"); or
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(ii) Default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) Default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(iv) Default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other
than a covenant or warranty a default in the performance of which or the
breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Capital Securities, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Trust
Agreement; or
(v) The occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and U. S. Bancorp, as Depositor, unless such Event of
Default has been cured or waived. U. S. Bancorp, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by U. S. Bancorp to pay any amount in respect of Junior
Subordinated Debentures when due, the Capital Securities will have a preference
over the Common Securities as described above. See "--Subordination of Common
Securities" and "--Liquidation Distribution Upon
Termination."
The existence of an Event of Default does not entitle the holders of
Capital Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Capital Securities may remove an Issuer Trustee for cause or, if a
Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding Capital
Securities, the successor may be appointed by the holders of at least 25% in
Liquidation Amount of the outstanding Capital Securities. If an Issuer Trustee
resigns, such Trustee will appoint its successor. If the Issuer Trustee fails to
appoint a successor, the holders of at least 25% in Liquidation Amount of the
outstanding Capital Securities may appoint a successor. If a successor has not
been appointed by the holders, any holder of Capital Securities or Common
Securities or the other Issuer Trustee may petition a court in the State of
Delaware to appoint a successor. Any Delaware Trustee must meet the applicable
requirements of Delaware law. Any Property Trustee must be a national or
state-chartered bank, and at the time of appointment have securities rated in
one of the three highest rating categories by a nationally recognized
statistical rating organization and have capital and surplus of at least
$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to
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which such Issuer Trustee is a party, or any Person succeeding to all or
substantially all the corporate trust business of such Issuer Trustee, will be
the successor of such Trustee under the Trust Agreement, provided such Person is
otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or otherwise set forth in the Trust Agreement. The Trust may, at
the request of the holder(s) of all the outstanding Common Securities, without
the consent of holders of any Capital Securities, merge with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with respect to the
Capital Securities or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Capital Securities in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) a trustee of such successor entity
possessing the same powers and duties as the Property Trustee is appointed to
hold the Junior Subordinated Debentures, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Capital Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization which gives ratings on the
Capital Securities, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect, (vi) such successor entity has a purpose
identical to that of the Trust, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, U. S. Bancorp has
received an opinion from independent counsel to the Trust experienced in such
matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and (viii) U. S. Bancorp or any permitted successor
or assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under 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 Capital Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as an association
taxable as a corporation or as other than a grantor trust for United States
federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Removal of Issuer Trustees" and
"--Description of New Guarantee--Amendments and Assignment" and as otherwise
required by law and the Trust Agreement, the holders of the Capital Securities
will have no voting rights.
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The Trust Agreement may be amended from time to time by holders of a
majority in aggregate Liquidation Amount of the Common Securities and the
Property Trustee, without the consent of the holders of the Capital Securities
(i) to cure any ambiguity, correct or supplement any provisions in the Trust
Agreement that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the Trust
Agreement, which are not inconsistent with the other provisions of the Trust
Agreement, or (ii) to modify, eliminate or add to any provisions of the Trust
Agreement to such extent as may be necessary to ensure that the Trust will not
be classified for United States federal income tax purposes as an association
taxable as a corporation and will be classified as a grantor trust at all times
that any Trust Securities are outstanding and to ensure that the Trust will not
be required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of either clause (i) or clause (ii),
such action shall not adversely affect in any material respect the interests of
any holder of Capital Securities, and any amendments of the Trust Agreement will
become effective when notice thereof is given to the holders of the Trust
Securities. The Trust Agreement may be amended by the Property Trustee and
holders of a majority in aggregate Liquidation Amount of the Common Securities
with (i) the consent of holders representing not less than a majority (based
upon Liquidation Amounts) of the outstanding Capital Securities, and (ii)
receipt by the Issuer Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act, except
that without the consent of each holder of Trust Securities, the Trust Agreement
may not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Trust, the
Property Trustee will not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on the Property Trustee with respect to the Junior
Subordinated Debentures, (ii) waive any past default that is waivable under
Section 513 of 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 to any amendment, modification or termination
of the Indenture or the Junior Subordinated Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the holders
of at least a majority in aggregate Liquidation Amount of the outstanding
Capital Securities, except that if a consent under the Indenture would require
the consent of each holder of Junior Subordinated Debentures affected thereby,
no such consent will be given by the Property Trustee without the prior consent
of each holder of the Capital Securities. The Issuer Trustees may not revoke any
action previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of the holders of the Capital Securities.
The Property Trustee will notify each holder of Capital Securities of any notice
of default with respect to the Junior Subordinated Debentures. In addition to
obtaining the foregoing approvals of the holders of the Capital Securities,
before taking any of the foregoing actions, the Property Trustee will obtain an
opinion of counsel experienced in such matters to the effect that the Trust will
not be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action and such action would not
cause the Trust to be classified as other than a grantor trust for United States
federal income tax purposes.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the Trust
Agreement.
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No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with the
Trust Agreement.
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 by U. S. Bancorp, the Issuer Trustees or any
affiliate of U. S. Bancorp or the Issuer Trustees will, for purposes of such
vote or consent, be treated as if they were not outstanding.
BOOK-ENTRY, DELIVERY AND FORM
The New Capital Securities initially will 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 Property 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 New Capital Securities will be issued in minimum blocks of at least
100 (representing a minimum of $100,000 aggregate Liquidation Amount) and the
New Capital Securities must at all times be held in blocks of at least 100.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DTC has advised U. S. Bancorp and the Trust that DTC is a limited purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodian
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised U. S. Bancorp and the Trust that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants with portions of the Liquidation
Amount of the Global Capital Securities and (ii) ownership of such interests in
the Global Capital Securities will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Except as described below, owners of beneficial interests in the Global
Capital Securities will not have Capital Securities registered in their name,
will not receive physical delivery of Capital Securities in certificated form
and will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of the Global Capital Securities registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Capital Securities, including the Global Capital Securities, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently,
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neither the Property Trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial interests in the Global Capital Securities, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised U. S. Bancorp and the Trust that its current practice, upon receipt of
any payment in respect of securities such as the Capital Securities, is to
credit the accounts of the relevant Participants with the payment on the payment
date, in amounts proportionate to their respective holdings in Liquidation
Amount of beneficial interests in the relevant security as shown on the records
of DTC unless DTC has reason to believe it will not receive payment on such
payment date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Global Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee, U. S. Bancorp or the Trust. Neither U. S. Bancorp or
the Trust nor the Property Trustee will be liable for any delay by DTC or any of
its Participants in identifying the beneficial owners of the Global Capital
Securities, and U. S. Bancorp, the Trust, and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Beneficial interests in the Global Capital Securities will trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
DTC has advised U. S. Bancorp and the Trust that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited and only in respect of such portion of the
Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Trust Agreement, DTC reserves the right to exchange the Global
Capital Securities for Capital Securities in certificated form and to distribute
such Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that U. S. Bancorp and the Trust believe to be
reliable, but neither U. S. Bancorp nor the Trust takes responsibility for the
accuracy thereof.
A Global New Capital Security is exchangeable for New Capital Securities
in registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as depositary for the Global New Capital
Security and the Trust thereupon fails to appoint a successor depositary within
90 days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) U. S. Bancorp in its sole discretion elects to cause the issuance of
the New Capital Securities in certificated form or (iii) there shall have
occurred and be continuing and Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Trust Agreement.
In addition, beneficial interests in a Global New Capital Security may be
exchanged for certificated New Capital Securities upon request but only upon at
least 20 days' prior written notice given to the Property Trustee by or on
behalf of DTC in accordance with customary procedures. In all cases,
certificated New Capital Securities delivered in exchange for any Global New
Capital Security or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
DTC (in accordance with its customary procedures), unless the Property Trustee
determines otherwise in compliance with applicable law.
PAYMENT AND PAYING AGENTS
Payments in respect of the New Capital Securities held in global form will
be made to DTC, which will credit the relevant accounts at DTC on the applicable
Distribution Dates or, with respect to the New
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Capital Securities that are not held by DTC or its nominee, such payments will
be made by check mailed to the address of the holder entitled thereto as such
address appears on the trust register. The paying agent (the "Paying Agent")
will initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees. The Paying Agent
will be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Administrative Trustees. If the Property Trustee is no
longer the Paying Agent, the Property Trustee will appoint a successor (which
must be a bank or trust company acceptable to the Administrative Trustees) to
act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the New
Capital Securities.
Registration of transfers of New Capital Securities will be effected
without charge by or on behalf of the Trust, other than payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer of New Capital Securities after they have been called
for redemption.
TRUST EXPENSES
Pursuant to the Expense Agreement, U. S. Bancorp, as holder of the Common
Securities, has irrevocably and unconditionally agreed with the Trust that U. S.
Bancorp will pay to the Trust, and reimburse the Trust for, the full amount of
any costs, expenses or liabilities of the Trust, other than obligations of the
Trust to pay to the holders of Capital Securities or other similar interests in
the Trust the amounts due such holders pursuant to the terms of the Capital
Securities or such other similar interests, as the case may be. Such payment
obligation will include any such costs, expenses or liabilities of the Trust
that are required by applicable law to be satisfied in connection with
termination of the Trust.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative courses of
action or to construe ambiguous provisions in the Trust Agreement or is unsure
of the application of any provision of the Trust Agreement, and the matter is
not one on which holders of Capital Securities are entitled under the Trust
Agreement to vote, then the Property Trustee will take such action as it deems
advisable and in the best interests of the holders of the Trust Securities and
will have no liability except for its own bad faith, negligence or willful
misconduct.
For information concerning the relationships between The First National
Bank of Chicago, the Property Trustee, and U. S. Bancorp, see "--Description of
New Junior Subordinated Debentures--Information Concerning the Debenture
Trustee."
MISCELLANEOUS
The Administrative Trustees and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Trust in such a way that
it will not be deemed to be an "investment company" required to be registered
under the Investment Company Act or classified as an association taxable as a
corporation or as other than a grantor trust for United States federal income
tax purposes and so that the Junior Subordinated Debentures will be treated as
indebtedness of U. S. Bancorp for United States federal income tax purposes. In
this connection, the holders of a majority in aggregate Liquidation Amount of
the outstanding Common Securities and the Property Trustee are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of the Trust or the Trust Agreement, that the holders of a majority in aggregate
Liquidation Amount of the
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outstanding Common Securities and the Property Trustee determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued under the Old
Indenture. The New Junior Subordinated Debentures will be issued under the New
Indenture, under which The First National Bank of Chicago is acting as Debenture
Trustee. The New Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the New Junior Subordinated
Debentures and the New Indenture does not purport to be complete, and where
reference is made to particular provisions of the New Indenture, such
provisions, including the definition 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 New Indenture and those terms made a part of the New
Indenture by the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by U. S.
Bancorp for the Common Securities, in Old Junior Subordinated Debentures issued
by U. S. Bancorp. Pursuant to the Exchange Offer, U. S. Bancorp 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 New Junior Subordinated Debentures will bear interest at the annual
rate of 8.27% of the principal amount thereof, payable semi-annually in arrears
on June 15 and December 15 of each year (each, an "Interest Payment Date"),
commencing December 15, 1997, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the June 1 or
December 1 next preceding such Interest Payment Date (the "Regular Record
Date"). It is anticipated that, until the liquidation, if any, of the Trust,
each New Junior Subordinated Debenture will be held by the Property Trustee in
trust for the benefit of the holders of the Trust Securities. The amount of
interest payable for any period less than a full interest period will be
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of interest payable
for any full interest period will be computed by dividing the rate per annum by
two. If any date on which interest is payable on the New Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of 8.27% thereof, compounded semi-annually and computed on
the basis of a 360-day year of twelve 30-day months and the actual days elapsed
in a partial month in such period. The amount of additional interest payable for
any full interest period will be computed by dividing the rate per annum by two.
The term "interest" as used herein includes semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The New Junior Subordinated Debentures will mature on December 15, 2026.
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The New Junior Subordinated Debentures will rank pari passu with the Old
Junior Subordinated Debentures and will be unsecured and subordinate and junior
in right of payment to all Senior Debt of U. S. Bancorp. Because U. S. Bancorp
is a bank holding company, its rights and the rights of its creditors to
participate in any distribution of assets of any subsidiary upon the latter's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary (including depositors in the case of bank
subsidiaries), except to the extent that U. S. Bancorp may itself be a creditor
with recognized claims against that subsidiary. There are also various legal
limitations on the extent to which certain of U. S. Bancorp's subsidiaries may
extend credit, pay dividends or otherwise supply funds to U. S. Bancorp or
certain of its other subsidiaries. See "Certain Regulatory Considerations."
Accordingly, the New Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of U. S. Bancorp's
subsidiaries, and holders thereof should look only to the assets of U. S.
Bancorp for payments on the New Junior Subordinated Debentures. The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt of
U. S. Bancorp, including Senior Debt, whether under any existing indenture or
any other indenture that U. S. Bancorp may enter into in the future or
otherwise. See "--Subordination."
FORM, REGISTRATION AND TRANSFER. If the New Junior Subordinated Debentures
are distributed to holders of the New Capital Securities, such New Junior
Subordinated Debentures may be represented by one or more global certificates
registered in the name of Cede & Co. as the nominee of DTC. The New Junior
Subordinated Debentures will be issuable and transferable only in denominations
of $100,000 and integral multiples of $1,000 in excess thereof. The depositary
arrangements for such New Junior Subordinated Debentures are expected to be
substantially similar to those in effect for the New Capital Securities. For a
description of DTC and the terms of the depositary arrangements relating to
payments, transfers, voting rights, redemptions and other notices and matters,
see "--Description of New Capital Securities--Book-Entry, Delivery and Form."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on New
Junior Subordinated Debentures will be made at the office of the Debenture
Trustee in The City of New York, except that at the option of U. S. Bancorp
payment of any interest may be made, except in the case of New Junior
Subordinated Debentures represented by a global security, (i) by check mailed to
the address of the person entitled thereto as such address appears in the
securities register or (ii) by transfer to an account maintained by the person
entitled thereto as specified in the securities register, provided that proper
transfer instructions have been received by the Regular Record Date. Payment of
any interest on a New Junior Subordinated Debenture will be made to the person
in whose name such New Junior Subordinated Debenture is registered at the close
of business on the Regular Record Date for such interest, except in the case of
defaulted interest. U. S. Bancorp may at any time designate additional paying
agents or rescind the designation of any paying agent; however, U. S. Bancorp
will at all times be required to maintain a paying agent in each place of
payment for the New Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by U. S. Bancorp in trust, for the payment of the principal of (and
premium, if any) or interest on any New Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of U. S. Bancorp, be
repaid to U. S. Bancorp and the holder of such New Junior Subordinated Debenture
shall thereafter look, as a general unsecured creditor, only to U. S. Bancorp
for payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
So long as no Debenture Event of Default has occurred and is continuing,
U. S. Bancorp has the right under the New Indenture at any time or from time to
time during the term of the New Junior Subordinated Debentures to defer payment
of interest on the New Junior Subordinated Debentures for a
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period not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the New Junior Subordinated Debentures. At the end of such Extension
Period, U. S. Bancorp must pay all interest then accrued and unpaid on the New
Junior Subordinated Debentures (together with interest on such unpaid interest
at the annual rate of 8.27%, compounded semi-annually and computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in a period, to the extent permitted by applicable law). The
amount of additional interest payable for any full interest period will be
computed by dividing the rate per annum by two. During an Extension Period,
interest will accrue and holders of New Junior Subordinated Debentures (or
holders of Capital Securities while Capital Securities are outstanding) will be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any such Extension Period, U. S. Bancorp may not, and may not
permit any subsidiary of U. S. Bancorp to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of U. S. Bancorp's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of U. S. Bancorp that rank pari passu with or junior in interest
to the New Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by U. S. Bancorp of the debt securities of any
subsidiary of U. S. Bancorp if such guarantee ranks pari passu with or junior in
interest to the New Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of U. S. Bancorp, (b) any declaration of a
dividend in connection with the implementation or amendment of a shareholders'
rights plan or any successor thereto or the issuance of rights, stock or other
property thereunder or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Guarantee and (d) repurchases, redemptions or
other acquisitions of common stock of U. S. Bancorp in connection with any
employment contract, benefit plan or similar arrangement with or for the benefit
of any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment and stock purchase plan, or in connection with the
issuance of common stock (or securities convertible or exchangeable for common
stock) as consideration in an acquisition transaction entered into prior to an
Extension Period).
Prior to the termination of any such Extension Period, U. S. Bancorp may
further defer the payment of interest on the New Junior Subordinated Debentures,
provided that no Extension Period may exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity of the New Junior Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the rate of
8.27%, compounded semi-annually, to the extent permitted by applicable law), U.
S. Bancorp may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. U. S. Bancorp must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earliest of
(i) the date interest on the New Junior Subordinated Debentures would have been
payable except for the election to begin such Extension Period, (ii) the date
the Administrative Trustees are required to give notice to the New York Stock
Exchange, the Nasdaq National Market or other applicable stock exchange or
automated quotation system on which the New Capital Securities are then listed
or quoted or to holders of the New Capital Securities of the record date for
such Distributions and (iii) the date such Distributions would have been payable
but for the election to begin such Extension Period, but in any event not less
than one Business Day prior to such record date. The Property Trustee will give
notice of U. S. Bancorp's election to begin a new Extension Period to the
holders of the Capital Securities. There is no limitation on the number of times
that U. S. Bancorp may elect to begin an Extension Period.
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REDEMPTION
Subject to U. S. Bancorp having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve, the Junior Subordinated Debentures are redeemable prior to
maturity at the option of U. S. Bancorp (i) on or after December 15, 2006, in
whole at any time or in part from time to time, or (ii) in whole (but not in
part), at any time within 90 days following the occurrence and continuation of a
Tax Event or Capital Treatment Event (each as defined under "Risk Factors--Tax
Event or Capital Treatment Event Redemption"), in either case at the redemption
price (the "Redemption Price") described below. The proceeds of any such
redemption will be used by the Trust to redeem the Capital Securities.
The Redemption Price for Junior Subordinated Debentures in the case of a
redemption under (i) above or, on or after December 15, 2006, under (ii) above,
shall equal the following prices, expressed in percentages of the principal
amount, together with accrued interest to but excluding the date fixed for
redemption. If redeemed during the 12-month period beginning December 15:
REDEMPTION
YEAR PRICE
---- ----------
2006...................................... 104.1350%
2007...................................... 103.7215
2008...................................... 103.3080
2009...................................... 102.8945
2010...................................... 102.4810
2011...................................... 102.0675
2012...................................... 101.6540
2013...................................... 101.2405
2014...................................... 100.8270
2015...................................... 100.4135
and at 100% on or after December 15, 2016.
The Redemption Price for Junior Subordinated Debentures, in the case of a
redemption prior to December 15, 2006 following a Tax Event or Capital Treatment
Event, as described under (ii) above, will equal the Make-Whole Amount (as
defined under "--Description of New Capital Securities--Redemption"), together
with accrued interest to but excluding the date fixed for redemption.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the date fixed for redemption to each holder of Junior
Subordinated Debentures to be redeemed at its registered address. Unless U. S.
Bancorp defaults in payment of the redemption price, on and after such
redemption date interest will cease to accrue on such Junior Subordinated
Debentures or portions thereof called for redemption.
ADDITIONAL SUMS
U. S. Bancorp has covenanted in the New Indenture that, if and for so long
as (i) the Trust is the holder of all New Junior Subordinated Debentures and
(ii) the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, U. S. Bancorp will pay as
additional sums on the New Junior Subordinated Debentures such amounts as may be
required so that the Distributions payable by the Trust will not be reduced as a
result of any such additional taxes, duties or other governmental charges. See
"--Description of New Capital Securities--Redemption."
In the Expense Agreement, U. S. Bancorp, as the holder of the Common
Securities, has agreed to pay all debts and other obligations (other than with
respect to the Capital Securities) and all costs and expenses of the Trust
(including costs and expenses relating to the organization and operation of the
Trust and the fees and expenses of the Issuer Trustees).
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RIGHT TO SHORTEN MATURITY
If a Tax Event occurs which relates to the deductibility of interest
payable by U. S. Bancorp on the Junior Subordinated Debentures, and if the
opinion relating to such Tax Event and referred to in the definition of Tax
Event above states that the risk of non-deductibility would be avoided if the
maturity of the Junior Subordinated Debentures were shortened, U. S. Bancorp
shall have the right to shorten the maturity of the Junior Subordinated
Debentures by the amount stated in such opinion to be the minimum extent
required in order to avoid such risk, but in no event may U. S. Bancorp shorten
the maturity of the Junior Subordinated Debentures to a Stated Maturity earlier
than June 24, 2016. In such event, the Capital Securities would be redeemed as
of such earlier Stated Maturity of the Junior Subordinated Debentures. In
addition, upon the exercise of the right to shorten the maturity of the Junior
Subordinated Debentures, U. S. Bancorp will no longer have the right to redeem
the Junior Subordinated Debentures prior to the new Stated Maturity upon the
occurrence of a Tax Event or to further shorten the maturity of the Junior
Subordinated Debentures.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF U. S. BANCORP
U. S. Bancorp will also covenant that it will not, and will not permit any
subsidiary of U. S. Bancorp to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of U. S. Bancorp's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities of U. S. Bancorp that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by U. S. Bancorp of the debt securities of any
subsidiary of U. S. Bancorp if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in capital stock of U. S. Bancorp, (b) any declaration of a
dividend in connection with the implementation or amendment of a shareholders'
rights plan or any successor thereto or the issuance of rights, stock or other
property thereunder or the redemption or repurchase of any such rights pursuant
thereto, (c) payments under the Guarantee and (d) repurchases, redemptions or
other acquisitions of common stock of U. S. Bancorp in connection with any
employment contract, benefit plan or similar arrangement with or for the benefit
of any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment and stock purchase plan, or in connection with the
issuance of common stock (or securities convertible into or exchangeable for
common stock) as consideration in an acquisition transaction entered into prior
to an Extension Period) if at such time (i) there has occurred any event of
which U. S. Bancorp has actual knowledge (a) that with the giving of notice or
the lapse of time, or both, would constitute a "Debenture Event of Default"
under the Indenture and (b) in respect of which U. S. Bancorp has not taken
reasonable steps to cure, (ii) if the Junior Subordinated Debentures are held by
the Trust, U. S. Bancorp is in default with respect to its payment of any
obligations under the Guarantee or (iii) U. S. Bancorp has given notice of its
election of an Extension Period as provided in the Indenture and shall not have
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
U. S. Bancorp has covenanted in the Indenture (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors that are permitted pursuant to the Indenture may succeed to U. S.
Bancorp's ownership of the Common Securities, (ii) not to voluntarily terminate,
wind-up or liquidate the Trust, other than (a) in connection with a distribution
of the Junior Subordinated Debentures to the holders of the Capital Securities
in exchange therefor upon liquidation of the Trust, or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the Trust
Agreement, in either such case upon prior approval of the Federal Reserve if
then so required under applicable capital guidelines or policies of the Federal
Reserve, and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Trust to remain classified as a
grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes.
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MODIFICATION OF INDENTURE
From time to time U. S. Bancorp and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of the Junior
Subordinated Debentures or the holders of the Capital Securities so long as they
remain outstanding) and qualifying, or maintaining the qualification of, the
Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting U. S. Bancorp and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures affected, to modify the Indenture in a manner adversely
affecting the rights of the holders of the Junior Subordinated Debentures in any
material respect; provided that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Debenture so affected, (i)
change the Stated Maturity of the Junior Subordinated Debentures, or reduce the
principal amount thereof, the rate of interest thereon or any premium payable
upon redemption thereof, or change the place of payment where, or the currency
in which, any such amount is payable or impair the right to institute suit for
the enforcement of any Junior Subordinated Debenture or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures, the holders of
which are required to consent to any such modification of the Indenture, and
provided further that, so long as Capital Securities remain outstanding, (a) no
such modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default or compliance with any
covenant under the Indenture may be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount of all
outstanding Capital Securities affected unless and until the principal of the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions have been satisfied, and (b)
where a consent under the Indenture would require the consent of each holder of
Junior Subordinated Debentures, no such consent shall be given by the Property
Trustee without the prior consent of each holder of Capital Securities.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) Failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any interest payment in
the case of an Extension Period); or
(ii) Failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity or upon redemption;
or
(iii) Failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
U. S. Bancorp from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of Old Junior Subordinated
Debentures or New Junior Subordinated Debentures, as applicable; or
(iv) Certain events in bankruptcy, insolvency or reorganization of U. S.
Bancorp.
The holders of at least a majority in aggregate outstanding principal
amount of the Old Junior Subordinated Debentures or New Junior Subordinated
Debentures, as applicable, have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee.
The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Old Junior Subordinated Debentures or the
New Junior Subordinated Debentures, as applicable, may declare the principal due
and payable immediately upon a Debenture Event of Default, and, if the Debenture
Trustee or such holders of the Old Junior Subordinated Debentures or the New
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Junior Subordinated Debentures, as applicable, fail to make such declaration,
the holders of at least 25% in aggregate Liquidation Amount of the Old Capital
Securities or the New Capital Securities, as applicable, will have such right.
The holders of at least a majority in aggregate outstanding principal amount of
the Old Junior Subordinated Debentures or the New Junior Subordinated
Debentures, as applicable, may annul such declaration and waive the default if
all defaults (other than the non-payment of the principal of the Old Junior
Subordinated Debentures or the New Junior Subordinated Debentures, as
applicable, which has become due solely by such acceleration) have been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Debenture
Trustee. If the holders of the Old Junior Subordinated Debentures or the New
Junior Subordinated Debentures, as applicable, fail to annul such declaration
and waive such default, the holders of a majority in aggregate Liquidation
Amount of the Old Capital Securities or New Capital Securities, as applicable,
will have such right.
The holders of at least a majority in aggregate outstanding principal
amount of the Old Junior Subordinated Debentures or the New Junior Subordinated
Debentures, as applicable, may, on behalf of the holders of all the Old Junior
Subordinated Debentures or the New Junior Subordinated Debentures, as
applicable, waive any default, except a default in the payment of principal or
interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Old Junior
Subordinated Debenture or New Junior Subordinated Debenture, as applicable. If
the holders of the Old Junior Subordinated Debentures or the New Junior
Subordinated Debentures, as applicable, fail to waive such default, the holders
of a majority in aggregate Liquidation Amount of the Old Capital Securities or
the New Capital Securities, as applicable, will have such right. U. S. Bancorp
is required to file annually with the Debenture Trustee certificates as to
whether or not U. S. Bancorp is in compliance with all the conditions and
covenants applicable to it under the Indenture.
If a Debenture Event of Default has occurred and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the Old Junior Subordinated Debentures or the New Junior
Subordinated Debentures, as applicable, and any other applicable amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Old Junior Subordinated Debentures or
the New Junior Subordinated Debentures, as applicable.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF NEW CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of U. S. Bancorp to pay any amounts payable
in respect of the New Junior Subordinated Debentures on the date such amounts
are otherwise payable, a holder of New Capital Securities may institute a legal
proceeding directly against U. S. Bancorp for enforcement of payment to such
holder of an amount equal to the amount payable in respect of such New Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the New Capital Securities held by such holder (a "Direct
Action"). U. S. Bancorp may not amend the New Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the New Capital Securities outstanding. U. S. Bancorp will have the
right under the New Indenture to set off any payment made to such holder of New
Capital Securities by U. S. Bancorp in connection with a Direct Action.
The holders of the New Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the New Junior Subordinated Debentures. See
"--Description of New Capital Securities--Events of Default; Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that U. S. Bancorp shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into U. S. Bancorp or convey, transfer or lease its
properties and assets substantially as an entirety to U. S. Bancorp, unless (i)
in case U. S. Bancorp consolidates with or merges into another Person or conveys
or transfers its properties and assets substantially as an entirety to any
Person, the successor Person is organized under the laws of the United States or
any state or the District of Columbia, and such successor Person expressly
assumes U. S. Bancorp's obligations on the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; (iii) such transaction
is permitted under the Trust Agreement and Guarantee and does not give rise to
any breach or violation of the Trust Agreement or Guarantee, and (iv) certain
other conditions as prescribed by the Indenture are met. It is anticipated that
FBS will become the successor to U. S. Bancorp pursuant to the Indenture, the
Trust Agreement, the Guarantee and the Expense Agreement pursuant to the
foregoing provisions in the event that the contemplated merger of U. S. Bancorp
with and into FBS is consummated. See "U. S. Bancorp."
The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving U. S. Bancorp that may adversely affect holders of
the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The New Indenture provides that when, among other things, all New Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and U. S. Bancorp deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount sufficient to pay and discharge the entire indebtedness on the New
Junior Subordinated Debentures not previously delivered to the Debenture Trustee
for cancellation, for the principal (and premium, if any) and interest and
Additional Sums to the date of the deposit or to the Stated Maturity, as the
case may be, then the New Indenture will cease to be of further effect (except
as to U. S. Bancorp's obligations to pay all other sums due pursuant to the New
Indenture and to provide the officers' certificates and opinions of counsel
described therein), and U. S. Bancorp will be deemed to have satisfied and
discharged the New Indenture.
SUBORDINATION
In the Indenture, U. S. Bancorp has covenanted and agreed that the Junior
Subordinated Debentures issued thereunder will rank subordinate and junior in
right of payment to all Senior Debt of U. S. Bancorp to the extent provided in
the Indenture. Upon any payment or distribution of assets of U. S. Bancorp 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 U. S. Bancorp, the holders of Senior Debt
will first be entitled to receive payment in full of principal of (and premium,
if any) and interest, if any, on such Senior Debt before the holders of Junior
Subordinated Debentures or the Property Trustee, on behalf of the holders of
Trust Securities, will be entitled to receive or retain any payment in respect
of the principal of (and premium, if any) and interest, if any, on the Junior
Subordinated Debentures; provided, however, that holders of Senior Debt will not
be entitled to receive payment of any such amount to the extent that such
holders would be required by the subordination provisions of such Senior Debt to
pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of U. S. Bancorp's business.
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In the event of the acceleration of the maturity of the Junior
Subordinated Debentures, the holders of all Senior Debt outstanding at the time
of such acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of (or premium, if any) or interest, if
any, on the Junior Subordinated Debentures; provided, however, that holders of
Senior Debt shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of U. S.
Bancorp's business.
No payments on account of principal (or premium, if any) or interest 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 Debt
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Senior Debt" means (i) Senior Indebtedness (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business) and
(ii) the Allocable Amounts of Senior Subordinated Indebtedness.
"Senior Indebtedness" means the principal of (and premium, if any) and
unpaid interest on (i) every obligation of U. S. Bancorp for money borrowed
(including any deferred obligation for the payment of the purchase price of
property and assets and obligations arising from guarantees by U. S. Bancorp of
the indebtedness of others), (ii) obligations of, or any such obligation
guaranteed by, U. S. Bancorp as lessee under leases required to be capitalized
on the balance sheet of the lessee under generally accepted accounting
principles and leases of property or assets made as part of any sale and
leaseback transaction to which U. S. Bancorp is a party, (iii) obligations of U.
S. Bancorp under letters of credit, and (iv) any indebtedness of U. S. Bancorp
under or other obligations of U. S. Bancorp to make payment pursuant to the
terms of commodity contracts, interest rate and currency swap agreements, cap,
floor and collar agreements, currency spot and forward contracts, and other
similar agreements or arrangements, whether incurred on or prior to the date of
the Indenture or thereafter incurred, other than any obligation as to which, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligation is not Senior Indebtedness,
provided that Senior Indebtedness does not include Senior Subordinated
Indebtedness or the Junior Subordinated Debentures.
"Senior Subordinated Indebtedness" means any obligation of U. S. Bancorp
to its creditors, whether now outstanding or subsequently incurred, where the
instrument creating or evidencing the obligation or pursuant to which the
obligation is outstanding provides that it is subordinate and junior in right of
payment to Senior Indebtedness. Senior Subordinated Indebtedness includes U. S.
Bancorp's outstanding subordinated debt securities and any subordinated debt
securities issued in the future with substantially similar subordination terms
and does not include the Junior Subordinated Debentures or any subordinated debt
securities issued in the future with subordination terms substantially similar
to the Junior Subordinated Debentures.
"Allocable Amounts," when used with respect to any Senior Subordinated
Indebtedness, means the amount necessary to pay all principal of (and premium,
if any) and interest, if any, on such Senior Subordinated Indebtedness in full
less, if applicable, any portion of such amounts which would have been paid to,
and retained by, the holders of such Senior Subordinated Indebtedness (whether
as a result of the receipt of payments by the holders of such Senior
Subordinated Indebtedness from U. S. Bancorp 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 Subordinated
Indebtedness pursuant to any provision of such indebtedness for the payment over
of amounts received on account of such indebtedness to the holders of such
Senior Subordinated Indebtedness) but for the fact that such Senior Subordinated
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Indebtedness is subordinate or junior in right of payment to trade accounts
payable or accrued liabilities arising in the ordinary course of business.
The Indenture places no limitation on the amount of Senior Debt that may
be incurred by U. S. Bancorp. U. S. Bancorp expects from time to time to incur
additional indebtedness and other obligations constituting Senior Debt.
GOVERNING LAW
The New Indenture and the New Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
Following the Exchange Offer and the qualification of the New Indenture
under the Trust Indenture Act, the Debenture Trustee shall have and be subject
to all the duties and responsibilities specified with respect to an indenture
trustee under the Trust Indenture Act. Subject to such provisions, the Debenture
Trustee is under no obligation to exercise any of the powers vested in it by the
New Indenture at the request of any holder of New Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
The Debenture Trustee presently serves as trustee with respect to the Old
Junior Subordinated Debentures, as well as Floating Rate Notes due November 15,
2006, issued by U. S. Bancorp pursuant to an indenture dated November 19, 1996
and related Floating Rate Putable Asset Trust Securities due November 15, 1999
issued pursuant to a Trust Agreement dated as of November 14, 1996, between U.
S. Bancorp and The First National Bank of Chicago, as trustee. The Debenture
Trustee also serves as issuing and paying agent for bank notes issued by
national banking subsidiaries of U. S. Bancorp and may serve from time to time
as trustee or paying agent under other indentures, trust agreements or issuing
and paying agency agreements with U. S. Bancorp or its subsidiaries relating to
other issues of their securities. U. S. Bancorp and its subsidiaries maintain
deposit accounts and conduct other banking transactions with the Debenture
Trustee in the ordinary course of business.
DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was executed and delivered by U. S. Bancorp concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Old Capital Securities. Promptly after the
Expiration Date, the New Guarantee will be issued by U. S. Bancorp for the
benefit of the holders from time to time of the New 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, 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
U. S. Bancorp will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the New Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
New Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), will be subject to the New Guarantee: (i) any accumulated
and unpaid Distributions required to be paid on the New Capital
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Securities, to the extent that the Trust has funds on hand available therefor at
such time, (ii) the Redemption Price with respect to New Capital Securities
called for redemption, to the extent that the Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary termination,
winding-up or liquidation of the Trust (unless the New Junior Subordinated
Debentures are distributed to holders of the New Capital Securities in exchange
therefor), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment, to the extent that
the Trust has funds on hand available therefor at that time, and (b) the amount
of assets of the Trust remaining available for distribution to holders of New
Capital Securities after satisfaction of liabilities to creditors of the Trust
as required by applicable law. U. S. Bancorp's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by U. S.
Bancorp to the holders of the New Capital Securities or by causing the Trust to
pay such amounts to such holders.
The New Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the New Capital Securities, but will apply only
to the extent that the Trust has funds sufficient to make such payments, and is
not a guarantee of collection.
If U. S. Bancorp does not make interest payments on the New Junior
Subordinated Debentures held by the Trust, the Trust will not be able to pay
Distributions on the New Capital Securities and will not have funds available
therefor and, in such event, holders of the New Capital Securities would not be
able to rely upon the New Guarantee for payment of such amounts. Instead, if any
Debenture Event of Default under the New Indenture has occurred and is
continuing, then a holder of New Capital Securities may institute a Direct
Action against U. S. Bancorp pursuant to the terms of the New Indenture for
enforcement of payment to such holder of the principal of or interest or
premium, if any, on such New Junior Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the New Capital Securities
of such holder. In connection with such Direct Action, U. S. Bancorp will have a
right of set-off under the New Indenture to the extent of any payment made by U.
S. Bancorp to such holder of New Capital Securities in the Direct Action. Except
as described herein, holders of New Capital Securities will not be able to
exercise directly any other remedy available to the holders of the New Junior
Subordinated Debentures or assert directly any other rights in respect of the
New Junior Subordinated Debentures.
The New Guarantee will rank subordinate and junior in right of payment to
all Senior Debt of U. S. Bancorp. See "--Status of New Guarantee." Because U. S.
Bancorp is a holding company, its rights and the rights of its creditors to
participate in any distribution of assets of any subsidiary upon the latter's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary (including depositors in the case of bank
subsidiaries), except to the extent that U. S. Bancorp may itself be a creditor
with recognized claims against that subsidiary. There are also various legal
limitations on the extent to which certain of U. S. Bancorp's subsidiaries may
extend credit, pay dividends or otherwise supply funds to U. S. Bancorp or
certain of its subsidiaries. See "Certain Regulatory Considerations."
Accordingly, U. S. Bancorp's obligations under the New Guarantee will be
effectively subordinated and junior to all existing and future liabilities of U.
S. Bancorp's subsidiaries, and claimants under the New Guarantee should look
only to the assets of U. S. Bancorp for payments thereunder. The New Guarantee
does not limit the incurrence or issuance of other secured or unsecured debt of
U. S. Bancorp, including Senior Debt, whether under any other existing indenture
or any other indenture that U. S. Bancorp may enter into in the future or
otherwise. U. S. Bancorp expects from time to time to incur additional
indebtedness constituting Senior Debt.
U. S. Bancorp will, through the New Guarantee, the Trust Agreement, the
New Junior Subordinated Debentures, the New Indenture and the Expense Agreement,
taken together, fully, irrevocably and unconditionally guarantee all of the
Trust's obligations under the New Capital Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the Trust's obligations under the New Capital
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Securities. See "Relationship Among the New Capital Securities, the New Junior
Subordinated Debentures, the New Guarantee, and the Expense Agreement."
STATUS OF NEW GUARANTEE
The New Guarantee will constitute an unsecured obligation of U. S. Bancorp
and will rank subordinate and junior in right of payment to all Senior Debt of
U. S. Bancorp in the same manner as the New Junior Subordinated Debentures,
except in the case of a bankruptcy or insolvency proceeding in respect of U. S.
Bancorp, in which case the New Guarantee will rank subordinate and junior in
right of payment to all liabilities of U. S. Bancorp.
The New Guarantee will rank pari passu with the Old Guarantee. The New
Guarantee will constitute a guarantee of payment and not of collection (i.e.,
the guaranteed party may institute a legal proceeding directly against U. S.
Bancorp to enforce its rights under the New Guarantee without first instituting
a legal proceeding against any other person or entity). The New Guarantee will
be held by the Guarantee Trustee 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 or the New Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the New Capital Securities (in which case no
vote will be required), the New Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of the outstanding New Capital Securities. The manner of obtaining any
such approval will be as set forth under "--Description of New Capital
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees and
agreements contained in the New Guarantee will bind the successors, assigns,
receivers, trustees and representatives of U. S. Bancorp and will inure to the
benefit of the holders of the New Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the New Guarantee will occur upon the failure of
U. S. Bancorp to perform any of its payment obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
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 Guarantee Trustee in respect of the New Guarantee or to direct the exercise
of any trust power conferred upon the Guarantee Trustee under the New Guarantee.
Any registered holder of the New Capital Securities may institute a legal
proceeding directly against U. S. Bancorp to enforce its rights under the New
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
U. S. Bancorp, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not U. S. Bancorp is in
compliance with all the conditions and covenants applicable to it under the New
Guarantee.
TERMINATION OF THE NEW GUARANTEE
The New Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the New Capital Securities, upon
full payment of the amounts payable upon liquidation of the Trust or upon
distribution of New Junior Subordinated Debentures to the holders of the New
Capital Securities in exchange therefor. The New Guarantee will continue to be
effective or will be
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reinstated, as the case may be, if at any time any holder of the New Capital
Securities must restore payment of any sums paid under such New Capital
Securities or the New Guarantee.
GOVERNING LAW
The New Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by U. S. Bancorp in performance of the New Guarantee, will undertake
to perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the New Guarantee, must exercise the same degree
of care and skill as a prudent person would exercise or use in the conduct of
his or her own affairs. Subject to this provision, the Guarantee Trustee will be
under no obligation to exercise any of the powers vested in it by the New
Guarantee at the request of any holder of New Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
For information concerning the relationship between The First National
Bank of Chicago, the Guarantee Trustee, and U. S. Bancorp, see "--Description of
New Junior Subordinated Debentures--Information Concerning the Debenture
Trustee."
THE EXPENSE AGREEMENT
Pursuant to an Agreement as to Expenses and Liabilities entered into by U.
S. Bancorp under the Trust Agreement (the "Expense Agreement"), U. S. Bancorp
will, as holder of the Common Securities, irrevocably and unconditionally
guarantee to each Person to whom the Trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the Trust, other than
obligations of the Trust to pay to the holders of the Trust Securities of the
amounts due such holders pursuant to the terms of the Trust Securities. The
Expense Agreement will be enforceable by third parties, will constitute an
unsecured obligation of U. S. Bancorp and will rank subordinate and junior in
right of payment to all Senior Debt of U. S. Bancorp in the same manner as the
Guarantee and the Junior Subordinated Debentures.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) 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 Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances), (ii) the New Capital Securities will not contain certain
restrictions on transfer applicable to Old Capital Securities, and (iii) 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, in each case in connection with the
Exchange Offer. With respect to clause (iii) above, in the event that a
registration statement relating to an exchange offer had not been filed and
declared effective by specified dates, or, in certain limited circumstances, in
the event a shelf registration statement (the "Shelf Registration Statement")
with respect to the resale of the Old Capital Securities was not declared
effective by a specified date, then interest would have accrued (in addition to
the stated interest rate on the Old Junior Subordinated Debentures) at the rate
of 0.25% per annum on the principal amount of the Old Junior Subordinated
Debentures and Distributions would have accumulated (in addition to the stated
Distribution rate on the Old Capital Securities) at the rate of 0.25% per annum
on the Liquidation Amount of the Old Capital Securities, for the period from the
occurrence of such event until such time as such required exchange offer was
consummated or any required Shelf Registration Statement became effective. The
New Securities are not, and upon consummation of the Exchange Offer the Old
Securities
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will not be, entitled to any such additional interest or Distributions or any
further registration rights, except under limited circumstances. 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."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES, THE NEW JUNIOR
SUBORDINATED DEBENTURES, THE NEW GUARANTEE
AND THE EXPENSE AGREEMENT
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds available for the payment of such
Distributions) will be irrevocably guaranteed by U. S. Bancorp as and to the
extent set forth under "Description of New Securities--Description of New
Guarantee." Taken together, U. S. Bancorp's obligations under the New Junior
Subordinated Debentures, the New Indenture, the Trust Agreement, the Expense
Agreement, and the New Guarantee will provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and other
amounts due on the New Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the New Capital Securities. If and to the extent that
U. S. Bancorp does not make payment on the New Junior Subordinated Debentures,
the Trust will not pay Distributions or other amounts due on the New Capital
Securities. The New Guarantee does not cover payment of Distributions when the
Trust does not have sufficient funds to pay such Distributions. In such event,
the remedy of a holder of New Capital Securities is to institute a Direct
Action.
The obligations of U. S. Bancorp under the New Guarantee will be
subordinate and junior in right of payment to all Senior Debt of U. S. Bancorp.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the New Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments distributable on the New Capital
Securities, primarily because (i) the aggregate principal amount of the New
Junior Subordinated Debentures will be equal to the sum of the aggregate stated
Liquidation Amount of the New Capital Securities and Common Securities; (ii) the
interest rate and interest and other payment dates on the New Junior
Subordinated Debentures will match the Distribution rate and Distribution and
other payment dates for the Trust Securities; (iii) U. S. Bancorp will pay for
all and any costs, expenses and liabilities of the Trust except the Trust's
obligations to holders of Trust Securities; and (iv) the Trust Agreement further
provides that the Trust will not engage in any activity that is not consistent
with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the New Indenture, U. S.
Bancorp has the right to set-off any payment it is otherwise required to make
thereunder against and to the extent U. S. Bancorp has theretofore made, or is
concurrently on the date of such payment making, a payment under the New
Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF NEW CAPITAL SECURITIES
A holder of any New Capital Security may institute a legal proceeding
directly against U. S. Bancorp to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
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A default or event of default under any Senior Debt of U. S. Bancorp would
not constitute a default or Event of Default in respect of the New Capital
Securities. However, in the event of payment defaults under, or acceleration of,
Senior Debt of U. S. Bancorp, the subordination provisions of the New Indenture
provide that no payments may be made in respect of the New Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on New
Junior Subordinated Debentures would constitute an Event of Default under the
Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The New Capital Securities will represent undivided beneficial ownership
interests in the Trust. The Trust exists for the sole purpose of issuing and
selling the Trust Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a holder
of a New Capital Security and a holder of a New Junior Subordinated Debenture is
that a holder of a New Junior Subordinated Debenture will be entitled to receive
from U. S. Bancorp the principal amount of and interest accrued on New Junior
Subordinated Debentures held, while a holder of New Capital Securities is
entitled to receive Distributions from the Trust (or from U. S. Bancorp under
the New Guarantee) only if and to the extent the Trust has funds available for
the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation
of the Trust, other than any such termination, winding-up or liquidation
involving the distribution of the Junior Subordinated Debentures, after
satisfaction of liabilities to creditors of the Trust as required by applicable
law and subject to the Expense Agreement, the holders of the Trust Securities
will be entitled to receive, out of the assets held by the Trust, the
Liquidation Distribution in cash. See "Description of New
Securities--Description of New Capital Securities--Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of U.
S. Bancorp, the Property Trustee, as holder of the New Junior Subordinated
Debentures, would be a subordinated creditor of U. S. Bancorp, subordinated in
right of payment to all Senior Debt as set forth in the New Indenture, but
entitled to receive payment in full of principal and interest, before any
shareholders of U. S. Bancorp receive payments or distributions. Since U. S.
Bancorp will be the guarantor under the New Guarantee and has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Trust Securities) under the Expense Agreement,
the positions of a holder of New Capital Securities and a holder of New Junior
Subordinated Debentures relative to other creditors and to shareholders of U. S.
Bancorp in the event of liquidation or bankruptcy of U. S. Bancorp are expected
to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income
tax consequences of the purchase, ownership and disposition of Capital
Securities. This summary only addresses the tax consequences to a person that
acquired the Old Capital Securities upon initial issuance at their original
offering price and that is (i) an individual citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state thereof or the District of Columbia or (iii) an
estate or trust the income of which is subject to United States federal income
tax regardless of source (a "United States Person"). This summary does not
address all tax consequences that may be applicable to a United States Person
that is a beneficial owner of Capital Securities, nor does it address the tax
consequences to (i) persons that are not United States Persons, (ii) persons
that may be subject to special treatment under United States federal income tax
law, such as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt organizations
and dealers in securities or currencies, (iii) persons that will hold Capital
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for federal
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income tax purposes, (iv) persons whose functional currency is not the United
States dollar or (v) persons that do not hold Capital Securities as capital
assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Miller, Nash, Wiener, Hager & Carlsen LLP, counsel to
U. S. Bancorp and the Trust ("Tax Counsel"). This summary is based upon the
Internal Revenue Code (the "Code"), Treasury Regulations, rulings of the
Internal Revenue Service (the "IRS") and pronouncements and judicial decisions
now in effect, all of which are subject to change at any time. Such changes may
be applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Capital Securities. In particular, legislation
has been proposed that could adversely affect U. S. Bancorp's ability to deduct
interest on the Junior Subordinated Debentures, which may in turn permit U. S.
Bancorp to cause a redemption of the Capital Securities. See "--Proposed Tax
Legislation." The authorities on which this summary is based are subject to
various interpretations, and it is therefore possible that the federal income
tax treatment of the purchase, ownership and disposition of Capital Securities
may differ from the treatment described below.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for New Capital Securities should
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 should 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.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Old Junior Subordinated Debentures,
Tax Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Old Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, the Old Junior Subordinated Debentures will be
classified for United States federal income tax purposes as indebtedness of U.
S. Bancorp. An opinion of Tax Counsel, however, is not binding on the IRS or the
courts. No rulings have been or are expected to be sought from the IRS with
respect to any of these issues and no assurance can be given that the IRS will
not take contrary positions. Moreover, no assurance can be given that any of the
opinions expressed herein will not be challenged by the IRS or, if challenged,
that such a challenge would not be successful.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Tax Counsel
has rendered its opinion generally to the effect that, under then current law
and assuming full compliance with the terms of the Trust Agreement and the Old
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each beneficial owner of Capital Securities (a "Securityholder")
generally will be considered the owner of an undivided interest in the Junior
Subordinated Debentures, and each holder will be required to include in its
gross income any interest (or original issue discount accrued) with respect to
its allocable share of those Junior Subordinated Debentures.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount ("OID"). U. S.
Bancorp believes that the likelihood of its exercising its option to defer
interest payments is remote. Accordingly, U. S. Bancorp intends to take the
position, based on the advice of Tax Counsel, that the Junior Subordinated
Debentures will not be considered to be issued with OID and, accordingly, a
Securityholder should include in gross income such Securityholder's allocable
share of interest on the Junior Subordinated Debentures.
Under the Regulations, if U. S. Bancorp exercised its option to defer any
payment of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter be treated as OID as long as Junior Subordinated
Debentures remained outstanding. In such event, all of a holder's taxable
interest income with respect to the Junior Subordinated Debentures would be
accounted for as OID on an economic accrual basis regardless of such
Securityholder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income. Consequently, a Securityholder
would be required to include in gross income OID even though U. S. Bancorp would
not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS and it is possible that the IRS could take a position
contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.
Subsequent uses of the term "interest" in this summary include income in
the form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH TO HOLDERS OF CAPITAL
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debentures as described under the caption "Description of New
Securities--Description of New Capital Securities--Liquidation Distribution Upon
Termination" will be non-taxable and will result in the Securityholder receiving
directly its pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such Securityholder had in
its Capital Securities before such distribution. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures, the distribution of Junior Subordinated Debentures to
Securityholders by the Trust would be a taxable event to the Trust and each
Securityholder, and the Securityholder would recognize gain or loss as if the
Securityholder had exchanged its Capital Securities for the Junior Subordinated
Debentures it received upon the liquidation of the Trust. A Securityholder will
include interest in income in respect of Junior Subordinated Debentures received
from the Trust in the manner described above under "--Interest Income and
Original Issue Discount."
Under certain circumstances described herein (see "Description of New
Securities--Description of New Junior Subordinated Debentures--Redemption"), the
Junior Subordinated Debentures may be redeemed by U. S. Bancorp for cash and the
proceeds of such redemption distributed by the Trust to holders in redemption of
their Capital Securities. Under current law, such redemption would, for U.S.
federal income tax purposes, constitute a taxable disposition of the redeemed
Capital Securities, and a holder could recognize gain or loss as if it sold such
redeemed Capital Securities for cash. See "--Sales or Redemption of Capital
Securities."
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SALES OR REDEMPTION OF CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Capital
Securities will recognize gain or loss equal to the difference between its
adjusted tax basis in the Capital Securities and the amount realized on the sale
of such Capital Securities. Assuming that U. S. Bancorp does not exercise its
option to defer payment of interest on the Junior Subordinated Debentures, and
the Capital Securities are not considered issued with OID, a Securityholder's
adjusted tax basis in the Capital Securities generally will be its initial
purchase price. If the Junior Subordinated Debentures are deemed to be issued
with OID as a result of U. S. Bancorp's deferral of any interest payment or
otherwise, a Securityholder's tax basis in the Capital Securities generally will
be its initial purchase price, increased by OID previously includable in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Capital Securities since and
including the date of the first Extension Period. Such gain or loss generally
will be a capital gain or loss (except to the extent any amount realized is
treated as a payment of accrued interest with respect to such holder's pro rata
share of the Junior Subordinated Debentures required to be included in income)
and generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than one year.
If U. S. Bancorp exercises its option to defer any payment of interest on
the Junior Subordinated Debentures, the Capital Securities may trade at a price
that does not accurately reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debentures. In the event of such a
deferral, a Securityholder who disposes of Capital Securities between record
dates for payments of Distributions thereon will be required to include in
income as ordinary income accrued but unpaid interest on the Junior Subordinated
Debentures to the date of disposition as OID and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis, such Securityholder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the Capital Securities
held of record by United States Persons (other than corporations and other
exempt Securityholders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Capital Securities will be reported
to holders on Form 1099 and mailed to holders of the Capital Securities by
January 31 following each calendar year.
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PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the Clinton Administration's Fiscal 1998
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate issuers
a deduction for interest in respect of certain debt obligations, such as the New
Junior Subordinated Debentures, issued on or after the date "of first committee
action," if such debt obligations had a maximum term in excess of 15 years and
are not shown as indebtedness on the issuer's applicable consolidated balance
sheet. The Proposed Legislation has not yet been introduced by any member of the
105th Congress. If other legislation is enacted by Congress and if it gives rise
to a Tax Event, the Trust would be permitted to cause a redemption of the Trust
Securities by electing to redeem the Junior Subordinated Debentures. See
"Description of New Securities--Description of New Capital
Securities--Redemption" and "--Description of New Junior Subordinated
Debentures--Redemption."
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISERS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECT OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
CERTAIN ERISA CONSIDERATIONS
U. S. Bancorp, the obligor with respect to the New Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may be
considered a "party in interest" (within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to many employee
benefit plans ("Plans") that are subject to ERISA. Any purchaser proposing to
acquire New Capital Securities with assets of any Plan should consult with its
counsel. The purchase and/or holding of New Capital Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement arrangements and other plans described in Section 4975(e)(1) of the
Code) and with respect to which U. S. Bancorp, the Property Trustee or any
affiliate is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code, unless such New Capital Securities are
acquired pursuant to and in accordance with an applicable exemption, such as
Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 95-23
(an exemption for certain transactions determined by an in-house manager). In
addition, as described below, a Plan fiduciary considering the acquisition of
New Capital Securities should be aware that the assets of the Trust may be
considered "plan assets" for ERISA purposes. Therefore, a Plan fiduciary should
consider whether the acquisition of New Capital Securities could result in a
delegation of fiduciary authority to the Property Trustee, and, if so, whether
such a delegation of authority is permissible under the Plan's governing
instrument or any investment management agreement with the Plan. In making such
determination, a Plan fiduciary should note that the Property Trustee is a U.S.
bank qualified to be an investment manager (within the meaning of section 3(38)
of ERISA) to which such a delegation of authority generally would be permissible
under ERISA. Further, prior to an Event of Default with respect to the New
Junior Subordinated Debentures, the Property Trustee will have only limited
custodial and ministerial authority with respect to Trust assets.
Under the U.S. Department of Labor regulations defining "plan assets" for
ERISA purposes (the "Plan Assets Regulations"), the assets of the Trust will be
considered plan assets of Plans owning New
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Capital Securities unless the aggregate investment in New Capital Securities by
"benefit plan investors" is not deemed "significant" or the New Capital
Securities qualify as "publicly offered securities" as defined in such
Regulations. For this purpose, equity participation by benefit plan investors
will not be considered "significant" on any date only if, immediately after the
most recent acquisition of New Capital Securities, the aggregate interest in the
New Capital Securities held by benefit plan investors will be less than 25% of
the value of the New Capital Securities. Although it is possible that the equity
participation by benefit plan investors in New Capital Securities on any date
will not be "significant" for purposes of the Plan Assets Regulations, such
result cannot be assured.
The New Capital Securities may qualify as "publicly offered securities"
under the Plan Assets Regulations if at the time of the Exchange Offer they are
also "widely held" and "freely transferable." Under the Regulations, a class of
securities is "widely held" only if it is a class of securities that is owned by
100 or more investors independent of the issuer and of one another. Although it
is possible that at the time of the Exchange Offer the New Capital Securities
will be "widely held," such result cannot be assured. Whether a security is
"freely transferable" for purposes of the Regulations is a factual question to
be determined on the basis of all relevant facts and circumstances. If at the
time of the Exchange Offer the New Capital Securities qualify as "publicly
offered securities," the assets of the Trust should not be "plan assets" with
respect to Plans acquiring New Capital Securities. If at the time of the
Exchange Offer the New Capital Securities do not qualify as "publicly offered
securities," the "plan asset" considerations discussed in the preceding
paragraphs could be applicable in connection with the investment by Plans in the
New Capital Securities.
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. U. S. Bancorp 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 extension under certain limited circumstances described herein) 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 U. S. Bancorp or the Trust, or cause U. S. Bancorp 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 its
address set forth herein under "The Exchange Offer--Exchange Agent and
Information Agent." See "The Exchange Offer--Resales of New Capital Securities."
U. S. Bancorp 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.
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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.
VALIDITY OF NEW SECURITIES
The validity of the New Guarantee and the New Junior Subordinated
Debentures have been passed upon for U. S. Bancorp by Miller, Nash, Wiener,
Hager & Carlsen LLP, Portland, Oregon. Certain matters relating to United States
federal income tax considerations described in this Prospectus have been passed
upon for U. S. Bancorp and the Trust by Miller, Nash, Wiener, Hager & Carlsen
LLP. Certain matters of Delaware law relating to the validity of the New Capital
Securities have been passed upon by Richards, Layton & Finger, Wilmington,
Delaware, special Delaware counsel to U. S. Bancorp and the Trust.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from U. S. Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1996, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which has been incorporated herein by
reference. The consolidated financial statements give retroactive effect to the
1995 merger of U. S. Bancorp and subsidiaries and West One Bancorp and
subsidiaries, which has been accounted for as a pooling of interests. The
consolidated statements of income, shareholders' equity, and cash flows of West
One Bancorp and subsidiaries for the year ended December 31, 1994 (not presented
separately in U. S. Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1996) were audited by Coopers & Lybrand L.L.P., independent
auditors, as stated in its report, which report has been incorporated herein by
reference from U. S. Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1996. Such reports have been incorporated herein by reference in
reliance upon the respective reports of such firms given upon their authority as
experts in accounting and auditing.
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