<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1997
REGISTRATION NOS. 333-29251
333-29251-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
NATIONAL COMMERCE BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TENNESSEE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
6712
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
62-0784645
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
NATIONAL COMMERCE CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
6719
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
62-6319850
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150
(901) 523-3242
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CHARLES NEALE
VICE PRESIDENT AND GENERAL COUNSEL
NATIONAL COMMERCE BANCORPORATION
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150
(901) 523-3242
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------
Copies to:
STEVEN KAPLAN, ESQ.
ARNOLD & PORTER
555 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
NATIONAL COMMERCE CAPITAL TRUST I
OFFER TO EXCHANGE FLOATING RATE CAPITAL TRUST PASS-THROUGH SECURITIES(SM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL
OUTSTANDING
FLOATING RATE CAPITAL TRUST PASS-THROUGH SECURITIES(SM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
NATIONAL COMMERCE BANCORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, NEW YORK
CITY TIME, ON AUGUST 6, 1997, UNLESS EXTENDED.
National Commerce Capital Trust I (the "Trust"), a statutory business trust
created under the laws of the State of Delaware, together with National Commerce
Bancorporation, a Tennessee corporation (the "Company"), as sponsor of 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 $50,000,000 aggregate
liquidation amount of its Floating Rate Capital Trust Pass-through 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 Floating Rate Capital Trust Pass-through Securities, of which
$50,000,000 aggregate liquidation amount is outstanding. Pursuant to the
Exchange Offer, the Company is also exchanging (i) the Old Guarantee for the
Guarantee and (ii) $50,000,000 aggregate principal amount of the Old
Subordinated Debt Securities for $50,000,000 aggregate principal amount of the
New Subordinated Debt Securities. The Guarantee and the Subordinated Debt
Securities have also been registered under the Securities Act. See "Certain
Defined Terms," "Prospectus Summary," "Description of the New Capital
Securities," "Description of the Subordinated Debt Securities" and "Description
of the Guarantee."
The terms of the New Capital Securities are identical in all material
respects to the respective terms of the Old Capital Securities, except that (i)
the New Capital Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital Securities, (ii) the New Capital Securities will not provide for
any increase in the Distribution rate thereon and (iii) the New Subordinated
Debt Securities will not provide for any increase in the interest rate thereon.
See "Description of the New Capital Securities" and "Description of the
Subordinated Debt Securities." The New Capital Securities are being offered for
exchange in order to satisfy certain obligations of the Company and the Trust
under the Registration Rights Agreement.
(continued on next page)
SEE "CERTAIN DEFINED TERMS" ON PAGE 4 FOR A GLOSSARY OF CERTAIN CAPITALIZED
TERMS USED IN THIS PROSPECTUS WITHOUT DEFINITION.
SEE "RISK FACTORS" BEGINNING ON PAGE 15 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE
EXCHANGE OFFER.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The New Capital Securities will be issued, and may be transferred, only in
blocks having a liquidation amount of not less than $100,000 (100 Capital
Securities). Any transfer, sale or other disposition of Capital Securities in a
block having a liquidation amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such Capital Securities for any purpose, including but not
limited to the receipt of distributions on such Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
The date of this Prospectus is July 7, 1997.
LOGO
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(cover page continued)
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, the Company and the Trust believe that the New Capital Securities
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than any holder that is an
"affiliate" of the Company or the Trust as defined under Rule 405 of the
Securities Act), provided that such New Capital Securities are acquired in the
ordinary course of such holders' business and such holders are not engaged in,
and do not intend to engage in, a distribution of such New Capital Securities
and have no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities. However, the staff of the
Commission has not considered the Exchange Offer in the context of a no-action
letter, and there can be no assurance that the staff of the Commission would
make a similar determination with respect to the Exchange Offer as in such other
circumstances. By tendering the Old Capital Securities in exchange for New
Capital Securities, each holder, other than a broker-dealer, will represent to
the Company and the Trust that: (i) it is not an affiliate of the Company or the
Trust (as defined under Rule 405 of the Securities Act); (ii) any New Capital
Securities to be received by it were acquired in the course of its ordinary
business; and (iii) it is not engaged in, and does not intend to engage in, a
distribution of the New Capital Securities and has no arrangement or
understanding to participate in a distribution of the New Capital Securities.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital Securities"
and "The Exchange Offer--Resales of New Capital Securities."
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company and the Trust have agreed that, starting on the date on
which the Exchange Offer is consummated and ending on the close of business one
year after such date, they will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
In that regard, each Participating Broker-Dealer (as defined herein) who
surrenders Old Capital Securities pursuant to the Exchange Offer will be deemed
to have agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from the Company or the Trust of the occurrence of any event or the
discovery of any fact which makes any statement contained or incorporated by
reference in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of the occurrence of
certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Capital Securities (or
the Guarantee or the New Subordinated Debt Securities, as applicable) pursuant
to this Prospectus until the Company or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company or the Trust has given notice that the sale of the
New Capital Securities (or the Guarantee or the New Subordinated Debt
Securities, as applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed the Company and the Trust that
they each currently intend to make a market in the New Capital Securities, they
are not obligated to do so, and any such market making may be discontinued at
any time without notice. Accordingly there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. Neither
the Company nor the Trust currently intends to apply for listing of the New
Capital Securities on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
ii
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(cover page continued)
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration (except
for those rights which terminate upon consummation of the Exchange Offer). Any
Old Capital Securities which remain outstanding after consummation of the
Exchange Offer and the New Capital Securities issued in the Exchange Offer will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration. Following
consummation of the Exchange Offer, the holder of Old Capital Securities will
continue to be subject to all of the existing restrictions upon transfer thereof
and neither the Company nor the Trust will have any further obligation to such
holders (other than under certain limited circumstances) to provide for
registration under the Securities Act of the Old Capital Securities held by
them. To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. See "Risk Factors-- Consequences of a Failure to
Exchange Old Capital Securities."
The New Capital Securities offered hereby represent undivided beneficial
interests in the assets of the Trust. The Company has acquired all the Common
Securities. The Trust exists for the sole purpose of issuing the Trust
Securities, investing the proceeds thereof in the Subordinated Debt Securities
of the Company, effecting the Exchange Offer, and certain other limited
activities described herein.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on August 6, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company and 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 the Company or the Trust and to the terms and provisions of the
Registrations Rights Agreement. The Company has agreed to pay all expenses of
the Exchange Offer. See "The Exchange Offer--Fees and Expenses." Each New
Capital Security will pay cumulative Distributions from the most recent
Distribution Date of the Old Capital Securities surrendered in exchange for such
New Capital Securities or, if no Distributions have been paid on such Old
Capital Securities, from March 27, 1997. Holders of the Old Capital Securities
whose Old Capital Securities are accepted for exchange will not receive
accumulated Distributions on such Old Capital Securities for any period from and
after the last Distribution Payment Date on such Old Capital Securities prior to
the original issue date of the New Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after such Distribution Payment Date or, if no such Distributions have been paid
or duly provided for, from and after March 27, 1997. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of July 7, 1997.
Neither the Company 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.
iii
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(cover page continued)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF SUCH INFORMATION.
iv
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and in accordance therewith files reports and other information with the
Commission. Any reports and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices in
Chicago, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and in
New York, Seven World Trade Center, 13th Floor, New York, New York 10048. Copies
of such material may also be obtained by mail from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants who file electronically with the
Commission. In addition, such reports, proxy statements and other information
can be inspected at NASDAQ, 1735 K Street, N.W., Washington, D.C. 20006, on
whose National Market System certain Securities of the Company are traded.
No separate financial statements of the Trust have been included herein.
The Company and the Trust do not consider that such financial statements would
be material to holders of the Capital Securities because the Trust has no
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Subordinated Debt
Securities, issuing the Trust Securities, effecting the Exchange Offer and
engaging in activities necessary or incidental thereto. All of the Common
Securities of the Trust are owned by the Company and the Company's obligations
described herein under the Indenture, the Declaration (including its obligations
to pay costs, expenses, debts and other obligations of the Trust, other than
with respect to the Trust Securities), the Subordinated Debt Securities and the
Guarantee, taken together, constitute a full and unconditional guarantee on a
subordinated basis by the Company of amounts due on the Capital Securities. See
"The Trust," "Description of the New Capital Securities," "Description of the
Subordinated Debt Securities" and "Description of the Guarantee." In addition,
the Company 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
(together with all exhibits thereto, the "Registration Statement") filed by the
Company 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 for further information with respect to the Company and the New
Capital Securities. Any statements contained herein concerning the provisions of
any document are not necessarily complete, and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
This Prospectus may contain or incorporate by reference statements which
may constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Prospective investors
are cautioned that any such forward-looking statements are not guarantees for
future performance and involve risks and uncertainties, and that actual results
may differ materially from those contemplated by such forward-looking
statements. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include significant fluctuations in interest rates, inflation, economic
recession, significant changes in the federal and state legal and regulatory
environment, significant underperformance in the Company's portfolio of
outstanding loans, and competition in the Company's markets. Neither the Company
nor the Trust undertakes any obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 and the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of any offering of securities hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for all purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein or
in any subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus. As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE COMPANY AT ONE COMMERCE SQUARE, MEMPHIS, TENNESSEE 38150 (TELEPHONE NUMBER
(901) 523-3732), ATTENTION: LON MAGNESS. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JULY 30, 1997, FIVE BUSINESS DAYS
PRIOR TO THE EXPIRATION DATE.
3
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information....................... 2
Incorporation of Certain Documents
by Reference.............................. 3
Certain Defined Terms....................... 4
Summary..................................... 5
Risk Factors................................ 15
National Commerce Bancorporation............ 21
Selected Consolidated Financial Data........ 22
Accounting Treatment........................ 23
Ratio of Earnings to Fixed Charges.......... 23
The Trust................................... 24
The Exchange Offer.......................... 25
Description of the New Capital Securities... 33
Description of the Guarantee................ 46
Description of the Subordinated Debt
Securities................................ 48
Effect of Obligations Under the Subordinated
Debt Securities and the Guarantee......... 59
United States Federal Income Taxation....... 60
Plan of Distribution........................ 64
Benefit Plan Considerations................. 65
Legal Matters............................... 67
Experts..................................... 67
</TABLE>
CERTAIN DEFINED TERMS
As used in this Prospectus, the following terms have the meanings
indicated:
"Capital Securities" means the New Capital Securities and the Old Capital
Securities of the Trust.
"Common Securities" means the common securities of the Trust representing
undivided beneficial interests in the assets of the Trust.
"Declaration" means the Amended and Restated Declaration of Trust, dated as
of March 27, 1997, among the Company, the Trust, The Bank of New York, as
institutional trustee, The Bank of New York (Delaware), as Delaware trustee, and
the three Administrators named therein, pursuant to which Capital Securities
were, and will be, issued.
"Distribution Payment Date" means the 1st day of January, April, July and
October in each year.
"Guarantee" means the Guarantee Agreement, from the Company in favor of The
Bank of New York, as Guarantee Trustee for the benefit of the holders of Capital
Securities, to be issued in exchange for the Old Guarantee.
"Indenture" means the Indenture, dated as of March 27, 1997, between the
Company and The Bank of New York, as Indenture Trustee for the benefit of the
holders of the Subordinated Debt Securities and any indenture supplemental
thereto pursuant to which the Subordinated Debt Securities are to be issued.
"Interest Payment Date" means the 1st day of January, April, July and
October in each year.
"New Capital Securities" means the $50,000,000 aggregate liquidation amount
of Floating Rate Capital Trust Pass-through Securities to be issued by the Trust
in exchange for Old Capital Securities.
"New Subordinated Debt Securities" means the $50,000,000 aggregate
principal amount of Floating Rate Junior Subordinated Debentures due 2027 to be
issued by the Company to the Trust in exchange for $50,000,000 aggregate
principal amount of Old Subordinated Debt Securities.
"Old Capital Securities" means the $50,000,000 aggregate liquidation amount
of Floating Rate Capital Trust Pass-through Securities issued by the Trust on
March 27, 1997 and having a variable per annum Distribution rate of LIBOR plus
0.98%.
"Old Guarantee" means the Guarantee Agreement, dated as of March 27, 1997,
from the Company in favor of The Bank of New York, as Guarantee Trustee for the
benefit of the holders of Old Capital Securities.
"Old Subordinated Debt Securities" means the $51,547,000 aggregate
principal amount of Floating Rate Subordinated Debt Securities issued by the
Company to the Trust on March 27, 1997, and having a variable per annum interest
rate of LIBOR plus 0.98%.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of March 27, 1997, among the Trust, the Company, and Salomon Brothers
Inc, as Representative for Keefe, Bruyette & Woods, Inc. and Salomon Brothers
Inc as Initial Purchasers (the "Initial Purchasers").
"Subordinated Debt Securities" means the New Subordinated Debt Securities
and the Old Subordinated Debt Securities.
"Trust Securities" means the Common Securities and the Capital Securities.
4
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference
herein. Holders of Old Capital Securities should consider carefully the factors
set forth herein under "Risk Factors." As used in this Prospectus, the "Company"
includes National Commerce Bancorporation and its respective predecessors and
subsidiaries, except as the context otherwise may require.
NATIONAL COMMERCE CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to (i) a declaration of trust dated as of March 14, 1997 (the "Initial
Declaration"), and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on March 14, 1997. The Trust's business and affairs are
conducted by its trustees: initially, The Bank of New York, as Institutional
Trustee (as defined herein), and The Bank of New York (Delaware), as Delaware
Trustee (as defined herein). The Trust exists for the exclusive purposes of (i)
issuing the Trust Securities, (ii) investing the gross proceeds from the sale of
the Common Securities and the Capital Securities to acquire the Old Subordinated
Debt Securities, (iii) effecting the Exchange Offer, including exchanging up to
$50,000,000 aggregate principal amount of the Old Subordinated Debt Securities
for up to $50,000,000 aggregate principal amount of the New Subordinated Debt
Securities in the Exchange Offer and (iv) engaging in only those other
activities necessary or incidental thereto. Accordingly, the Subordinated Debt
Securities will be the sole assets of the Trust, and payments under the
Subordinated Debt Securities will be the sole revenues of the Trust. All of the
Common Securities are owned by the Company. The principal place of business of
the Trust is c/o National Commerce Bancorporation, One Commerce Square, Memphis,
Tennessee 38150 (telephone number (901) 523-3242).
NATIONAL COMMERCE BANCORPORATION
National Commerce Bancorporation is a registered bank holding company and
owns National Bank of Commerce, Nashville Bank of Commerce, NBC Bank, FSB
(Knoxville) and NBC Bank, FSB (Belzoni). At present, the Company provides its
financial institutions with financial advice and counsel and performs the
record-keeping functions necessary to comply with accounting and regulatory
requirements. The National Bank of Commerce's wholly-owned computer and
broker-dealer subsidiaries, Commerce General Corporation and NBC Capital Markets
Group, Inc., provide data processing and broker-dealer services, respectively.
The Nashville Bank of Commerce's wholly-owned subsidiary, National Commerce Bank
Services, Inc. ("NCBS"), provides in-store banking services. The Company also
owns Commerce Capital Management, Inc. and Brooks, Montague & Associates, Inc.,
which provide investment advisory services, and Commerce Finance Company, a
consumer finance subsidiary. In 1996, the Company completed the acquisition of
TransPlatinum Service Corp., which provides electronic payment systems and data
processing services to the transportation industry.
As of March 31, 1997, the Company had total consolidated assets of
approximately $4.4 billion, total consolidated deposits of approximately $3.0
billion and total consolidated shareholders' equity of approximately $322
million. Consolidated net income for the year ending December 31, 1996 was
approximately $57.5 million and for the quarter ending March 31, 1997 was
approximately $15.1 million.
Largely through its efforts in supermarket banking, the Company has grown
from $1.2 billion in consolidated assets in 1985 to approximately $4.4 billion
in consolidated assets at March 31, 1997. As of March 31, 1997, the Company
operated 109 banking locations throughout Tennessee, Virginia, North Carolina,
Georgia and Mississippi. These locations included 17 traditional branches and 92
full service branches inside supermarkets and Wal-Mart Supercenters. The Company
believes that the establishment and operation of bank branches in supermarkets
increases the number of customers to which it has access, and reduces its
occupancy, personnel and other expenses. The Company believes that NCBS enables
it to utilize its knowledge of supermarket banking to generate additional fee
income.
5
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Through NCBS, the Company has assisted over 200 financial institution
clients establish over 600 in-store branches across the United States. NCBS, the
nation's leading provider of in-store banking programs, provides a full range of
consulting services including design and construction of the in-store branch,
hiring and staffing guidelines, retail sales training, marketing and promotional
support, and goal-setting and performance measurement systems. NCBS has a fee
based structure with fees paid both up front and multi-year consulting and
training services once the branch is in operation.
The Company is a legal entity separate and distinct from National Bank of
Commerce and the Company's other banking subsidiaries (collectively, the
"Banking Subsidiaries") and affiliates. Because the Company is a bank holding
company, its rights and the rights of its creditors and shareholders, including
the holders of its Subordinated Debt Securities and the Guarantee, to
participate in the assets of any subsidiary upon its liquidation or
recapitalization will be subject to the prior claims of such subsidiary's
creditors except to the extent that the Company may itself be a creditor having
recognized claims against such subsidiary, in which case it will share in such
subsidiary's assets along with other creditors.
There are various legal and regulatory limitations on the extent to which
the Company's Banking Subsidiaries may extend credit, pay dividends or otherwise
supply funds to the Company. The approval of the Office of The Comptroller of
the Currency is required if total dividends declared by a national bank in any
calendar year should exceed net profits for that year combined with its retained
net profits for the preceding two years. Moreover, banks may not pay dividends
in excess of their undivided profits. In determining whether and to what extent
to pay dividends, each Banking Subsidiary must also consider the effect of
dividend payments on applicable risk-based capital and leverage requirements as
well as policy statements of the federal regulatory agencies to the effect that,
generally, banking organizations should pay dividends out of current operating
earnings. The Company's other Banking Subsidiaries, including its state
chartered bank and its federally chartered savings banks, are subject to similar
restrictions under their respective state and federal laws. While the specific
standards vary, the Company's Banking Subsidiaries are generally permitted to
pay dividends only from net profits, and then, only after first deducting losses
and credit write-offs. All of the applicable statutes prohibit the payment of
dividends if such a payment would impair capital. In addition there are numerous
governmental requirements and regulations which affect the activities of the
Company and its bank and non-bank subsidiaries. See the discussion in Part 1,
Item 1 of the Company's Form 10-K for the year ended December 31, 1996 under the
caption "Supervision and Regulation."
The principal executive offices of the Company are located at One Commerce
Square, Memphis, Tennessee 38150 (telephone number (901) 523-3242).
THE EXCHANGE OFFER
The Exchange Offer......... Up to $50,000,000 aggregate liquidation amount of
New Capital Securities are being offered in
exchange for a like aggregate liquidation amount
of Old Capital Securities. Old Capital Securities
may be tendered for exchange in whole or in part
in a liquidation amount of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in
excess thereof. The Company and the 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 August 6, 1997
(such time on such date being hereinafter called
the "Expiration Date") unless the Exchange Offer
is extended by the Company and the Trust (in which
case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer
is extended). See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
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<PAGE> 11
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the Company and
the Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities being
tendered. See "The Exchange Offer--Conditions to
the Exchange Offer." The Company 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--Expiration Date; Extensions; Amendments."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent (as defined herein) in
conformity with certain procedures set forth below
under "The Exchange Offer-- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities..... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See
"The Exchange Offer-- Procedures for Tendering Old
Capital Securities." Letters of Transmittal and
certificates representing Old Capital Securities
should not be sent to the Company or the Trust.
Such documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to the
Exchange Agent. See "The Exchange Offer--Exchange
Agent."
Resales of New Capital
Securities................. Based on interpretations by the staff of the
Commission as set forth in no-action letters
issued to third parties, the Company and the Trust
believe that holders of Old Capital Securities
(other than any holder that is an "affiliate" of
the Company or the Trust as defined under Rule 405
of the Securities Act) who exchange their Old
Capital Securities for New Capital Securities
pursuant to the Exchange Offer may offer such New
Capital Securities for resale, resell such New
Capital Securities and otherwise transfer such New
Capital Securities
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<PAGE> 12
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such New Capital Securities are
acquired in the ordinary course of such holders'
business and such holders are not engaged in, and
do not intend to engage in, a distribution of such
New Capital Securities and have no arrangement or
understanding with any person to participate in
the distribution of such New Capital Securities.
However, the staff of the Commission has not
considered the Exchange Offer in the context of a
no-action letter, and there can be no assurance
that the staff of the Commission would make a
similar determination with respect to the Exchange
Offer. However, any holder of Old Capital
Securities who is an "affiliate" of the Company 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 to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a)
will not be able to rely on the interpretations of
the Staff set forth in the above-mentioned
interpretive letters, (b) will not be permitted or
entitled to tender such Old Capital Securities in
the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a
result of market-making or other trading
activities and exchanges such Old Capital
Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities (other than
certain specified holders) who wishes to exchange
Old Capital Securities for New Capital Securities
in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the
Company or the Trust, (ii) any New Capital
Securities to be received by it are being acquired
in the ordinary course of its business, and (iii)
it is not engaged in, and does not intend to
engage in, a distribution (within the meaning of
the Securities Act) of such New Capital Securities
and has no arrangement or understanding to
participate in a distribution of New Capital
Securities. Each broker-dealer that receives New
Capital Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale
of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based on
the position taken by the Staff in the
interpretive letters referred to above, the
Company and the 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
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<PAGE> 13
requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
distribution with respect to the resale of such
New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Capital Securities received in exchange for Old
Capital Securities where such Old Capital
Securities were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject
to certain provisions set forth in the
Registration Rights Agreement and to the
limitations described below under "The Exchange
Offer--Resales of New Capital Securities," the
Company and the Trust have agreed to allow the
Participating Broker-Dealers to use this
Prospectus in connection with resales of such New
Capital Securities for a period of one year after
the Expiration Date, exclusive of any period when
a stop order is in effect. See "Plan of
Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company or the 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 Bank of New York (the "Exchange
Agent"). The addresses, and telephone and
facsimile numbers of the Exchange Agent are set
forth in "The Exchange Offer--Exchange Agent" and
in the Letter of Transmittal.
United States Federal
Income Taxation, ERISA
Considerations............. Holders of Old Capital Securities should review
the information set forth under "United States
Federal Income Taxation" and "Benefit Plan
Considerations" prior to tendering Old Capital
Securities in the Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered......... Up to $50,000,000 aggregate liquidation amount of
the Trust's Floating Rate Capital Trust
Pass-through Securities which have been registered
under the Securities Act (liquidation amount
$1,000 per Capital Security). The New Capital
Securities will be issued, and the Old Capital
Securities were issued, under the Declaration. The
New Capital Securities and any Old Capital
Securities which remain outstanding after
consummation of the Exchange Offer will constitute
a single series of Capital Securities under the
Declaration and, accordingly, will vote together
as a single class for purposes of determining
whether holders of the requisite percentage in
outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under
the Declaration. See "Description of New Capital
Securities--General." The terms of the New Capital
Securities are identical in all material respects
to the terms of the Old Capital Securities, except
that the New Capital Securities have been
registered under the Securities Act and therefore
are not subject to certain restrictions on
transfer applicable to the Old
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<PAGE> 14
Capital Securities and will not provide for any
increase in the Distribution rate thereon. See
"The Exchange Offer--Purpose and Effect of the
Exchange Offer" and "Description of New Capital
Securities."
Distributions.............. Holders of the New Capital Securities are entitled
to receive cumulative cash distributions at a
variable annual rate equal to LIBOR plus 0.98% on
the liquidation amount of $1,000 per Capital
Security, accruing from the original date of
issuance of the Old Capital Securities, and
(subject to the possible extension of distribution
payment periods described below) will be payable
quarterly, in arrears, on the first day of
January, April, July and October of each year,
commencing July 1, 1997. See "Description of the
New Capital Securities--Distributions."
Option to Extend Interest
Payment Period............. The Company has the right, at any time, subject to
certain conditions, to defer payments of interest
on the Subordinated Debt Securities, for Extension
Periods, each not exceeding 20 consecutive
quarterly periods; provided that no Extension
Period may extend beyond the maturity date of the
Subordinated Debt Securities. As a consequence of
the Company's extension of the interest payment
period on the Subordinated Debt Securities,
distributions on the Capital Securities would be
deferred but interest would continue to accrue
during any such Extension Period to the extent
permitted by law. In the event the Company
exercises its right to extend an interest payment
period, then during any Extension Period, subject
to certain exceptions, (i) the Company shall not
declare or pay any dividend on, make any
distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment
with respect to, any of its capital stock or
rights to acquire such capital stock or make any
guarantee payments (other than payments on the
Guarantee and the Common Securities Guarantee (as
defined herein)) with respect to the foregoing and
(ii) the Company shall not make any payment of
interest on or principal of (or premium, if any,
on), or repay, repurchase or redeem, any debt
securities issued by the Company which rank pari
passu with or junior to the Subordinated Debt
Securities. Upon the termination of any Extension
Period and the payment of all amounts then due,
the Company may commence a new Extension Period,
subject to certain requirements. See "Description
of the Subordinated Debt Securities--Option to
Extend Interest Payment Period." Should an
Extension Period occur with respect to the Capital
Securities, holders of the Capital Securities will
continue to recognize interest income at a
variable annual rate equal to LIBOR plus 0.98%,
compounded quarterly, for United States federal
income tax purposes notwithstanding the deferred
receipt of payments which accrue during the
Extension Period. As a result, such holders will
be required to include such amounts in gross
income for United States federal income tax
purposes in advance of the receipt of cash, and
such holders will not receive the cash from the
Trust related to such income if such holders
dispose of the Capital Securities prior to the
record date for payment of distributions. See
"United States Federal Income Taxation--US
Holders--Original Issue Discount."
Liquidation................ The Company, as the holder of all of the Common
Securities, has the right at any time to dissolve
the Trust (including, without limitation,
10
<PAGE> 15
upon the occurrence of a Tax Event, a Capital
Treatment Event or an Investment Company Event),
subject to certain conditions (including the
receipt of prior approval by the Federal Reserve
if then required under applicable capital
guidelines or policies of the Federal Reserve),
with the result that, after satisfaction of
liabilities to creditors of the Trust (to the
extent not satisfied by the Company), the Company
must cause the Subordinated Debt Securities to be
distributed to the holders of the Trust Securities
on a pro rata basis in accordance with the
respective liquidation amounts thereof, in
liquidation of the Trust. In addition, the Trust
will be dissolved and liquidated under certain
other circumstances. See "Description of the New
Capital Securities--Liquidation Distribution Upon
Dissolution."
Liquidation Amount......... In the event of the voluntary or involuntary
liquidation, dissolution, winding-up or
termination of the Trust, after satisfaction of
liabilities to creditors of the Trust (to the
extent not satisfied by the Company) holders of
the Capital Securities will be entitled to receive
$1,000 per Capital Security plus an amount equal
to accrued and unpaid distributions thereon to the
date of payment, unless the Subordinated Debt
Securities are distributed to holders of the Trust
Securities in exchange therefor. If such
liquidation distribution can be paid only in part
because the Trust has insufficient assets
available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by
the Trust on the Capital Securities shall be paid
on a pro rata basis. The holders of the Common
Securities will be entitled to receive
distributions upon any such liquidation pro rata
with the holders of the Capital Securities, except
that if a Declaration Event of Default has
occurred and is continuing, the Capital Securities
shall have a priority over the Common Securities.
See "Description of the New Capital
Securities--Liquidation Distribution Upon
Dissolution."
Maturity................... Upon the repayment of the Subordinated Debt
Securities, whether at maturity or upon early
redemption as provided in the Indenture, the
proceeds from such repayment will be applied by
the Institutional Trustee to redeem a like amount
of the Trust Securities, upon the terms and
conditions described herein. See "Description of
the New Capital Securities--Redemption."
Optional Redemption........ The Company has the right to redeem the
Subordinated Debt Securities, in whole or in part,
at any time or from time to time, on or after
April 1, 2007, at par, together with accrued and
unpaid interest to the date of redemption, subject
to the Company having received prior approval from
the Federal Reserve if then required under
applicable capital guidelines or policies of the
Federal Reserve. See "Description of the
Subordinated Debt Securities--Redemption." Upon
the redemption of the Subordinated Debt
Securities, the proceeds of such redemption will
be applied by the Institutional Trustee to redeem
a like amount of the Trust Securities on a pro
rata basis at the applicable Redemption Price,
upon the terms and conditions described herein.
See "Description of the New Capital
Securities--Redemption."
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<PAGE> 16
Tax Event, Capital
Treatment Event and
Investment Company Event
Redemption................. If at any time a Tax Event, a Capital Treatment
Event or an Investment Company Event should occur
and be continuing, the Company may, within 90 days
of the occurrence of such Tax Event, Capital
Treatment Event or Investment Company Event,
redeem the Subordinated Debt Securities in whole
or in part in certain limited circumstances
described herein at a redemption price equal to
par plus accrued and unpaid interest to the
redemption date, subject to the Company having
received prior approval from the Federal Reserve
if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon the redemption of the Subordinated Debt
Securities, the proceeds of such redemption will
be applied by the Institutional Trustee to redeem
a like amount of the Trust Securities on a pro
rata basis, upon the terms and conditions
described herein. See "Description of the New
Capital Securities--Redemption."
The Guarantee.............. The payment of distributions out of moneys held by
the Trust, payments on liquidation of the Trust
and payment upon the redemption of the Capital
Securities are guaranteed by the Company as
described herein under "Description of the
Guarantee." The Guarantee covers payments of
distributions and other payments on the Capital
Securities only if and to the extent that the
Trust has funds available therefor, which funds
will not be available except to the extent the
Company has made payments of interest or principal
or other payments on the Subordinated Debt
Securities. The Guarantee, when taken together
with the Company's obligations under the
Subordinated Debt Securities, the Declaration and
the Indenture (including its obligations to pay
costs, expenses, debts and other liabilities of
the Trust (other than with respect to the Trust
Securities)), provides a full and unconditional
guarantee on a subordinated basis by the Company
of amounts due on the Capital Securities. The
Company has also agreed separately to guarantee
the obligations of the Trust with respect to the
Common Securities as described herein under
"Description of the Guarantee--General."
Ranking.................... The Common Securities rank pari passu with, and
payments thereon will be made pro rata with, the
Capital Securities, except that upon the
occurrence and continuation of a Declaration Event
of Default, the rights of the holders of the
Common Securities to receive payment of
distributions and payments upon liquidation,
redemption or otherwise will be subordinated to
the rights of the holders of the Capital
Securities. See "Description of the New Capital
Securities--General." The Subordinated Debt
Securities are unsecured and subordinate and
junior in right of payment to the extent and in
the manner set forth in the Indenture to all
Senior Indebtedness of the Company. See
"Description of the Subordinated Debt Securities."
The Guarantee will constitute an unsecured
obligation of the Company and will rank
subordinate and junior in right of payment to the
extent and in the manner set forth in the
Guarantee to all Senior Indebtedness of the
Company. The Company's obligations under the
Guarantee and the Subordinated Debt Securities are
also effectively subordinate to claims of
creditors of the Company's subsidiaries. See
"Description of the Guarantee."
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<PAGE> 17
Voting Rights.............. Holders of the Capital Securities have limited
voting rights relating generally to the
modification of the Capital Securities and the
Guarantee and the exercise of the Trust's rights
as the holder of the Subordinated Debt Securities.
Holders of the Capital Securities are not entitled
to appoint, remove or replace the Institutional
Trustee or the Delaware Trustee except upon the
occurrence of an Indenture Event of Default (as
defined herein) described herein. See "Description
of the New Capital Securities--Voting Rights" and
"--Removal of the Issuer Trustees; Appointment of
Successors."
Rating..................... The New Capital Securities are expected to be
rated "BBB-" by Standard & Poor's Ratings Services
("S&P") and "baa1" by Moody's Investors Service,
Inc. ("Moody's"). 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 Old Capital Securities were, and the New
Capital Securities will be, issued and may be
transferred only in blocks having a liquidation
amount of not less than $100,000 (100 Old Capital
Securities or New Capital Securities, as the case
may be). Any such transfer of the Old Capital
Securities or the New Capital Securities in a
block having a liquidation amount of less than
$100,000 shall be deemed to be void and of no
legal effect whatsoever. See "Description of the
New Capital Securities -- Restrictions on
Transfer."
Subordinated Debt
Securities................. The Trust invested the proceeds from the issuance
of the Old Capital Securities and Common
Securities in an equivalent amount of Old
Subordinated Debt Securities of the Company, up to
$50,000,000 aggregate principal amount of which
will be exchanged for New Subordinated Debt
Securities. The Subordinated Debt Securities
mature on April 1, 2027. The Subordinated Debt
Securities rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company.
In addition, the Company's obligations under the
Subordinated Debt Securities are effectively
subordinated to all existing and future
liabilities and obligations of its subsidiaries.
See "Risk Factors--Ranking of Subordinate
Obligations Under the Guarantee and the
Subordinated Debt Securities", "Risk
Factors--Status of Company as Holding Company" and
"Description of the Subordinated Debt Securities--
Subordination."
Benefit Plan
Considerations............. Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Benefit
Plan Considerations."
Form of Capital
Securities................. The Old Capital Securities initially sold to
"qualified institutional buyers" (as defined in
Rule 144A under the Securities Act) in reliance on
Rule 144A under the Securities Act are represented
by a global certificate or certificates registered
in the name of Cede & Co., as nominee for DTC. The
Old Capital Securities initially sold to
institutional "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) were issued only in fully
registered, certificated form. Beneficial
interests in the New Capital Securities
represented by a global certificate or
certificates will be evidenced by, and transfers
thereof will be effected only through, records
maintained
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<PAGE> 18
by the participants in DTC. Except in the limited
circumstances described herein, the New Capital
Securities in certificated form will not be issued
in exchange for the global certificate or
certificates. See "Description of the New Capital
Securities--Book-Entry Only Issuance--The
Depository Trust Company."
Trading Price.............. The New Capital Securities are expected to trade
in the secondary market at a price per New Capital
Security plus accrued and unpaid distributions, if
any, to the date of settlement.
For additional information with respect to the New Capital Securities, see
"Description of the New Capital Securities," "Description of the Subordinated
Debt Securities," "Description of the Guarantee" and "United States Federal
Income Taxation."
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors."
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<PAGE> 19
RISK FACTORS
Prior to deciding whether to participate in the Exchange Offer, holders of
Old Capital Securities should carefully review the information contained
elsewhere, or incorporated by reference, in this Prospectus and should
particularly consider the following matters:
ABSENCE OF PUBLIC TRADING MARKET
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Company or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Capital Securities may
be transferred by the holders thereof only in blocks having a liquidation amount
of not less than $100,000 (100 Capital Securities). The Company and the Trust
have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
with respect to the New Capital Securities may be discontinued at any time
without notice. In addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other market will develop for the New Capital Securities or the Old
Capital Securities or as to the liquidity of or the trading market for the New
Capital Securities or the Old Capital Securities. If an active public market
does not develop, the market price and liquidity of the New Capital Securities
may be adversely affected.
If a public trading market for the New Capital Securities develops, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED DEBT
SECURITIES
The obligations of the Company under the Guarantee and the Subordinated
Debt Securities are subordinate and junior in right of payment to all present
and future Senior Indebtedness of the Company. No payment of principal of
(including redemption payments, if any) or interest on the Subordinated Debt
Securities may be made if (i) any Senior Indebtedness of the Company is not paid
when due and any applicable grace period with respect to such default has ended
with such default not having been cured or waived or ceasing to exist or (ii)
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default. As of March 31, 1997, the Company had $0 of Senior
Indebtedness. There are no terms in the Capital Securities, the Subordinated
Debt Securities or the Guarantee that limit the ability of the Company or its
subsidiaries to incur additional indebtedness, liabilities and obligations,
including such indebtedness that ranks senior to the Subordinated Debt
Securities and the Guarantee. See "Description of the Guarantee--Status of the
Guarantee" and "Description of the Subordinated Debt Securities."
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<PAGE> 20
Because the Company is a bank holding company, the Subordinated Debt
Securities and the Guarantee are effectively subordinated to all existing and
future liabilities, including trade payables, of the Company's subsidiaries,
except to the extent that the Company is a creditor of the subsidiaries
recognized as such. There are also various legal limitations on the extent to
which the Company's Banking Subsidiaries may extend credit, pay dividends or
otherwise supply funds to the Company or various of its affiliates.
GUARANTEE COVERS DISTRIBUTIONS AND OTHER PAYMENTS ONLY TO THE EXTENT THE TRUST
HAS AVAILABLE FUNDS; RELATED REMEDIES
The terms of the Guarantee will be those set forth in the Guarantee and
those made part of the Guarantee by the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), under which The Bank of New York will act as
trustee (the "Guarantee Trustee"). The Guarantee will be qualified under the
Trust Indenture Act upon the effectiveness of the Registration Statement. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Capital Securities.
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by the Trust: (i) any accrued and
unpaid distributions required to be paid on the Capital Securities, to the
extent the Trust has funds available therefor, (ii) the Redemption Price,
including all accrued and unpaid distributions to the date of redemption, with
respect to the Capital Securities called for redemption by the Trust, to the
extent the Trust has funds available therefor, and (iii) upon a voluntary or
involuntary liquidation, dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of the Subordinated Debt
Securities to the holders of the Capital Securities in exchange therefor), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Capital Securities to the date of the payment, to the
extent the Trust has funds available therefor and (b) the amount of assets of
the Trust remaining available for distribution to holders of the Capital
Securities in liquidation of the Trust. The Guarantee is subordinated as
described under "--Ranking of Subordinate Obligations Under the Guarantee and
the Subordinated Debt Securities." The holders of a majority in liquidation
amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. A holder of record of the Capital
Securities may institute a legal proceeding directly against the Company to
enforce the Guarantee Trustee's rights without first instituting any legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Company were to default on its obligation to pay amounts payable
on the Subordinated Debt Securities, the Trust would lack available funds for
the payment of distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, each holder of the Capital Securities would rely on the enforcement (i)
by the Institutional Trustee of its rights as registered holder of the
Subordinated Debt Securities against the Company pursuant to the terms of the
Subordinated Debt Securities or (ii) by such holder of the Capital Securities of
its right against the Company to enforce payments of principal and interest on
the Subordinated Debt Securities having an aggregate principal amount equal to
the aggregate liquidation amount of Capital Securities of such holder. See
"Description of the New Capital Securities," "Description of the Guarantee" and
"Description of the Subordinated Debt Securities." The Declaration provides that
each holder of the Capital Securities, by acceptance thereof, agrees to the
provisions of the Guarantee and the Indenture, including the subordination
provisions thereof.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE CAPITAL SECURITIES
If a Declaration Event of Default with respect to the Trust occurs and is
continuing, then the holders of the Capital Securities would, except as provided
below, rely on the enforcement by the Institutional Trustee of its rights as
holder of the Subordinated Debt Securities against the Company. The holders of a
majority in liquidation amount of the Capital Securities will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee with respect to the Capital Securities or
to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as
16
<PAGE> 21
holder of the Subordinated Debt Securities. If the Institutional Trustee fails
to enforce its rights under the Subordinated Debt Securities after the holders
of a majority in liquidation amount of the Capital Securities have so directed
the Institutional Trustee, a holder of record of the Capital Securities may, to
the fullest extent permitted by law, institute a legal proceeding directly
against the Company to enforce the rights of the Institutional Trustee under the
Subordinated Debt Securities, without first instituting any legal proceeding
against such Institutional Trustee or any other person.
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Subordinated Debt Securities on the
respective dates such interest or principal is payable, after giving effect to
any Extension Period (or in the case of redemption, on the redemption date),
then a holder of record of the Capital Securities may institute directly against
the Company a proceeding for enforcement of payment, on or after the respective
due dates specified in the Subordinated Debt Securities, to such holder directly
of the principal of or interest on the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will be subrogated to the rights of such holder of
the Capital Securities under the Declaration to the extent of any payment made
by the Company to such holder of the Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as a
Declaration Event of Default has occurred and is continuing. The holders of the
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debt Securities. See "Description
of the New Capital Securities--Declaration Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON THE CAPITAL SECURITIES
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period, at
any time and from time to time, subject to certain conditions, for Extension
Periods, each not exceeding 20 consecutive quarterly periods, provided that no
Extension Period may extend beyond the stated maturity of the Subordinated Debt
Securities. During each such Extension Period, quarterly distributions on the
Capital Securities would also be deferred (but would continue to accrue at a
variable annual rate equal to LIBOR plus 0.98%, despite such deferral, with
interest thereon compounded quarterly to the fullest extent permitted by law) by
the Trust. In the event that the Company exercises this right to defer interest
payments on the Subordinated Debt Securities, and such deferral is continuing,
or if there shall have occurred and be continuing any Indenture Event of Default
or if the Company shall be in default with respect to the payment of its
obligations under the Guarantee, (a) the Company shall not declare or pay
dividends on, or make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock (other than (i) purchases or acquisitions of shares of any such
capital stock or rights to acquire such capital stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans,
(ii) as a result of a reclassification of the Company's capital stock or rights
to acquire such capital stock or the exchange or conversion of one class or
series of capital stock of the Company or rights to acquire such capital stock
for another class or series of the Company's capital stock or rights to acquire
such capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
and distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make guarantee payments (other than payments under the
Guarantee and the Common Securities Guarantee) in respect of the foregoing and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Subordinated Debt Securities. Prior
to the termination of any such Extension Period, the Company may further extend
the interest payment period, provided that each such Extension Period, together
with all such previous and further extensions thereof, may not exceed 20
consecutive quarterly periods or extend beyond the
17
<PAGE> 22
maturity of the Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the terms set forth herein. See
"Description of the New Capital Securities" and "Description of the Subordinated
Debt Securities."
During each Extension Period, if any, each holder of the Capital Securities
will continue to accrue income (as original issue discount ("OID")) in respect
of the deferred interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed. In
such event, each holder of the Capital Securities will recognize income for
United States federal income tax purposes in advance of the receipt of cash, and
will not receive cash related to such income from the Trust if such holder
disposes of its Capital Securities prior to the record date for payment of such
deferred interest. See "United States Federal Income Taxation--US
Holders--Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest on the Subordinated Debt Securities. However, should the
Company determine to exercise such right in the future, the market price of the
Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of the Company's right to
defer interest payments, the market price of the Capital Securities (which
represent undivided beneficial interests in the Subordinated Debt Securities)
may be more volatile than the market price of other similar securities where the
issuer does not have such right to defer interest payments.
PROPOSED TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. One of the proposals therein (the "President's Proposal")
would generally deny corporate issuers a deduction for interest on certain debt
obligations that have a maximum term in excess of 15 years and are not shown as
indebtedness on the separate balance sheet of the issuer, or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. As drafted, the
President's Proposal would not apply retroactively to the Subordinated Debt
Securities. However, if the President's Proposal (or similar legislation) is
enacted with retroactive effect with respect to the Subordinated Debt
Securities, the Company would not be entitled to an interest deduction with
respect to the Subordinated Debt Securities.
Fiscal year 1998 budget reconciliation legislation is currently pending
before the United States Congress. To date, neither the budget reconciliation
bill being considered by the House of Representatives nor the budget
reconciliation bill being considered by the Senate contains a provision
substantially similar to the President's Proposal.
There can be no assurance that the President's Proposal will not be
enacted, and that, if enacted, it will not apply retroactively to the
Subordinated Debt Securities or that other legislation enacted after the date
hereof will not otherwise adversely affect the ability of the Company to deduct
the interest payable on the Subordinated Debt Securities. Accordingly, there can
be no assurance that a Tax Event will not occur. See "Description of the New
Capital Securities--Redemption."
REDEMPTION; DISTRIBUTION
The Company, as the holder of all of the outstanding Common Securities, has
the right at any time (including, without limitation, upon the occurrence of a
Tax Event, a Capital Treatment Event or an Investment Company Event) to dissolve
the Trust, and, after satisfaction of liabilities to creditors of the Trust (to
the extent not paid by the Company), cause the Subordinated Debt Securities to
be distributed to the holders of the Trust Securities on a pro rata basis in
accordance with the respective liquidation amounts thereof, in liquidation of
the Trust. See "Description of the New Capital Securities--Liquidation
Distribution Upon Dissolution." In certain circumstances described herein, the
Company will have the right to redeem the Subordinated Debt Securities, in whole
or in part, in which event the Trust will redeem the Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt
18
<PAGE> 23
Securities redeemed by the Company on a pro rata basis. The exercise of such
rights is subject to the Company having received prior approval from the Federal
Reserve, if then required under applicable capital guidelines or policies of the
Federal Reserve. See "Description of the New Capital Securities--Redemption" and
"--Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law, a distribution of the
Subordinated Debt Securities upon the dissolution of the Trust generally would
not be a taxable event to holders of the Capital Securities. However, a
dissolution of the Trust in which holders of the Capital Securities receive cash
would be a taxable event to such holders. See "United States Federal Income
Taxation--US Holders--Receipt of Subordinated Debt Securities or Cash Upon
Liquidation of the Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Subordinated Debt Securities that a holder of the Capital Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price paid to purchase such Capital Securities. Because the ability of the
Trust to pay amounts due on the Capital Securities is wholly dependent upon the
Company's making payments on the Subordinated Debt Securities as and when
required, and because holders of the Capital Securities may receive the
Subordinated Debt Securities upon dissolution and liquidation of the Trust,
prospective purchasers of the Capital Securities are also making an investment
decision with regard to the Subordinated Debt Securities and should carefully
review all the information regarding the Subordinated Debt Securities contained
herein and evaluate the credit risk of the Company. See "Description of the New
Capital Securities" and "Description of the Subordinated Debt Securities."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving the Company that may adversely affect such holders. See "Description
of the Subordinated Debt Securities."
LIMITED VOTING RIGHTS
Holders of the Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee,
mergers and consolidations of the Trust and the exercise of the Trust's rights
as the holder of the Subordinated Debt Securities. Holders of the Capital
Securities will not be entitled to appoint, remove or replace the Institutional
Trustee or the Delaware Trustee except upon the occurrence of an Indenture Event
of Default described herein. The Institutional Trustee and the holders of a
majority of the Common Securities may amend the Declaration without the consent
of the holders of the Capital Securities to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust and
will not be required to be registered as an investment company under the 1940
Act (as defined herein), even if such action adversely affects the interests of
such holders. See "Description of the New Capital Securities--Voting Rights" and
"--Removal of the Issuer Trustees; Appointment of Successors."
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
19
<PAGE> 24
to have such Old Capital Securities registered under the Securities Act or to
any similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company 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. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Declaration and, accordingly, will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration. See
"Description of the New Capital Securities--General." If, under certain
circumstances set forth in the Registration Rights Agreement, the Exchange Offer
is not consummated on or prior to the 210th day following the date of original
issuance of the Old Subordinated Debt Securities and the Old Capital Securities,
interest will accrue (in addition to the stated interest thereon) from and
including the next day following such 210-day period. Such additional interest
(the "Special Payment") will be payable in cash quarterly in arrears on each
Distribution Payment Date, at a rate per annum equal to 0.25% of the principal
amount or liquidation amount, as applicable, of the Old Subordinated Debt
Securities and the Old Capital Securities. The aggregate amount of Special
Payment payable pursuant to the above provisions will in no event exceed 0.25%
per annum of the principal amount or the liquidation amount, as applicable, of
the Old Subordinated Debt Securities and the Old Capital Securities. Following
consummation of the Exchange Offer, the Old Capital Securities will not be
entitled to any increase in the Distribution rate thereon. The New Capital
Securities will not be entitled to any such increase in the interest rate
thereon. See "The Exchange Offer--Purpose and Effect of the Exchange Offer."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of the Old Capital Securities desiring to tender
such Old Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Trust is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
20
<PAGE> 25
NATIONAL COMMERCE BANCORPORATION
National Commerce Bancorporation is a registered bank holding company and
owns National Bank of Commerce, Nashville Bank of Commerce, NBC Bank, FSB
(Knoxville) and NBC Bank, FSB (Belzoni). At present, the Company provides its
financial institutions with financial advice and counsel and performs the
record-keeping functions necessary to comply with accounting and regulatory
requirements. The National Bank of Commerce's wholly-owned computer and
broker-dealer subsidiaries, Commerce General Corporation and NBC Capital Markets
Group, Inc., provide data processing and broker-dealer services, respectively.
The Nashville Bank of Commerce's wholly-owned subsidiary, NCBS, provides
in-store banking services. The Company also owns Commerce Capital Management,
Inc. and Brooks, Montague & Associates, Inc., which provide investment advisory
services, and Commerce Finance Company, a consumer finance subsidiary. In 1996,
the Company completed the acquisition of TransPlatinum Service Corp., which
provides electronic payment systems and data processing services to the
transportation industry.
As of March 31, 1997, the Company had total consolidated assets of
approximately $4.4 billion, total consolidated deposits of approximately $3.0
billion and total consolidated shareholders' equity of approximately $322
million. Consolidated net income for the year ending December 31, 1996 was
approximately $57.5 million and for the quarter ending March 31, 1997 was
approximately $15.1 million.
Largely through its efforts in supermarket banking, the Company has grown
from $1.2 billion in consolidated assets in 1985 to approximately $4.4 billion
in consolidated assets at March 31, 1997. As of March 31, 1997, the Company
operated 109 banking locations throughout Tennessee, Virginia, North Carolina,
Georgia and Mississippi. These locations included 17 traditional branches and 92
full service branches inside supermarkets and Wal-Mart Supercenters. The Company
believes that the establishment and operation of bank branches in supermarkets
increases the number of customers to which it has access, and reduces its
occupancy, personnel and other expenses. The Company believes that NCBS enables
it to utilize its knowledge of supermarket banking to generate additional fee
income.
Through NCBS, the Company has assisted over 200 financial institution
clients establish over 600 in-store branches across the United States. NCBS, the
nation's leading provider of in-store banking programs, provides a full range of
consulting services including design and construction of the in-store branch,
hiring and staffing guidelines, retail sales training, marketing and promotional
support, and goal-setting and performance measurement systems. NCBS has a fee
based structure with fees paid both up front and multi-year consulting and
training services once the branch is in operation.
21
<PAGE> 26
NATIONAL COMMERCE BANCORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data contained in the following table
is qualified in its entirety by, and should be read in conjunction with, the
Company's consolidated financial statements, including the notes thereto, and
other detailed financial information included in the documents incorporated by
reference in this Prospectus. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income..... $ 79,337 $ 67,250 $ 286,567 $ 246,465 $ 195,120 $ 162,690 $ 160,317
Total interest expense.... 41,480 34,919 151,101 126,440 85,099 62,297 67,698
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest
income:............. 37,857 32,331 135,466 120,025 110,021 100,393 92,619
Provision for loan
losses.................. 3,454 2,842 14,134 9,750 7,077 8,392 12,543
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan
losses.................. 34,403 29,489 121,332 110,275 102,944 92,001 80,076
Total other income........ 17,595 14,956 70,929 53,868 49,940 52,289 46,519
Total other expenses...... 28,954 24,421 105,169 91,830 87,574 86,082 76,217
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................... 23,044 20,024 87,092 72,313 65,310 58,208 50,378
Income taxes.............. 7,929 6,748 29,579 23,278 20,968 18,802 16,385
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............ $ 15,115 $ 13,276 $ 57,513 $ 49,035 $ 44,342 $ 39,406 $ 33,993
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Total cash and cash
equivalents............. $ 206,232 $ 179,579 $ 195,902 $ 387,755 $ 166,433 $ 120,396 $ 325,468
Available-for-sale
securities.............. 724,847 826,984 700,775 516,623 872,379 954,788 (1)
Held-to-maturity
securities.............. 886,277 572,420 817,124 762,023 283,906 17,408 (1)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total securities........ 1,611,124 1,399,404 1,517,899 1,278,646 1,156,285 972,196 676,719
Trading account
securities.............. 45,411 19,763 31,812 20,159 13,507 63,124 36,283
Loans, net of unearned
discounts............... 2,431,322 1,983,881 2,347,973 1,931,213 1,592,806 1,395,830 1,200,603
Less allowance for loan
losses................ 36,739 30,224 35,514 29,010 24,310 21,467 17,356
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net loans............. 2,394,583 1,953,657 2,312,459 1,902,203 1,568,496 1,374,363 1,183,247
Premises and equipment,
net..................... 22,369 18,963 21,799 18,382 17,729 15,388 12,931
Broker/dealer customer
receivables............. 24,808 9,412 11,699 13,444 1,130 23,645 1,142
Other assets.............. 124,635 82,594 108,839 74,453 82,229 51,655 47,752
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets............ $4,429,162 $3,663,372 $4,200,409 $3,695,042 $3,005,809 $2,620,767 $2,283,542
========== ========== ========== ========== ========== ========== ==========
Total deposits.......... $2,966,508 $2,556,362 $2,976,430 $2,574,770 $2,154,390 $1,919,641 $1,771,170
Short-term borrowings and
other liabilities....... 504,769 396,427 358,476 444,413 299,076 289,652 236,241
Federal Home Loan Bank
Advances................ 429,778 405,513 396,109 372,799 321,541 170,025 71,099
Long-term debt............ 205,986 6,381 156,065 6,381 6,383 6,372 6,372
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities....... 4,107,041 3,364,683 3,887,080 3,398,363 2,781,390 2,385,690 2,084,882
Total shareholders'
equity.................. 322,121 298,689 313,329 296,679 224,419 235,077 198,660
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
shareholders'
equity................ $4,429,162 $3,663,372 $4,200,409 $3,695,042 $3,005,809 $2,620,767 $2,283,542
========== ========== ========== ========== ========== ========== ==========
SELECTED PERFORMANCE RATIOS:
Return on assets.......... 1.44% 1.47% 1.51% 1.53% 1.56% 1.65% 1.59%
Return on equity.......... 19.02 18.14 19.44 18.00 18.48 18.68 18.81
Efficiency ratio.......... 49.87 50.25 49.72 51.19 52.69 54.63 54.08
</TABLE>
22
<PAGE> 27
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED ASSET QUALITY RATIOS:
Net charge-offs to average
loans................... 0.430% 0.333% 0.352% 0.294% 0.281% 0.340% 0.760%
Non-performing assets to
loans and real estate
owned................... 0.000 0.000 0.000 0.000 0.004 0.122 0.861
Accruing loans 90 days
delinquent as a
percentage of loans..... 0.182 0.185 0.148 0.168 0.153 0.148 0.155
Loss reserve to loans..... 1.51 1.52 1.51 1.50 1.53 1.54 1.45
CAPITAL RATIOS:
Total capital to
risk-weighted assets.... 13.91% 13.25% 12.30% 13.52% 14.87% 15.02% 14.59%
Tier 1 capital to
risk-weighted assets.... 12.66 12.01 11.05 12.30 13.62 13.77 13.41
Tier 1 capital to total
assets (leverage
ratio).................. 8.33 8.00 7.33 7.91 8.56 8.62 8.70
Average equity to
assets.................. 7.57 8.26 7.76 8.48 8.43 8.84 8.46
</TABLE>
- ---------------
(1) The Company was not required to differentiate between securities
available-for-sale and securities held-to-maturity prior to January 1, 1993.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
wholly-owned subsidiary of the Company and, accordingly, the accounts of the
Trust will be included in the consolidated financial statements of the Company.
The Capital Securities will be presented in the consolidated balance sheet of
the Company as a separate line item directly above shareholders' equity under
the caption "Company-obligated mandatorily redeemable Capital Trust Pass-through
Securities of Subsidiary Trust holding solely a Company-Guaranteed Related
Subordinated Debt" and appropriate disclosures about the Capital Securities, the
Guarantee and the Subordinated Debt Securities will be included in the notes to
the consolidated financial statements. For financial reporting purposes, the
Company will record distributions payable on the Capital Securities as an
expense in its consolidated statements of income.
RATIO OF EARNINGS TO FIXED CHARGES
The following unaudited table presents the consolidated ratio of earnings
to fixed charges of the Company. The consolidated ratio of earnings to fixed
charges has been computed by dividing income before income taxes, the cumulative
effect of changes in accounting principles and fixed charges by fixed charges.
Fixed charges represent all interest expense (ratios are presented both
excluding and including interest on deposits), amortization of notes and
debentures expense and the portion of net rental expense which is deemed to be
equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on notes and
23
<PAGE> 28
debentures, federal funds purchased and securities sold under agreements to
repurchase, mortgages, commercial paper and other funds borrowed:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
31, YEAR ENDED DECEMBER 31,
-------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits........ 5.18x 5.39x 5.33x 6.37x 6.44x 8.55x 11.28x
Including Interest on Deposits........ 1.55x 1.57x 1.57x 1.56x 1.75x 1.91x 1.73x
</TABLE>
There were no shares of preferred stock outstanding during any of the
periods above indicated.
THE TRUST
The Trust is a statutory business trust created under Delaware law pursuant
to (i) the Declaration and (ii) the filing of a certificate of trust for the
Trust with the Delaware Secretary of State on March 14, 1997. The Trust's
business and affairs are conducted by its trustees. Pursuant to the Declaration,
one trustee of the Trust maintains its principal place of business in the State
of Delaware (the "Delaware Trustee") and one trustee is a financial institution
that is unaffiliated with the Company and is eligible and act as institutional
trustee, as indenture trustee pursuant to the terms of the Indenture and as
guarantee trustee pursuant to the terms of the Guarantee (the "Institutional
Trustee" and together with the Delaware Trustee, the "Issuer Trustees"). The
Bank of New York is acting as the Institutional Trustee and The Bank of New York
(Delaware) is acting as the Delaware Trustee. In addition, three individuals who
are employees or officers of or affiliated with the holder of the majority of
the Common Securities serve as administrators with respect to the Trust (the
"Administrators"). The Administrators were selected by the holders of a majority
of the Common Securities. See "Description of the New Capital
Securities--Miscellaneous." The Trust exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of the Trust, (ii) investing the gross proceeds of such Trust Securities
in the Old Subordinated Debt Securities, (iii) effecting the Exchange Offer,
including exchanging up to $50,000,000 aggregate principal amount of the Old
Subordinated Debt Securities for up to $50,000,000 aggregate principal amount of
the New Subordinated Debt Securities and (iv) engaging in only those other
activities necessary or incidental thereto. All of the Common Securities of the
Trust are directly owned by the Company. The Common Securities of the Trust rank
pari passu, and payments will be made thereon on a pro rata basis, with the
Capital Securities of the Trust, except that upon the occurrence and
continuation of a Declaration Event of Default, the rights of the holders of the
Common Securities to payment from the Trust in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Capital Securities. The Company acquired the Common
Securities in an aggregate liquidation amount equal to approximately 3% of the
total capital of the Trust. The Trust has a term of approximately 55 years, but
may earlier dissolve as provided in the Declaration. The Company, as the holder
of all of the outstanding Common Securities, has the right at any time to
dissolve the Trust (including, without limitation, upon the occurrence of a Tax
Event, a Capital Treatment Event or an Investment Company Event) and, after
satisfaction of liabilities to creditors of the Trust, cause the Subordinated
Debt Securities to be distributed to the holders of the Trust Securities on a
pro rata basis in accordance with the respective liquidation amounts thereof, in
liquidation of the Trust.
The Institutional Trustee holds title to the Subordinated Debt Securities
for the benefit of the holders of the Trust Securities and has the power to
exercise all rights, powers and privileges under the Indenture as the holder of
the Subordinated Debt Securities. In addition, the Institutional Trustee
maintains exclusive control of a separate, segregated, non-interest bearing
trust account (the "Property Account") to hold all payments made in respect of
the Subordinated Debt Securities for the benefit of the holders of the Trust
Securities issued by the Trust. The Institutional Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of record of the Trust Securities out of funds from the Property
Account. Holders of the Capital Securities are not entitled to appoint, remove
or replace the Institutional Trustee or the Delaware Trustee except upon the
occurrence of an Indenture Event of Default.
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See "Description of the New Capital Securities--Voting Rights" and "--Removal of
the Issuer Trustees; Appointment of Successors." The Company, as borrower under
the Indenture, has agreed to pay all costs, expenses, debts and other
obligations related to the Trust (other than in respect of the Trust Securities)
and the offering of the New Capital Securities. See "Description of the
Subordinated Debt Securities-- Miscellaneous." The rights of the holders of the
Capital Securities of the Trust, including economic rights, rights to
information and voting rights, are set forth in the Declaration, the Delaware
Business Trust Act, as amended (the "Trust Act"), and the Trust Indenture Act.
See "Description of the New Capital Securities."
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company and
the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Company and the Trust agreed, among other
things, to file and to use their best efforts to cause to become effective with
the Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities which have been registered under the
Securities Act with terms identical in all material respects to the terms of the
Old Capital Securities. A copy of the Registration Rights Agreement has been
filed as an Exhibit to the Registration Statement of which this Prospectus is a
part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Trust under the Registration Rights Agreement. The form and
terms of the New Capital Securities are the same as the form and terms of the
Old Capital Securities, except that the New Capital Securities have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. In that regard, if,
under certain circumstances set forth in the Registration Rights Agreement, the
Exchange Offer is not consummated on or prior to the 210th day following the
date of original issuance of the Old Subordinated Debt Securities and the Old
Capital Securities, interest will accrue (in addition to the stated interest
thereon) from and including the next day following such 210-day period. Such
Special Payment will be payable in cash quarterly in arrears on each
Distribution Payment Date, at a rate per annum equal to 0.25% of the principal
amount or liquidation amount, as applicable, of the Old Subordinated Debt
Securities and the Old Capital Securities. The aggregate amount of Special
Payment payable pursuant to the above provisions will in no event exceed 0.25%
per annum of the principal amount or the liquidation amount, as applicable, of
the Old Subordinated Debt Securities and the Old Capital Securities. Upon
consummation of the Exchange Offer, holders of Old Capital Securities that
remain outstanding 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."
The Exchange Offer is not being made to, nor will the Company or 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, the Company will exchange as
soon as practicable after the date hereof, the Old Guarantee for the Guarantee
and $50 million aggregate principal amount of the Old Subordinated Debt
Securities for a like aggregate principal amount of the New Subordinated Debt
Securities. The Guarantee and New Subordinated Debt Securities have also been
registered under the Securities Act.
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TERMS OF THE EXCHANGE
The Company and the Trust hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $50,000,000 aggregate liquidation amount of New
Capital Securities for a like aggregate liquidation amount of Old Capital
Securities properly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn in accordance with the procedures described
below. The Trust will issue, promptly after the Expiration Date, an aggregate
liquidation amount of up to $50,000,000 of New Capital Securities in exchange
for a like principal amount of outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their Old
Capital Securities in whole or in part in a liquidation amount of not less than
$100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$50,000,000 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 Declaration, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors--Consequences of a Failure to Exchange Old Capital Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE ADMINISTRATORS OR TRUSTEES
OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on August
6, 1997 unless the Exchange Offer is extended by the Company and the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). The Company and the Trust expressly
reserve the right in their sole and absolute discretion, subject to applicable
law, at any time and from time to time, (i) to delay the acceptance of the Old
Capital Securities for exchange, (ii) to terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
if the Company and the Trust determine, in their sole and absolute discretion,
that any of the events or conditions referred to under "--Conditions to the
Exchange Offer" have occurred or exist or have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to withdraw their tendered Old
Capital Securities as described under "--Withdrawal Rights," and (iv) to waive
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any condition or otherwise amend the terms of the Exchange Offer in any respect.
If the Exchange Offer is amended in a manner determined by the Company and the
Trust to constitute a material change, or if the Company and the Trust waive a
material condition of the Exchange Offer, the Company or the Trust will promptly
disclose such amendment or waiver by means of a prospectus supplement that will
be distributed to the registered holders of the Old Capital Securities, and the
Company and the Trust will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company or the Trust may choose to make any public
announcement and subject to applicable law, neither the Company nor the Trust
shall have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company and the Trust will exchange, and will issue to the Exchange Agent, New
Capital Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Trust will be deemed to have accepted for exchange, and thereby exchanged,
Old Capital Securities validly tendered and not withdrawn as, if and when the
Company or the Trust gives oral or written notice to the Exchange Agent of the
Company's and 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
Company and 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 Company's and the Trust's acceptance for
exchange of Old Capital Securities) or the Company 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 Company's or the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Company and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "--Withdrawal
Rights."
Pursuant to the Letter of Transmittal, 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 Company,
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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 either (i) tendered Old Capital Securities must be received by the
Exchange Agent on or prior to the Expiration Date, or (ii) such Old Capital
Securities must be tendered pursuant to the procedures for book-entry transfer
set forth below and a book-entry confirmation must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of a tendering holder's Old Capital Securities are
tendered, the tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
The entire amount of Old Capital Securities delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "--Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
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
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all required documents to reach the Exchange Agent on or before the Expiration
Date, or the procedures for book-entry transfer cannot be completed on a timely
basis, such Old Capital Securities may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with: (i) such
tenders are made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form accompanying the Letter of Transmittal, is received by the Exchange Agent,
as provided below, on or prior to the Expiration Date; and (iii) the
certificates (or a book-entry confirmation) representing all tendered Old
Capital Securities, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other documents required by the Letter
of Transmittal, are received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail, to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The acceptance by the Company and the Trust for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, the Company and the
Trust upon the terms and subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. The Company 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 view of counsel to the Company and the Trust, be unlawful. The Company and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "--Conditions to
the Exchange Offer" or any condition or irregularity in any tender of Old
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The Company's and the Trust's interpretation of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither the Company, the Trust, any affiliates
or assigns of the Company or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company or
the Trust, proper evidence satisfactory to the Company or the Trust, in their
sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
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RESALES OF NEW CAPITAL SECURITIES
Based on interpretations by the staff of the Commission as set forth in
no-action letters issued to third parties, the Company and the Trust believe
that holders of Old Capital Securities (other than any holder that is an
"affiliate" of the Company or the Trust as defined under Rule 405 of the
Securities Act) who exchange their Old Capital Securities for New Capital
Securities pursuant to the Exchange Offer may offer such New Capital Securities
for resale, resell such New Capital Securities and otherwise transfer such New
Capital Securities without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holders' business and
such holders are not engaged in, and do not intend to engage in, a distribution
of such New Capital Securities and have no arrangement or understanding with any
person to participate in the distribution of such New Capital Securities.
However, the staff of the Commission has not considered the Exchange Offer in
the context of a no-action letter, and there can be no assurance that the staff
of the Commission would make a similar determination with respect to the
Exchange Offer. However, any holder of Old Capital Securities who is an
"affiliate" of the Company 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 to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
(a) will not be able to rely on the interpretations of the Staff 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 (other than certain specified
holders) who wishes to exchange them for New Capital Securities in the Exchange
Offer will be required to represent that: (i) it is not an "affiliate" of the
Company or the Trust; (ii) any New Capital Securities to be received by it are
being acquired in the ordinary course of its business; and (iii) it is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities and has no arrangement or
understanding to participate in a distribution of New Capital Securities. In
addition, the Company and the Trust may require such holder, as a condition to
such holder's eligibility to participate in the Exchange Offer, to furnish to
the Company and the 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 will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff in the
interpretive letters referred to above, the Company and the Trust believe that
broker-dealers who acquired Old Capital Securities for their own accounts as a
result of market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
and the Trust have agreed to allow the Participating Broker-Dealers to use
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this Prospectus, as it may be amended or supplemented from time to time, in
connection with resales of such New Capital Securities for a period of one year
after the Expiration Date. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company 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 the
Company 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, such Participating Broker-Dealer
will suspend the sale of New Capital Securities (or the Guarantee or the New
Subordinated Debt Securities, as applicable) pursuant to this Prospectus until
the Company or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Company or
the Trust has given notice that the sale of the New Capital Securities (or the
Guarantee or the New Subordinated Debt Securities, 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" on or prior to the Expiration Date. Any such
notice of withdrawal must specify the name of the person who tendered the Old
Capital Securities to be withdrawn, the aggregate liquidation amount of Old
Capital Securities to be withdrawn, and (if certificates for such Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth on the Old Capital Securities, if different from
that of the person who tendered such Old Capital Securities. If Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Old Capital Securities, the tendering
holder must submit the serial numbers shown on the particular Old Capital
Securities to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Capital
Securities tendered for the account of an Eligible Institution. If Old Capital
Securities have been tendered pursuant to the procedures for book-entry transfer
set forth in "--Procedures for Tendering Old Capital Securities," then the
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawal of Old Capital Securities, in which case a
notice of withdrawal will be effective if delivered to the Exchange Agent by
written or facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn will
not be deemed validly tendered for purposes of the Exchange Offer, but may be
re-tendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Neither the Company, the Trust, any affiliates or assigns of the
Company 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 THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Payment Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital
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Securities or, if no such Distributions have been made, will not receive any
accumulated Distributions on such Old Capital Securities, and will be deemed to
have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Payment Date or, if no
such Distributions have been made, from and after March 27, 1997. However,
because Distributions on the New Capital Securities will accumulate from such
date, the amount of the Distributions received by holders whose Old Capital
Securities are accepted for exchange will not be affected by the exchange.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if there shall occur
a change in the current interpretation by the Staff which permits the New
Capital Securities issued pursuant to the Exchange Offer in exchange for Old
Capital Securities to be offered for resale, resold and otherwise transferred by
holders thereof (other than broker-dealers and any such holder which is an
"affiliate" of the Company or the Trust within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Capital Securities are
acquired in the ordinary course of such holders' business and such holders have
no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities.
If the Company and the Trust determine in their sole and absolute
discretion that the foregoing event has occurred, the Company and the Trust may,
subject to applicable law, terminate the Exchange Offer (whether or not any Old
Capital Securities have theretofore been accepted for exchange) or may waive any
such condition or otherwise amend the terms of the Exchange Offer in any
respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company and the Trust will promptly disclose such amendment
or waiver by means of a prospectus supplement that will be distributed to the
registered holders of the Old Capital Securities, and the Company and the Trust
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letter 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:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attention: Reorganization Section
Telephone: (212) 815-6333
Facsimile: (212) 571-3080
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay 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.
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Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers
or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE NEW CAPITAL SECURITIES
The Old Capital Securities have been issued and the New Capital Securities
will be issued pursuant to the terms of the Declaration. The Institutional
Trustee, The Bank of New York, acts as trustee for the Capital Securities under
the Declaration. The terms of the Capital Securities include those stated in the
Declaration and those made part of the Declaration by the Trust Indenture Act
and the Trust Act. The Declaration will be qualified under the Trust Indenture
Act upon effectiveness of the Exchange Offer Registration Statement with respect
to the Capital Securities. See "The Exchange Offer." The following summary of
the material terms and provisions of the Capital Securities does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
the Declaration (a copy of which may be obtained from the Company or the Trust),
the Trust Act and the Trust Indenture Act.
GENERAL
The Trust Securities represent undivided beneficial interests in the assets
of the Trust. All of the Common Securities are owned by the Company. The Common
Securities have equivalent terms to and rank pari passu, and payments will be
made thereon on a pro rata basis, with the Capital Securities, except that upon
the occurrence and during the continuance of a Declaration Event of Default, the
rights of the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. The
Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust.
The Institutional Trustee holds legal title to the Subordinated Debt Securities
for the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Capital Securities upon liquidation of the Trust, are guaranteed by the
Company as described under "Description of the Guarantee." The Guarantee is held
by The Bank of New York, the Guarantee Trustee (as defined herein), for the
benefit of the holders of the Capital Securities. The Guarantee does not cover
payment of distributions in respect of the Capital Securities to the extent the
Trust does not have available funds to pay distributions. In such event, the
remedy of holders of the Capital Securities would be, through the vote of
holders of a majority in liquidation amount of the Capital Securities, to direct
the Institutional Trustee to enforce the Institutional Trustee's rights under
the Subordinated Debt Securities except in the circumstances in which a holder
of such Capital Securities may take Direct Action. See "--Voting Rights" and
"--Declaration Events of Default."
DISTRIBUTIONS
Distributions on each Capital Security will be payable in U.S. dollars at a
variable annual rate equal to LIBOR plus 0.98% (which is the same rate payable
on the Subordinated Debt Securities) on the liquidation amount of $1,000 per
Capital Security, compounded quarterly to the extent permitted by law. The term
"distribution" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of the actual
number of days elapsed in a year of twelve 30-day months.
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Distributions on the Capital Securities will be cumulative, will accrue
from the date of original issuance of the Old Capital Securities, and will be
payable (subject to extension of distribution payment periods as described
herein) quarterly in arrears on each Distribution Payment Date, commencing July
1, 1997, when, as and if available for payment. Distributions will be made by
the Institutional Trustee, except as otherwise described below.
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period at
any time and from time to time, subject to the conditions described below,
although such interest will continue to accrue on the Subordinated Debt
Securities at a variable annual rate of LIBOR plus 0.98%, compounded quarterly
to the extent permitted by law during any Extension Period. If such right is
exercised, quarterly distributions on the Capital Securities will also be
deferred (though such distributions will continue to accrue at a variable annual
rate equal to LIBOR plus 0.98%, compounded quarterly to the extent permitted by
law) during any such Extension Period. Such right to extend any interest payment
period for the Subordinated Debt Securities is limited to Extension Periods,
each not exceeding 20 consecutive quarterly periods, and no Extension Period may
be initiated while accrued interest from a prior, completed Extension Period is
unpaid or while the Company is in default on the payment of interest that has
become due and payable on the Subordinated Debt Securities, and no Extension
Period may extend beyond the maturity of the Subordinated Debt Securities. In
the event that the Company exercises this right, then during any Extension
Period (a) the Company shall not declare or pay dividends on, make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Company of its obligations under any employee
benefit plans, (ii) as a result of a reclassification of the Company's capital
stock or rights to acquire such capital stock or the exchange or conversion of
one class or series of the Company's capital stock or rights to acquire such
capital stock for another class or series of the Company's capital stock or
rights to acquire such capital stock, (iii) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(iv) dividends and distributions made on the Company's capital stock or rights
to acquire such capital stock with the Company's capital stock or rights to
acquire such capital stock, or (v) any declaration of a dividend in connection
with the implementation of a shareholder rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto), or make guarantee payments (other than payments under
the Guarantee and the Common Securities Guarantee) with respect to the foregoing
and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such Extension Period in respect of
the Subordinated Debt Securities, the Company may further extend the interest
payment period; provided that each such Extension Period in respect of the
Subordinated Debt Securities, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarterly periods or extend
beyond the maturity of the Subordinated Debt Securities. Upon the termination of
any Extension Period in respect of the Subordinated Debt Securities and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. See "Description of the Subordinated
Debt Securities-- Interest," "--Option to Extend Interest Payment Period" and
"--Certain Covenants." If distributions are deferred, the distributions due on
such Capital Securities shall be paid on the date that the related Extension
Period terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to holders of applicable
Capital Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date.
Distributions on the Capital Securities must be paid on the dates payable
(after giving effect to any Extension Period) to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
The Trust's funds available for distribution to the holders of the Capital
Securities will be limited to payments received from the Company on the
Subordinated Debt Securities. See "Description of the Subordinated Debt
Securities." The payment of distributions out of moneys held by the Trust is
guaranteed by the Company to the extent set forth under "Description of the
Guarantee."
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Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities are held solely in
book-entry only form, will be one Business Day (as defined below) prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "--Book-Entry Only Issuance--The Depository Trust Company." At
any time when the Capital Securities are not held solely in book-entry only
form, the Administrators shall select record dates, which shall be the 15th day
of the month next preceding the month containing the relevant payment date. In
the event that any date on which distributions are to be made on the Capital
Securities is not a Business Day, then payment of the distributions payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on such payment date. A "Business Day" shall
mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) and Memphis (in the
State of Tennessee) are permitted or required by any applicable law to close.
REDEMPTION
The Subordinated Debt Securities will mature on April 1, 2027. The
Subordinated Debt Securities may be redeemed by the Company, in whole or in
part, at any time and from time to time on or after April 1, 2007, at par, plus
accrued and unpaid interest thereon to the date of redemption. In addition, the
Subordinated Debt Securities may be redeemed by the Company, in whole or in
part, at any time in certain circumstances described herein, upon the occurrence
and continuation of a Tax Event, a Capital Treatment Event or an Investment
Company Event, within 90 days following the occurrence of such Tax Event,
Capital Treatment Event or Investment Company Event, as the case may be, at par,
together with accrued and unpaid interest thereon to the date of redemption,
upon not less than 30 nor more than 60 days' notice to holders of such
Subordinated Debt Securities. In each case, the right of the Company to redeem
the Subordinated Debt Securities is subject to the Company having received prior
approval from the Federal Reserve, if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon the repayment in full at maturity or redemption in whole or in part of
the Subordinated Debt Securities (other than following the distribution of the
Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or payment shall concurrently be applied to redeem
on a pro rata basis at the applicable Redemption Price, Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities so repaid or redeemed; provided, however, that
holders of such Trust Securities shall be given not less than 30 nor more than
60 days' notice of such redemption (other than at the scheduled maturity of the
Subordinated Debt Securities). See "Description of the Subordinated Debt
Securities--Redemption." In the event that fewer than all of the outstanding
Capital Securities are to be redeemed, the Capital Securities held in book-entry
form will be redeemed in accordance with the procedures of DTC as described
under "--Book-Entry Only Issuance--The Depository Trust Company."
"Tax Event" means the receipt by the Institutional Trustee of an opinion of
a nationally recognized independent tax counsel to the Company experienced in
such matters to the effect that, as a result of (a) any amendment to,
clarification of or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any judicial decision or
official administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to,
clarification of or change in the administrative position or interpretation of
any Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment, clarification
or change is effective or such Administrative Action or decision is announced,
in each case, on or after March 20, 1997, there is more than an insubstantial
risk that (i) the Trust is, or will be
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within 90 days of the date thereof, subject to United States federal income tax
with respect to interest accrued or received on the Subordinated Debt Securities
or subject to more than a de minimis amount of other taxes, duties or other
governmental charges, or (ii) any portion of interest payable by the Company to
the Trust on the Subordinated Debt Securities is not, or within 90 days of the
date thereof will not be, deductible by the Company for United States federal
income tax purposes, or (iii) the Company could become liable to pay, on the
next date on which any amount would be payable with respect to the Subordinated
Debt Securities, any Additional Interest (as defined herein).
"Capital Treatment Event" means the Company shall have received an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any rules or regulations thereunder) of the
United States or any rules, guidelines or policies of the Federal Reserve or (b)
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement, action or decision is announced on or after
March 20, 1997, the Company will not be entitled to treat the Capital Securities
or the Subordinated Debt Securities, if the Subordinated Debt Securities were to
be distributed following the occurrence of a Tax Event as described in the
proviso to this paragraph, as "Tier 1 Capital" (or the equivalent thereof) for
purposes of the risk-based capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Company; provided, however, that the
distribution of the Subordinated Debt Securities in connection with the
liquidation of the Trust by the Company shall not in and of itself constitute a
Capital Treatment Event.
"Investment Company Event" means the receipt by the Institutional Trustee
of an opinion of counsel rendered by a law firm having a nationally recognized
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority ("Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law
becomes effective or is announced, enacted or promulgated on or after March 20,
1997.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
such Capital Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of the Capital
Securities (which notice will be irrevocable), then by 12:00 noon, New York City
time, on the redemption date, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or maturity
of the Subordinated Debt Securities, the Institutional Trustee will irrevocably
deposit with the Depositary (as defined herein) or its nominee funds sufficient
to pay the applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay such Redemption Price to the holders of such
Capital Securities. See "--Book-Entry Only Issuance--The Depository Trust
Company." With respect to the Capital Securities that are Certificated
Securities (as defined herein), provided that the Company has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debt Securities, the Institutional
Trustee will pay the applicable Redemption Price to the holders of such Capital
Securities by check mailed to the address of each such holder appearing on the
books and records of the Trust on the redemption date. If notice of redemption
shall have been given and funds deposited as required, then, immediately prior
to the close of business on the date of such deposit, distributions will cease
to accrue on the Capital Securities and all rights of holders of such Capital
Securities will cease, except the right of the holders of such Capital
Securities to receive the applicable Redemption Price but without interest on
such Redemption Price. In the event that any date fixed for redemption of the
Capital Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day (without any interest or other payment in respect of any such delay) with
the same force and effect as if made on such date, except that, if such Business
Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the Redemption
Price in respect of the Capital Securities is improperly withheld or refused and
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not paid either by the Institutional Trustee or by the Company pursuant to the
Guarantee, distributions on such Capital Securities will continue to accrue at
the then applicable rate from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, Capital Securities will be redeemed on a pro rata basis in
accordance with the procedures of DTC as described under "--Book-Entry Only
Issuance--The Depository Trust Company."
In the event of any redemption of the Capital Securities in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange any
Certificated Security during a period beginning at the opening of business 15
days before any selection for redemption of the Capital Securities and ending at
the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of the Capital Securities
to be so redeemed or (ii) register the transfer of or exchange any Certificated
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Certificated Securities being redeemed in part.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries may at
any time, and from time to time, purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of the voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation") other than in
connection with a redemption of the Subordinated Debt Securities as previously
described, the holders of the Capital Securities will be entitled to receive out
of the assets of the Trust, after satisfaction of liabilities to creditors of
the Trust (to the extent not satisfied by the Company), distributions in an
amount equal to the aggregate of the liquidation amount of $1,000 per Capital
Security plus accrued and unpaid distributions thereon to the date of payment
(the "Liquidation Distribution"), unless, in connection with such Liquidation,
the Subordinated Debt Securities in an aggregate principal amount equal to the
aggregate liquidation amount of the Trust Securities have been distributed on a
pro rata basis to the holders of the Trust Securities in exchange for the Trust
Securities. Upon any Liquidation in which the Subordinated Debt Securities are
distributed, if at the time of such Liquidation the Capital Securities are rated
by at least one nationally recognized statistical rating organization, the
Company will use its best efforts to obtain from at least one nationally
recognized statistical rating organization a rating for the Subordinated Debt
Securities.
The Company, as the holder of all of the Common Securities, has the right
at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event, a Capital Treatment Event or an Investment Company
Event), subject to the receipt by the Company of prior approval from the Federal
Reserve, if then required under applicable capital guidelines or policies of the
Federal Reserve, and, after satisfaction of liabilities to creditors of the
Trust (to the extent not satisfied by the Company), cause the Subordinated Debt
Securities to be distributed to the holders of the Trust Securities on a pro
rata basis in accordance with the aggregate liquidation amount thereof, in
liquidation of the Trust.
Pursuant to the Declaration, the Trust shall dissolve on the first to occur
of (i) April 1, 2052, the expiration of the term of the Trust, (ii) the
bankruptcy of the Company, (iii) (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture, the
Declaration or the Guarantee, as the case may be) the filing of a certificate of
dissolution or its equivalent with respect to the Trust, upon the consent of the
holders of at least a majority in liquidation amount of the Trust Securities
voting together as a single class to file a certificate of cancellation with
respect to the Trust, or upon the revocation of the charter of the Company and
the expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) the distribution to the holders of the Trust Securities of the
Subordinated Debt Securities, upon exercise of the right of the holder of all of
the outstanding Common Securities of the Trust to dissolve the Trust as
described above, (v) the entry of a decree of judicial dissolution of the
Company or the Trust, or (vi) the redemption of all of the Trust Securities.
Pursuant to the Declaration, as soon as practicable after the
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dissolution of the Trust and upon completion of the winding up of the Trust, the
Trust shall terminate upon the filing of a certificate of cancellation.
If a Liquidation occurs as described in clause (i), (ii), (iii) or (v) of
the preceding paragraph, the Trust shall be liquidated by the Issuer Trustees as
expeditiously as such Issuer Trustees determine to be possible by distributing
to the holders of the Trust Securities, after satisfaction of liabilities to
creditors of the Trust to the extent not satisfied by the Company, the
Subordinated Debt Securities, unless such distribution is determined by the
Institutional Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Trust available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust to the
extent not satisfied by the Company, an amount equal to the Liquidation
Distribution. An early Liquidation of the Trust pursuant to clause (iv) above
shall occur only if the Institutional Trustee determines that such Liquidation
is possible by distributing to the holders of the Trust Securities, after
satisfaction of liabilities to creditors of the Trust to the extent not
satisfied by the Company, the Subordinated Debt Securities, and such
distribution occurs.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the holders of the Trust
Securities on a pro rata basis. The holders of the Common Securities issued by
the Trust will be entitled to receive distributions upon any such Liquidation
pro rata with the holders of such Capital Securities, except that if a
Declaration Event of Default has occurred and is continuing in respect of the
Trust, the Capital Securities shall have a preference over the Common Securities
with regard to such distributions.
After the date for any distribution of the Subordinated Debt Securities
upon dissolution of the Trust, (i) the Trust Securities will be deemed to be no
longer outstanding, (ii) the Depositary or its nominee, as the record holder of
the Capital Securities issued in book-entry form, will receive a registered
Global Certificate (as defined herein) or Certificates representing the
Subordinated Debt Securities to be delivered upon such distribution, and (iii)
any certificates representing the Capital Securities not held by the Depositary
or its nominee will be deemed to represent the Subordinated Debt Securities
having an aggregate principal amount equal to the aggregate liquidation amount
of such Capital Securities until such certificates are presented to the Company
or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Subordinated Debt Securities that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a discount
to the price paid to purchase such Capital Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture in respect of the Subordinated Debt
Securities (an "Indenture Event of Default") constitutes an event of default
under the Declaration with respect to the Trust Securities (each a "Declaration
Event of Default"); provided that pursuant to the Declaration, the holder of the
Common Securities will be deemed to have waived any Declaration Event of Default
with respect to such Common Securities until all Declaration Events of Default
with respect to the Capital Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default have been so cured, waived,
or otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Capital Securities and only the holders
of such Capital Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. The holders of a majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as holder of the Subordinated
Debt Securities. If the Institutional Trustee fails to enforce its rights under
the Subordinated
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Debt Securities after the holders of a majority in liquidation amount of the
Capital Securities have so directed the Institutional Trustee, to the fullest
extent permitted by law, a holder of record of such Capital Securities may
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Subordinated Debt
Securities on the respective dates such interest or principal is payable (or in
the case of redemption, the redemption date), then a holder of record of such
Capital Securities may institute a Direct Action against the Company for
payment, on or after the respective due dates specified in the Subordinated Debt
Securities, to such holder directly of the principal of or interest on
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder. In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of Capital Securities under the Declaration to the extent of any
payment made by the Company to such holder of the Capital Securities in such
Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing. The holders of the Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, so long as it is the sole holder of the Subordinated Debt Securities,
will have the right under the Indenture to declare the principal of and interest
on the Subordinated Debt Securities to be immediately due and payable. The
Company and the Trust are each required to file annually with the Institutional
Trustee an officer's certificate as to its compliance with all conditions and
covenants under the Declaration.
VOTING RIGHTS
Except as described below, under the Trust Act and under "--Removal of the
Issuer Trustees; Appointment of Successors," "--Mergers, Consolidations or
Amalgamations" and "Description of the Guarantee--Modification of the Guarantee;
Assignment," and as otherwise required by law and the Declaration, the holders
of the Capital Securities will have no voting rights.
Subject to the requirements set forth in this paragraph, the holders of a
majority in aggregate liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon such Institutional Trustee under the Declaration, including the
right to direct such Institutional Trustee, as holder of the Subordinated Debt
Securities, to (i) exercise the remedies available to it under the Indenture as
a holder of the Subordinated Debt Securities, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall be
due and payable or (iv) consent on behalf of all the holders of the Capital
Securities of the Trust to any amendment, modification or termination of the
Indenture or the Subordinated Debt Securities where such consent shall be
required; provided, however, that where a consent or action under the Indenture
would require the consent or act of holders of more than a simple majority in
principal amount of the Subordinated Debt Securities (a "Super-Majority")
affected thereby, the Institutional Trustee may only give such consent or take
such action at the written direction of the holders of at least the proportion
in aggregate liquidation amount of the Capital Securities outstanding which the
relevant Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding. If the Institutional Trustee fails to
enforce its rights under the Subordinated Debt Securities after the holders of a
majority in liquidation amount of such Capital Securities have so directed the
Institutional Trustee, to the extent permitted by law, a holder of record of the
Capital Securities may institute a legal proceeding directly against the Company
to enforce the Institutional Trustee's rights under the Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Subordinated Debt Securities on the respective dates such
interest or principal is payable (or in the case of redemption, the
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redemption date) then a holder of record of the Capital Securities may institute
a Direct Action against the Company for payment, on or after the respective due
dates specified in the Subordinated Debt Securities, to such holder directly of
the principal of or interest on the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder. The Institutional Trustee shall notify all
holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Subordinated Debt Securities unless
(x) such default has been cured prior to the giving of such notice or (y) the
Institutional Trustee determines in good faith that the withholding of such
notice is in the interest of the holders of such Capital Securities, except
where the default relates to the payment of interest on or principal of any of
the Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Subordinated Debt Securities, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, such Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of such Trust Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of such Trust Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debt Securities outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the holders of such Trust Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of the Capital Securities may
be given at a separate meeting of such holders convened for such purpose, at a
meeting of all of the holders of Trust Securities or pursuant to written
consent. The Institutional Trustee will cause a notice of any meeting at which
holders of the Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of the Capital Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of the Capital Securities will be required for the Trust to
redeem and cancel the Capital Securities or distribute the Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not entitle the holders thereof to vote or
consent and shall, for purposes of such vote or consent, be treated as if such
Capital Securities were not outstanding.
The procedures by which holders of the Capital Securities issued in
book-entry form may exercise their voting rights are described below. See
"--Book-Entry Only Issuance--The Depository Trust Company."
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REMOVAL OF THE ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
If an Indenture Event of Default has occurred and is continuing, an Issuer
Trustee may be removed and its successor appointed by the holders of at least a
majority in liquidation amount of Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace the Administrators, which voting rights are vested exclusively in the
Company as the holder of the Common Securities. No resignation or removal of an
Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Declaration.
MODIFICATION OF THE DECLARATION
The Declaration may be amended from time to time by the Institutional
Trustee and the holders of a majority of the Common Securities without the
consent of the holders of the Capital Securities to: (i) cure any ambiguity;
(ii) correct or supplement any provision in such Declaration that may be
defective or inconsistent with any other provision of such Declaration; (iii)
add to the covenants, restrictions or obligations of the Company; (iv) modify,
eliminate or add to any provision of the Declaration to such an extent as may be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes at all times as a grantor trust and will not be required to
register as an "investment company" under the 1940 Act; and (v) modify,
eliminate and add to any provision of such Declaration, provided that no such
modification, elimination or addition referred to in clauses (i), (ii), (iii)
and (v) hereof shall adversely affect the powers, preferences or special rights
of the holders of such Capital Securities so long as they remain outstanding.
In addition, the Declaration may be modified and amended if approved by the
Institutional Trustee and the holders of a majority of the Common Securities
(and in certain circumstances the Delaware Trustee), provided that, if any
proposed amendment provides for, or the Institutional Trustee otherwise proposes
to effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to the
Declaration or otherwise or (ii) the Liquidation of the Trust other than
pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the holders of at least a majority in liquidation
amount of the Trust Securities affected thereby; provided that if any amendment
or proposal referred to in clause (i) above would adversely affect only the
Capital Securities or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for United States federal income tax purposes as other than a
grantor trust or (ii) cause the Trust to be deemed an "investment company" which
is required to be registered under the 1940 Act.
Notwithstanding any provision of the Declaration, the provisions of Section
316(b) of the Trust Indenture Act incorporated by reference into the Declaration
provide that the right of any holder of the Capital Securities to receive
payments of distributions and other payments upon redemption or otherwise on or
after their respective due dates, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such holder.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below or as otherwise described in "--Liquidation Distribution Upon
Dissolution." The Trust may, at the request of the holders of the Common
Securities and with the consent of the Institutional Trustee and the holders of
at least a majority in aggregate liquidation amount of the Capital Securities,
but without the consent of the Delaware Trustee, consolidate, amalgamate, merge
with or into, or be replaced by, a trust organized as such under the laws of any
state of the United States; provided that (i) if the Trust is not the survivor,
such
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successor entity either (x) expressly assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so that the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) a trustee of such successor entity
possessing the same powers and duties as the Institutional Trustee is appointed
as the holder of the Subordinated Debt Securities, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (iv) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of such Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in such successor entity), (v) such successor entity has a
purpose substantially identical to that of the Trust, (vi) prior to such merger,
consolidation, amalgamation or replacement, the Trust has received an opinion of
a nationally recognized independent counsel to the Trust experienced in such
matters to the effect that (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in such successor entity), (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (C)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be classified as other than a grantor trust
for United States federal income tax purposes, and (vii) the Company guarantees
the obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee. Notwithstanding the foregoing, the
Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes. In addition, the Debt Trustee will be required pursuant to
the Indenture to exchange for Old Subordinated Debt Securities, as part of the
Exchange Offer, New Subordinated Debt Securities that will have terms identical
in all material respects to the Old Subordinated Debt Securities except for
certain transfer restrictions under the Securities Act and the provision for an
increase in the interest rate thereon under certain circumstances. See
"--Exchange Offer; Registration Rights."
MERGER OR CONSOLIDATION OF THE ISSUER TRUSTEES
Any entity into which the Institutional Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Declaration, provided such entity is otherwise
qualified and eligible.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Certificates"). The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a Global Certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities
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certificates. Participants in DTC include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of the Capital Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased the
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Capital Securities, except in the
event that use of the book-entry system for the Capital Securities is
discontinued.
To facilitate subsequent transfers, all the Capital Securities deposited by
Participants with DTC will be registered in the name of DTC's nominee, Cede &
Co. The deposit of the Capital Securities with DTC and their registration in the
name of Cede & Co. will effect no change in beneficial ownership. DTC will have
no knowledge of the actual Beneficial Owners of the Capital Securities. DTC's
records will reflect only the identity of the Direct Participants to whose
accounts such Capital Securities are credited, which may or may not be the
Beneficial Owners. The Direct Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate in respect of the Capital Securities, DTC or such nominee, as
the case may be, will be considered the sole owner or holder of the Capital
Securities represented thereby for all purposes under the Declaration and such
Capital Securities. No Beneficial Owner of an interest in a Global Certificate
will be able to transfer that interest except in accordance with DTC's
applicable procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of the Capital Securities (including the presentation of the
Capital Securities for exchange as described below) only at the direction of one
or more Participants to whose accounts the DTC interest in the Global
Certificates is credited and only in respect of such portion of the aggregate
liquidation amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is a
Declaration Event of Default with respect to the Capital Securities, DTC will,
upon notice, exchange the Global Certificates in respect of such Capital
Securities for Certificated Securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, the Capital Securities will be redeemed on a pro rata basis.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the Capital Securities. Under its usual procedures, DTC
would mail an omnibus proxy to the Trust as soon as possible after the record
date. The
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omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Capital Securities are credited on the record
date (identified in a listing attached to the omnibus proxy).
Payments in respect of the Capital Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Direct Participants and Indirect Participants and not of
DTC, the Trust or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments in respect of the
Capital Securities held in book-entry form to DTC are the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of the Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Company, the Trust
or the Issuer Trustees will have any responsibility for the performance by DTC
or its Direct Participants or Indirect Participants under the rules and
procedures governing DTC. DTC may discontinue providing its services as a
securities depositary with respect to the Capital Securities at any time by
giving notice to the Company and the Trust. Under such circumstances, in the
event that a successor securities depositary is not obtained, the Capital
Security certificates will be required to be printed and delivered.
Additionally, the Trust (with the consent of the Company) may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Capital Securities of the Trust. In
that event, certificates for such Capital Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believes to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
RESTRICTIONS ON TRANSFER
The Old Capital Securities were, and the New Capital Securities will be,
issued and may be transferred only in blocks having a liquidation amount of not
less than $100,000 (100 Old Capital Securities or New Capital Securities, as the
case may be). Any such transfer of the Old Capital Securities or the New Capital
Securities in a block having a liquidation amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such transferee shall
be deemed not to be the holder of such Old Capital Securities or New Capital
Securities for any purpose, including but not limited to, the receipt of
distributions on such Old Capital Securities or New Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Old Capital
Securities or New Capital Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution payment dates or, in the case of Certificated
Securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the books and records of
the Trust or by wire transfer. The paying agent for the Trust Securities (the
"Paying Agent") shall initially be The Bank of New York. The Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Institutional Trustee, the Administrators and the Company. In the event that The
Bank of New York shall no longer be the
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Paying Agent, the Institutional Trustee shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company).
REGISTRAR AND TRANSFER AGENT
The Institutional Trustee is acting as registrar and transfer agent for the
Capital Securities of the Trust.
Registration of transfers or exchanges of the Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or the Company may require) in respect of
any tax or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer or exchange of the Capital Securities after such Capital Securities
have been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise such of the rights
and powers vested in it by such Declaration, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of the Capital Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The holders of the Capital
Securities will not be required to offer such indemnity in the event such
holders, by exercising their voting rights, direct the Institutional Trustee to
take any action it is empowered to take under the Declaration following a
Declaration Event of Default. The Institutional Trustee also serves as trustee
under the Guarantee and the Indenture.
Whenever in the exercise of its rights or powers or the performance of its
duties under the Declaration the Institutional Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or taking
any other action thereunder, the Institutional Trustee (i) may request
instructions from the holders of the Capital Securities, which instructions may
only be given by the holders of a majority, or such other proportion, in
liquidation amount of the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of such Capital Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in or accordance
with such instructions.
The Company and certain of its affiliates maintain a banking relationship
with the Institutional Trustee and its affiliates.
GOVERNING LAW
The Declaration and the Capital Securities are governed by, and construed
in accordance with, the laws of the State of Delaware, without regard to
principles of conflict of laws.
MISCELLANEOUS
The Administrators, the holders of a majority of the Common Securities and
the Institutional Trustee are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act nor be characterized as other than a grantor trust
for United States federal income tax purposes. The Company has agreed to conduct
its affairs so that the Subordinated Debt Securities will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Institutional Trustee and the holders of a majority of the
Common Securities are authorized to take any action, not inconsistent with
applicable law or the Declaration, that the Institutional Trustee and such
holders of the Common Securities determine in their discretion to be necessary
or desirable to achieve such end, even if such action adversely affects the
interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
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DESCRIPTION OF THE GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of the Capital Securities. As soon as is
practicable after the date hereof, the Company will exchange the Old Guarantee
for the Guarantee. The Guarantee has been qualified under the Trust Indenture
Act. This summary of the material provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee, including the definitions therein of
certain terms. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Capital Securities.
GENERAL
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
Capital Securities, the Guarantee Payments (as defined herein) (except to the
extent paid by the Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which the Trust may have or assert. The following
payments with respect to the Capital Securities, to the extent not paid by the
Trust (the "Guarantee Payments"), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions which are required to be
paid on the Capital Securities, to the extent the Trust shall have funds
available therefor; (ii) the Redemption Price, to the extent the Trust has funds
available therefor, with respect to any Capital Securities called for redemption
by the Trust and (iii) upon Liquidation of the Trust (other than in connection
with the distribution of the Subordinated Debt Securities to the holders of the
Capital Securities in exchange therefor), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Capital
Securities to the date of payment, to the extent the Trust has funds available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to holders of such Capital Securities in liquidation of the Trust.
The Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will not apply to any payment of distributions except to the
extent the Trust shall have funds available therefor, which funds will not be
available except to the extent the Company has made payments of interest or
principal or other payments on the Subordinated Debt Securities purchased by the
Trust. See "Description of the Subordinated Debt Securities--Certain Covenants."
The Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities, the Declaration and the Indenture, including its
obligations to pay costs, expenses, debts and other obligations of the Trust
(other than with respect to the Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Capital Securities.
Because the Guarantee is a guarantee of payment and not of collection,
holders of the Capital Securities may proceed directly against the Company,
rather than having to proceed against the Trust before attempting to collect
from the Company, and the Company waives any right or remedy to require that any
action be brought against the Trust or any other person or entity before
proceeding against the Company. Such obligations will not be discharged except
by payment of the Guarantee Payments in full. The Guarantee will be deposited
with the Guarantee Trustee to be held for the benefit of the holders of Capital
Securities. Except as otherwise noted herein, the Guarantee Trustee has the
right to enforce the Guarantee on behalf of the holders of the Capital
Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to Common Securities (the
"Common Securities Guarantee") to the same extent as the Guarantee, except that
upon the occurrence and continuance of a Declaration Event of Default, holders
of Capital Securities shall have priority over holders of Common Securities with
respect to any payments made by the Company on or in respect of the Trust
Securities under the Guarantee and the Common Securities Guarantee.
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CERTAIN COVENANTS OF THE COMPANY UNDER THE GUARANTEE
In the Guarantee, the Company will covenant that, so long as any Capital
Securities remain outstanding, if the Company shall be in default under the
Guarantee or there shall have occurred and be continuing any event that would
constitute a Declaration Event of Default, then (a) the Company shall not
declare or pay any dividend on, make a distribution with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of the Company's
capital stock or rights to acquire such capital stock (other than (i) purchases
or acquisitions of shares of the Company's capital stock or rights to acquire
such capital stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make any guarantee payments (other than payments under the
Guarantee and the Common Securities Guarantee) with respect to the foregoing and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Subordinated Debt Securities.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of the Capital Securities in any material respect (in which case no
vote of such holders will be required), the Guarantee may be amended only with
the prior approval of the holders of not less than a majority in liquidation
amount of the outstanding Capital Securities. All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Capital Securities then outstanding.
TERMINATION
The Guarantee will terminate as to the Capital Securities (a) upon full
payment of the Redemption Price of all Capital Securities, (b) upon distribution
of the Subordinated Debt Securities to the holders of the Capital Securities or
(c) upon full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Trust. The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of the Capital
Securities must restore payment of any sums paid under such Capital Securities
or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. A holder of record of the Capital Securities may
institute a legal proceeding directly against the Company to enforce the
Guarantee Trustee's rights under the Guarantee, without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. Pursuant to the Guarantee, the Company will waive any right or remedy to
require that any action be brought first against the Trust or any other person
or entity before proceeding directly against the Company.
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STATUS OF THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all present and future Senior Indebtedness of the Company
and are also effectively subordinated to claims of creditors of the Company's
subsidiaries. The terms of the Capital Securities provide that each holder of
the Capital Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto. Because the
Company is a bank holding company, the right of the Company to participate in
any distribution of assets of any of its subsidiaries upon such subsidiary's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent the Company may itself be
recognized as a creditor of that subsidiary. Accordingly, the Company's
obligations under the Guarantee will be effectively subordinated to all existing
and future liabilities of the Company's subsidiaries, and claimants should look
only to the assets of the Company for payments thereunder. The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Indebtedness of the Company, under any indenture that
the Company may enter into in the future or otherwise.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in such Guarantee and, after default, shall exercise such of the rights
and powers vested in it by such Guarantee, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Trustee is
under no obligation to exercise any of the powers vested in it by the Guarantee
at the request of any holder of Capital Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
The Company and certain of its affiliates maintain a banking relationship
with the Guarantee Trustee and its affiliates.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of laws principles.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the principal terms of the Subordinated
Debt Securities. The following description does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the description
in the Indenture, dated as of March 27, 1997 (the "Base Indenture"), between the
Company and The Bank of New York, as trustee (the "Debt Trustee"), as
supplemented by a First Supplemental Indenture dated as of March 27, 1997 (the
Base Indenture, as so supplemented, is herein referred to as the "Indenture".)
Certain capitalized terms used herein are defined in the Indenture. The terms of
the Indenture are those set forth in the Indenture and those made part thereof
by the Trust Indenture Act. The Indenture, by its terms, requires the Company
and the Debt Trustee to comply with the Trust Indenture Act. The Indenture will
be qualified under the Trust Indenture Act upon the effectiveness of a
registration statement with respect to the Subordinated Debt Securities. See
"The Exchange Offer." This summary of the material terms of the Indenture does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Indenture.
In certain circumstances, the Subordinated Debt Securities may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the New Capital Securities--Liquidation Distribution Upon
Dissolution."
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GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Old Subordinated Debt Securities
issued by the Company. Pursuant to the Exchange Offer, the Company will exchange
$50 million aggregate principal amount of Old Subordinated Debt Securities for a
like amount of New Subordinated Debt Securities as soon as is practicable after
the date of this Prospectus, and thereafter $1,547,000 aggregate principal
amount of Old Subordinated Debt Securities will remain outstanding. The New
Subordinated Debt Securities will be issued as unsecured debt under the
Indenture. The Subordinated Debt Securities will be limited to an amount equal
to the sum of the aggregate liquidation amounts of the Trust Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Compounded Interest (as defined herein) and Additional
Interest (as defined herein), if any, on April 1, 2027.
If the Subordinated Debt Securities are distributed to holders of the
Capital Securities in liquidation of such holders' interests in the Trust, the
Subordinated Debt Securities will, with respect to the Capital Securities held
in book-entry only form, initially be issued as a Global Security (as defined
herein) having an aggregate principal amount equal to the liquidation amount of
such Capital Securities and, with respect to such Capital Securities held in
certificated non-book entry form, will initially be deemed to be represented by
such certificates and to have an aggregate principal amount equal to the
liquidation amount of such Capital Securities. As described herein, under
certain limited circumstances, Subordinated Debt Securities may be issued in
certificated non-book entry form in exchange for a Global Security. See
"--Book-Entry Issuance and Settlement." The Subordinated Debt Securities deemed
to be represented by a Capital Security certificate will be issued in
certificated form upon presentation for transfer or reissuance. Payments on the
Subordinated Debt Securities issued as a Global Security will be made to DTC, a
successor depositary or, in the event that no depositary is used, to a paying
agent for the Subordinated Debt Securities. In the event the Subordinated Debt
Securities are issued in certificated non-book entry form, interest and
principal will be payable, the transfer of the Subordinated Debt Securities will
be registrable and the Subordinated Debt Securities will be exchangeable for
Subordinated Debt Securities of other denominations of a like aggregate
principal amount at the corporate trust office of the Debt Trustee in New York,
New York; provided that payment of interest may be made, at the option of the
Company, by check mailed to the address of the holder entitled thereto or by
wire transfer to an account appropriately designated by the holder entitled
thereto. Notwithstanding the foregoing, so long as the holder of any
Subordinated Debt Securities is the Institutional Trustee, the payment of
interest and principal on the Subordinated Debt Securities held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all present and future Senior
Indebtedness of the Company. No payment of principal (including redemption
payments) or interest on the Subordinated Debt Securities may be made (in cash,
property, securities, by set-off or otherwise) if (i) any Senior Indebtedness of
the Company, as the case may be, is not paid when due and any applicable grace
period with respect to a payment default under such Senior Indebtedness has
ended and such default has not been cured or waived or ceased to exist or (ii)
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default. Upon any distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal and interest due or to become due on all Senior
Indebtedness of the Company must be paid in full before the
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holders of the Subordinated Debt Securities are entitled to receive or retain
any payment. Upon satisfaction of all claims of all Senior Indebtedness then
outstanding, the rights of the holders of the Subordinated Debt Securities will
be subrogated to the rights of the holders of Senior Indebtedness of the Company
to receive payments or distributions applicable to Senior Indebtedness until all
amounts owing on the Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company (except
any other obligations which rank pari passu with the Subordinated Debt
Securities), (i) the principal and interest in respect of (A) indebtedness of
the Company for money borrowed, and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company,
including, without limitation, any current or future indebtedness under any
indenture (other than the Indenture) to which the Company is party; (ii) all
capital lease obligations of the Company, (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of the Company for the
reimbursement on any letter of credit, any banker's acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any interest
rate swap, any other hedging arrangement, any obligation under options or any
similar credit or other transaction, (v) all obligations of the type referred to
in clauses (i) through (iv) above of other persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of the Company (whether or
not such obligation is assumed by the Company), except for (1) any indebtedness
between or among the Company or any affiliate of the Company and (2) any other
debt securities issued pursuant to the Indenture and guarantees in respect of
those debt securities. Senior Indebtedness does not include the Subordinated
Debt Securities or any junior subordinated debt securities issued in the future
with subordination terms substantially similar to the Subordinated Debt
Securities. Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
Because the Company is a bank holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Company may
itself be recognized as a creditor of that subsidiary. The Company is a legal
entity separate and distinct from its Banking Subsidiaries and non-banking
subsidiaries. The Company's principal assets are the stock of its Banking
Subsidiaries and non-bank subsidiaries. The Company relies primarily on
dividends from such subsidiaries to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. The principal sources of the Company's income are dividends, interest
and fees from the Banking Subsidiaries and non-banking subsidiaries. The Banking
Subsidiaries of the Company are subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions with
the Company and certain other affiliates and on investments in stock or other
securities thereof. In addition, payment of dividends to the Company by the
Banking Subsidiaries is subject to ongoing review by banking regulators and is
subject to various statutory limitations and in certain circumstances requires
approval by banking regulatory authorities. Accordingly, the Company's
obligations under the Subordinated Debt Securities will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and claimants should look only to the assets of the Company for
payments thereunder.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company. The Company had $0 of Senior Indebtedness as
of March 31, 1997.
REDEMPTION
The Company may redeem the Subordinated Debt Securities, in whole or in
part, at any time and from time to time, on or after April 1, 2007 upon not less
than 30 nor more than 60 days' notice, at par plus accrued and unpaid interest
to the redemption date. In addition, the Subordinated Debt Securities may be
redeemed by the Company at any time, in whole or in part, in certain
circumstances described herein, upon the occurrence and continuation of a Tax
Event, a Capital Treatment Event or an Investment Company Event,
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within 90 days following the occurrence of such Tax Event, Capital Treatment
Event or Investment Company Event, upon not less than 30 nor more than 60 days'
notice, at par, plus any accrued and unpaid interest to the redemption date. In
each case, redemption prior to maturity is subject to the receipt by the Company
of prior approval from the Federal Reserve, if then required under applicable
capital guidelines or policies of the Federal Reserve. See "Description of the
New Capital Securities--Redemption."
INTEREST
The Subordinated Debt Securities shall bear interest at a variable annual
rate equal to LIBOR plus 0.98%, from the original date of issuance of the Old
Subordinated Debt Securities, payable quarterly in arrears on the first day of
January, April, July and October of each year (each an "Interest Payment Date"),
commencing July 1, 1997, to the person in whose name such Subordinated Debt
Security is registered, subject to certain exceptions, at the close of business
on the Business Day next preceding such Interest Payment Date. The term
"interest" as used herein, as such term relates to the Subordinated Debt
Securities, includes any Compounded Interest or Additional Interest or any
Special Payment payable unless otherwise stated. In the event the Subordinated
Debt Securities are not held solely in book-entry only form, the Company will
select relevant record dates, which shall be the 15th day of the month next
preceding the month containing the relevant Interest Payment Date.
The Bank of New York, as Calculation Agent (the "Calculation Agent"), will
calculate the interest rate for each quarterly interest period based on LIBOR
determined as of two London Business Days (defined as any day, other than a
Saturday or Sunday, on which banks are open for business in London) prior to the
first day of such interest period (each, a "Determination Date"). "LIBOR" means,
with respect to a quarterly interest period relating to an Interest Payment Date
(in the following order of priority):
(i) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date;
(ii) if such rate does not appear on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date, LIBOR will be the
arithmetic mean (if necessary rounded upwards to the nearest whole multiple
of .00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
(iii) if such rate does not appear on Reuters Page LIBO as of 11:00
a.m. (London time) on the related Determination Date, the Calculation Agent
will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations
(expressed as percentages per annum) to prime banks in the London interbank
market for Eurodollar deposits having a three-month maturity as of 11:00
a.m. (London time) on such Determination Date. If at least two quotations
are provided, LIBOR will be the arithmetic mean (if necessary rounded
upwards to the nearest whole multiple of .00001%) of such quotations;
(iv) if fewer than two such quotations are provided as requested in
clause (iii) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
as of 11:00 a.m. (London time) on such Determination Date. If at least two
such quotations are provided, LIBOR will be the arithmetic mean (if
necessary rounded upwards to the nearest whole multiple of .00001%) of such
quotations; and
(v) if fewer than two such quotations are provided as requested in
clause (iv) above, LIBOR will be LIBOR determined with respect to the
interest period immediately preceding such current interest period.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case may
be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by a
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corrected rate before 12:00 noon (London time) on such Determination Date, the
corrected rate as so substituted on the applicable page will be the applicable
LIBOR for such Determination Date.
LIBOR for the initial interest period (commencing upon the original
issuance of the Old Subordinated Debt Securities) shall be determined as
provided above, except that the Determination Date for the initial interest
period shall be one London Business Day prior to the first day of such initial
interest period.
The initial Distribution rate for the Capital Securities and the interest
rate for the related Subordinated Debt Securities is 6.74172% per annum.
Absent manifest error, the Calculation Agent's determination of LIBOR and
its calculation of the applicable interest rate for each interest period will be
final and binding. Investors may obtain the interest rates for the current and
preceding interest period by writing or calling Corporate Trust Administration
at the Calculation Agent at The Bank of New York, 101 Barclay Street, Floor 21
West, New York, New York 10286 (telephone (212) 815-5287).
The amount of interest payable for any period will be computed on the basis
of the actual number of days elapsed in a year of twelve 30-day months. In the
event that any date on which interest is payable on the Subordinated Debt
Securities is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) with the same force
and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company is not in default in the payment of interest that
has become due and payable on the Subordinated Debt Securities and no accrued
interest from a prior completed Extension Period is unpaid, the Company shall
have the right to defer payments of interest on the Subordinated Debt Securities
by extending the interest payment period, at any time and from time to time, for
Extension Periods, each not exceeding 20 consecutive quarterly periods and none
extending beyond the maturity date of the Subordinated Debt Securities,
provided, however, that on the date on which each such Extension Period ends or,
if such date is not an Interest Payment Date, on the immediately following
Interest Payment Date, the Company shall pay all interest then accrued and
unpaid, together with interest thereon at a variable annual rate equal to LIBOR
plus 0.98%, compounded quarterly to the extent permitted by applicable law
("Compounded Interest"). During any Extension Period (a) the Company shall not
declare or pay dividends on, make any distribution with respect to, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock or rights to acquire such capital stock (other than (i) purchases
or acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make any guarantee payments (other than payments under the
Guarantee and the Common Securities Guarantee) with respect to the foregoing and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Subordinated Debt Securities. Prior
to the termination of any such Extension Period, the Company may further defer
payments of interest by extending the interest payment period; provided,
however, that each such Extension Period, including all such previous and
further extensions thereof, may not exceed 20 consecutive quarterly periods or
extend beyond the maturity of the Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the terms set forth
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herein. No interest during an Extension Period, except on the date on which such
Extension Period terminates (or if such date is not an Interest Payment Date, on
the immediately following Interest Payment Date), shall be due and payable. The
Company has no present intention of exercising its right to defer payments of
interest on the Subordinated Debt Securities.
If the Institutional Trustee shall be the sole holder of the Subordinated
Debt Securities, the Company shall give the Administrators, the Institutional
Trustee and the Debt Trustee notice of its initiation of any Extension Period
one Business Day prior to the earlier of (i) the date distributions on the
Capital Securities are payable or (ii) the date the Administrators are required
to give notice to holders of the Capital Securities (or any national securities
exchange or other organization on which the Capital Securities are listed, if
any) of the record date or the distribution payment date, in each case with
respect to distributions on the Trust Securities the payment of which is being
deferred. An Administrator shall give notice of the Company's initiation of any
Extension Period to the holders of such Capital Securities. If the Institutional
Trustee shall not be the sole holder of the Subordinated Debt Securities, the
Company shall give the holders of such Subordinated Debt Securities notice of
its initiation of such Extension Period 10 Business Days prior to the earlier of
(i) the next succeeding Interest Payment Date or (ii) the date upon which the
Company is required to give notice to holders of such Subordinated Debt
Securities (or any national securities exchange or other organization on which
the corresponding Capital Securities are listed, if any) of the record date or
interest payment date, in each case with respect to interest payments the
payment of which is being deferred.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Subordinated Debt Securities such additional amounts as shall be required
so that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will equal the amounts
the Trust and the Institutional Trustee would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
PROPOSED TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. The President's Proposal would generally deny corporate
issuers a deduction for interest on certain debt obligations that have a maximum
term in excess of 15 years and are not shown as indebtedness on the separate
balance sheet of the issuer, or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related party
issues a related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. As drafted, the President's Proposal would not apply
retroactively to the Subordinated Debt Securities. However, if the President's
Proposal (or similar legislation) is enacted with retroactive effect with
respect to the Subordinated Debt Securities, the Company would not be entitled
to an interest deduction with respect to the Subordinated Debt Securities.
Fiscal year 1998 budget reconciliation legislation is currently pending
before the United States Congress. To date, neither the budget reconciliation
bill being considered by the House of Representatives nor the budget
reconciliation bill being considered by the Senate contains a provision
substantially similar to the President's Proposal.
There can be no assurance that the President's Proposal will not be
enacted, and that, if enacted, it will not apply retroactively to the
Subordinated Debt Securities or that other legislation enacted after the date
hereof will not otherwise adversely affect the ability of the Company to deduct
the interest payable on the Subordinated Debt Securities. Accordingly, there can
be no assurance that a Tax Event will not occur. See "Description of the New
Capital Securities--Redemption."
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CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that would
constitute an Event of Default (as defined herein) under the Indenture, (ii) the
Company shall be in default with respect to its payment of any obligations under
the Guarantee or the Common Securities Guarantee, or (iii) the Company shall
have given notice of its election to defer payments of interest on the
Subordinated Debt Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Company shall not declare or pay any dividend on, make
a distribution with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock or rights to acquire such
capital stock (other than (i) purchases or acquisitions of shares of any such
capital stock or rights to acquire such capital stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans,
(ii) as a result of a reclassification of the Company's capital stock or rights
to acquire such capital stock or the exchange or conversion of one class or
series of the Company's capital stock or rights to acquire such capital stock
for another class or series of the Company's capital stock or rights to acquire
such capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
and distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make any guarantee payments (other than payments under the
Guarantee and the Common Securities Guarantee) with respect to the foregoing and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Subordinated Debt Securities.
For so long as the Trust Securities remain outstanding, the Company has
agreed to maintain 100% ownership of the Common Securities; provided, however,
that any permitted successor of the Company under the Indenture may succeed to
the Company's ownership of such Common Securities. The Administrators and the
holder of a majority of the Common Securities each will covenant to use their
respective reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of the Subordinated
Debt Securities to the holders of the Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (b)
to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes and (c) to use its reasonable efforts to cause each
holder of the Trust Securities to be treated as owning an undivided beneficial
interest in the Subordinated Debt Securities.
LIMITATION ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Subordinated Debt Securities
shall prevent any consolidation or merger of the Company with or into any other
corporation (whether or not affiliated with the Company) or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party, or shall prevent any sale, conveyance, transfer or other
disposition of the property of the Company or its successor or successors as an
entirety, or substantially as an entirety, to any other corporation (whether or
not affiliated with the Company or its successor or successors) authorized to
acquire and operate the same; provided, however, that the Company shall, upon
any such consolidation, merger, sale, conveyance, transfer or other disposition,
cause the obligations of the Company under the Subordinated Debt Securities and
under the Indenture to be expressly assumed, by supplemental indenture
satisfactory in form to the Debt Trustee and executed and delivered to the Debt
Trustee, by the successor entity formed by such consolidation or into which the
Company shall have been merged, or which shall have acquired such property. Upon
execution and delivery of such supplemental indenture to the Debt Trustee, such
successor entity will be substituted under the Indenture and thereupon the
Company will be relieved of any further liability or obligation thereunder.
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EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing with respect to the Subordinated
Debt Securities constitutes an "Event of Default" with respect to the
Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the Subordinated Debt
Securities, including any Compounded Interest or Additional Interest in respect
thereof or any Special Payment, when due; provided, however, that a valid
extension of the interest payment period by the Company shall not constitute a
default in the payment of interest for this purpose; or
(b) default in payment of principal on the Subordinated Debt Securities
when due either at maturity, upon redemption, by declaration or otherwise; or
(c) default by the Company in the performance of any other of the covenants
or agreements in the Indenture which shall not have been remedied for a period
of 90 days after notice to the Company by the Debt Trustee or to the Company and
the Debt Trustee by the holders of not less than 25% in aggregate principal
amount of Subordinated Debt Securities; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) the Liquidation of the Trust, except in connection with the
distribution of the Subordinated Debt Securities to the holders of the Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
The Indenture provides that the Debt Trustee may, under certain
circumstances, withhold from the holders notice of default with respect to the
Subordinated Debt Securities (except for any default in payment of principal of
or interest on the Subordinated Debt Securities) if the Trustee considers it in
the interest of such holders to do so.
The Indenture provides that if an Event of Default in respect of the
Subordinated Debt Securities shall have occurred and be continuing, either the
Debt Trustee or the holders of not less than 25% in aggregate principal amount
of the Subordinated Debt Securities then outstanding may declare the principal
of and accrued interest on all Subordinated Debt Securities to be due and
payable immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except defaults in payment of
principal of or interest on the Subordinated Debt Securities, which must be
cured or paid in full) by the holders of a majority in aggregate principal
amount of the Subordinated Debt Securities then outstanding.
No holder of any Subordinated Debt Security shall have any right to
institute any suit, action or proceeding for any remedy under the Indenture,
unless such holder previously shall have given to the Debt Trustee written
notice of a continuing Event of Default with respect to the Subordinated Debt
Securities and unless the holders of not less than 25% in aggregate principal
amount of the Subordinated Debt Securities then outstanding shall have given the
Debt Trustee a written request to institute such action, suit or proceeding and
shall have offered to the Debt Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred thereby, and
the Debt Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action, suit or proceeding;
provided that no holder of the Subordinated Debt Securities shall have any right
to prejudice the rights of any other holder of the Subordinated Debt Securities,
obtain priority or preference over any other such holder or enforce any right
under the Indenture except as provided in the Indenture and for the equal,
ratable and common benefit of all holders of the Subordinated Debt Securities.
Notwithstanding the foregoing, the right of any holder of any Subordinated Debt
Security to receive payment of the principal of and interest on such
Subordinated Debt Security when due, or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the consent of such
holder.
The holders of a majority in aggregate principal amount of the Subordinated
Debt Securities then outstanding shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to, or
exercising any trust or power conferred on, the Debt Trustee under the
Indenture; provided, however, that, except under certain circumstances, the Debt
Trustee may decline to follow any such
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direction if the Debt Trustee determines that the action so directed would be
unjustly prejudicial to holders not taking part in such direction or would be
unlawful or would involve the Debt Trustee in personal liability. The Indenture
requires the annual filing by the Company with the Debt Trustee of a certificate
as to the absence of certain defaults under the Indenture.
An Event of Default under the Indenture also constitutes a Declaration
Event of Default. The holders of the Capital Securities of the Trust, in certain
circumstances, have the right to direct the Institutional Trustee of the Trust
to exercise its rights as the holder of the Subordinated Debt Securities. See
"Description of the New Capital Securities--Declaration Events of Default" and
"--Voting Rights." Notwithstanding the foregoing, if an Indenture Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay principal of or interest on the Subordinated Debt
Securities on the respective dates such principal or interest is payable (or in
the case of redemption, on the redemption date), the Company acknowledges that a
holder of record of the Capital Securities may institute a Direct Action for
payment, on or after the respective due dates specified in such Subordinated
Debt Securities, to such holder directly of the principal of or interest on the
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder.
Notwithstanding any payments made to such holder of the Capital Securities by
the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of or interest on the Subordinated Debt
Securities, and the Company shall be subrogated to the rights of such holder of
such Capital Securities under the Declaration to the extent of any payments made
by the Company to such holder in any Direct Action; provided, however, that no
such subrogation right may be exercised so long as a Declaration Event of
Default has occurred and is continuing. Except to the extent described above
under "Description of the New Capital Securities--Declaration Events of Default"
and "--Voting Rights," the holders of the Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Subordinated
Debt Securities.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities at the time outstanding, to
modify the Indenture or any supplemental indenture or the rights of the holders
of the Subordinated Debt Securities; provided, however, that no such
modification shall without the consent of the holder of each Subordinated Debt
Security so affected (i) extend the fixed maturity of any Subordinated Debt
Security, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of or interest on, the Subordinated Debt Securities
payable in any coin or currency other than that provided in the Subordinated
Debt Securities, or impair or affect the right of any holder of the Subordinated
Debt Securities to institute suit for the payment thereof or (ii) reduce the
aforesaid percentage of Subordinated Debt Securities the consent of the holders
of which is required for any such modification.
The Company and the Debt Trustee may enter into supplemental indentures,
without the consent of any holder of the Subordinated Debt Securities: (i) to
evidence the succession of another corporation to the Company and the assumption
by the successor corporation of the covenants, agreements and obligations of the
Company pursuant to the Indenture; (ii) to add to the covenants of the Company
such further covenants, restrictions or conditions for the protection of the
holders of the Subordinated Debt Securities and to make the occurrence, or the
occurrence and continuance (including any or no grace periods), of a default in
any of such additional covenants, restrictions or conditions a default or an
Event of Default permitting the enforcement of remedies provided in the
Indenture; (iii) to cure any ambiguity or to correct or supplement any provision
contained in the Indenture or in any supplemental indenture which may be
defective or inconsistent with any other provision contained therein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under the Indenture, including the qualification or
maintenance of the qualification of the Indenture under the Trust Indenture Act;
provided that any such action shall not adversely affect the interests of the
holders of the Subordinated Debt Securities; (iv) to add to, delete from, or
revise the terms of the Subordinated Debt Securities to provide for transfer
procedures and restrictions substantially similar to those applicable to the
Capital Securities (for purposes of assuring that no registration of the
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Subordinated Debt Securities is required under the Securities Act); (v) to
evidence and provide for the acceptance of appointment under the Indenture by a
successor Debt Trustee with respect to the Subordinated Debt Securities and to
add to or change any of the provisions of the Indenture as shall be necessary to
provide for or facilitate the administration of the Trust under the Indenture by
more than one Debt Trustee, pursuant to the Indenture; (vi) to make any change
that does not adversely affect the rights of any holder of any Subordinated Debt
Security in any material respect; or (vii) to provide for the issuance, and
establish the form and terms and conditions, of the Subordinated Debt
Securities, to establish the form of any certifications required to be furnished
pursuant to the terms of the Indenture or the Subordinated Debt Securities or to
add to the rights of the holders of the Subordinated Debt Securities.
DISCHARGE
The Indenture provides that when, among other things, all Subordinated Debt
Securities not previously delivered to the Debt Trustee for cancellation (i)
have become due and payable or (ii) will become due and payable at the stated
maturity within one year or are to be called for redemption within one year
under arrangements satisfactory to the Debt Trustee, and the Company deposits or
causes to be deposited with the Debt Trustee funds, in trust, for the purpose
and in an amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debt Securities not previously delivered to the Debt Trustee for
cancellation, for the principal and interest to the date of the stated maturity
or redemption date, as the case may be, then the Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and opinions
of counsel described therein), and the Company will be deemed to have satisfied
and discharged the Indenture.
THE DEBT TRUSTEE
The Company and certain of its affiliates maintain a banking relationship
with the Debt Trustee and its affiliates.
BOOK-ENTRY ISSUANCE AND SETTLEMENT
If distributed to holders of the Capital Securities of the Trust in
connection with the involuntary or voluntary dissolution, winding-up or
liquidation of the Trust, the Subordinated Debt Securities will, with respect to
such Capital Securities held in book-entry form, initially be issued in the form
of one or more global certificates (each a "Global Security") registered in the
name of the Depositary or its nominee. Except under the limited circumstances
described below, the Subordinated Debt Securities represented by a Global
Security will not be exchangeable for, and will not otherwise be issuable as,
the Subordinated Debt Securities in certificated form. The Global Securities
described above may not be transferred except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in certificated form and will not be considered the holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing the Subordinated Debt Securities shall be
exchangeable, except for another Global Security of like denomination and tenor
to be registered in the name of the Depositary or its nominee or to a successor
Depositary or its nominee. Accordingly, each beneficial owner must rely on the
procedures of the Depositary or if such beneficial owner is not a Participant,
on the procedures of the Participant through which such beneficial owner owns
its interest to exercise any rights of a holder under the Indenture.
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THE DEPOSITARY
If the Subordinated Debt Securities are distributed to holders of the
Capital Securities in liquidation of such holders' interests in the Trust, DTC
will act as securities Depositary (the "Depositary") for the Subordinated Debt
Securities issued by the Trust with respect to the Capital Securities held in
book-entry form. For a description of DTC and the specific terms of the
depositary arrangements, see "Description of the New Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company." As of the
date of this Prospectus, the description herein of DTC's book-entry system and
DTC's practices as they relate to purchases, transfers, redemptions, notices and
payments with respect to the Capital Securities would apply in all material
respects to any debt obligations represented by one or more Global Securities
held by DTC. The Company may appoint a successor to DTC or any successor
depositary in the event DTC or such successor depositary is unable or unwilling
to continue as the Depositary for the Global Securities.
None of the Company, the Trust, the Institutional Trustee, the Debt
Trustee, any paying agent and any other agent of the Company, the Trust, the
Institutional Trustee or the Debt Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for the Subordinated Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for the Subordinated Debt
Securities registered in the names of persons other than the Depositary or its
nominee only if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the Depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for the Subordinated Debt Securities registered in such names as
the Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
RESTRICTIONS ON TRANSFER
The Subordinated Debt Securities will be issued and may be transferred only
in blocks having an aggregate principal amount of not less that $100,000 (and
integral multiples of $1,000 in excess thereof). Any such transfer of the
Subordinated Debt Securities in a block having an aggregate principal amount of
less than $100,000 shall be deemed to be void and of no legal effect whatsoever.
Any such transferee shall be deemed not to be the holder of such Subordinated
Debt Securities for any purpose, including but not limited to the receipt of
payments on such Subordinated Debt Securities, and such transferee shall be
deemed to have no interest whatsoever in such Subordinated Debt Securities.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities are governed by, and
construed in accordance with, the laws of the State of New York, without regard
to conflict of laws principles.
MISCELLANEOUS
The Indenture provides that the Company will pay all fees and expenses
related to (i) the offering and sale of the Trust Securities and the
Subordinated Debt Securities, (ii) the organization, maintenance and dissolution
of the Trust, (iii) the retention of the Issuer Trustees and Administrators and
(iv) the enforcement by the Institutional Trustee of the rights of the holders
of the Capital Securities.
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The Company has the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly owned
subsidiary of the Company; provided that, in the event of any such assignment,
the Company will remain liable for all of its obligations. Subject to the
foregoing, the Indenture will be binding upon and inure to the benefit of the
parties thereto and their respective successors and assigns. Except as otherwise
provided in "--Limitation on Mergers and Sales of Assets," the Indenture
provides that it may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the exclusive purposes of the Trust are to
issue and sell the Trust Securities evidencing undivided beneficial interests in
the assets of the Trust, to invest the proceeds from such issuance and sale in
the Subordinated Debt Securities issued by the Company in accordance with the
terms of such Trust Securities, to effect the Exchange Offer and to engage in
certain other limited activities described herein.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of the Subordinated Debt Securities
will be equal to the aggregate liquidation amount of the Trust Securities; (ii)
the interest rate and the interest and other payment dates on the Subordinated
Debt Securities will match the distribution rate and distribution and other
payment dates for the Trust Securities; (iii) the Company shall pay all, and the
Trust shall not be obligated to pay directly or indirectly any, costs, expenses,
debts and other obligations of the Trust (other than with respect to such Trust
Securities); and (iv) the Declaration further provides that the Issuer Trustees
shall not take any action or cause or permit the Trust to, among other things,
engage in any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available to
the Trust) and other payments due on the Capital Securities (to the extent funds
therefor are available to the Trust) are guaranteed by the Company as described
under "Description of the Guarantee." If the Company does not make interest
payments on the Subordinated Debt Securities, it is expected that the Trust will
not have sufficient funds to pay distributions on such Capital Securities. The
Guarantee will not apply to any payment except to the extent that the Trust has
funds available for the payment of such distributions. The Guarantee will cover
the payment of distributions and other payments on such Capital Securities only
if and to the extent that the Company has made payments of interest on or
principal of the Subordinated Debt Securities held by the Trust as its sole
assets. The Guarantee, when taken together with the Company's obligations under
the Subordinated Debt Securities, the Declaration and the Indenture, including
its obligations to pay costs, expenses, debts and other obligations of the Trust
(other than with respect to the Trust Securities), provide a full and
unconditional guarantee on a subordinated basis by the Company of amounts when
due on such Capital Securities.
If the Company fails to make interest or other payments on the Subordinated
Debt Securities when due (after giving effect to any Extension Period), the
Declaration provides a mechanism whereby the holders of the Capital Securities,
using the procedures described herein under "Description of the New Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company" and
"--Voting Rights," may direct the Institutional Trustee, to the fullest extent
permitted by law to enforce its rights under the Subordinated Debt Securities.
If the Institutional Trustee fails to enforce its rights under the Subordinated
Debt Securities after a majority in liquidation amount of the Capital Securities
have so directed the Institutional Trustee, a holder of record of the Capital
Securities may to the fullest extent permitted by law institute a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Subordinated Debt Securities without first instituting any legal
proceedings against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay principal of or interest on the Subordinated Debt Securities on the
respective dates such principal or interest is payable (or in the case of
redemption, on the redemption date), then a holder of record of the Capital
Securities may institute a Direct Action for payment on or after the respective
due dates specified in the Subordinated Debt Securities. In connection with
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such Direct Action, the Company will be subrogated to the rights of such holder
of the Capital Securities under the Declaration to the extent of any payment
made by the Company to such holder of the Capital Securities in such Direct
Action; provided, however, that no such subrogation right may be exercised so
long as a Declaration Event of Default has occurred and is continuing.
Because the Company is a bank holding company, the Subordinated Debt
Securities and the Guarantee are effectively subordinated to all existing and
future liabilities, including trade payables, of the Company's subsidiaries,
except to the extent that the Company is a creditor of the subsidiaries
recognized as such.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Arnold & Porter, Washington, D.C., in its capacity as
special tax counsel to the Company ("Tax Counsel"), the discussion of United
States federal income taxation which follows summarizes the principal material
United States federal income tax consequences of the Exchange Offer and of the
ownership and disposition of the Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the Internal Revenue Service ("IRS") or the courts, either of
which could take a contrary position. Moreover, no rulings have been or will be
sought from the IRS with respect to the transactions described herein.
Accordingly, there can be no assurance that the IRS will not challenge the
opinions expressed herein or that a court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the Capital
Securities held as a capital asset by a holder who or which (i) purchased the
Old Capital Securities upon original issuance at their original offering price
and (ii) is a US Holder (as defined below). This summary does not address all
the tax consequences that may be relevant to a US Holder, nor does it address
the tax consequences, except as stated below, to holders that are not US Holders
or to holders that may be subject to special tax treatment (such as banks,
thrift institutions, real estate investment trusts, regulated investment
companies, insurance companies, brokers and dealers in securities or currencies,
other financial institutions, tax-exempt organizations, persons holding the
Capital Securities as a position in a "straddle," as part of a "hedging,"
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and certain United States expatriates).
Further, this summary does not address (a) the income tax consequences to
shareholders in, or partners or beneficiaries of, a holder of the Capital
Securities, (b) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Capital Securities, or (c) any
state, local or foreign tax consequences of the purchase, ownership and
disposition of Capital Securities.
A "US Holder" is a holder of the Capital Securities who or which is (i) a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, (ii) a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source, or (iv) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more United States trustees have the authority to control all substantial
decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE EXCHANGE OFFER AND OF THE OWNERSHIP AND DISPOSITION
OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF
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THE POSSIBLE REDEMPTION OF THE CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN
TAX EVENTS SEE "DESCRIPTION OF THE NEW CAPITAL SECURITIES-- REDEMPTION."
US HOLDERS
CHARACTERIZATION OF THE TRUST
In connection with the Exchange Offer, Tax Counsel has rendered its opinion
that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Declaration (and other documents), and based on certain assumptions
and qualifications referenced in such counsel's written opinion, the Trust will
be characterized for United States federal income tax purposes as a grantor
trust and will not be characterized as an association taxable as a corporation
for such purposes. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of an
undivided interest in the Subordinated Debt Securities owned by the Trust, and
each US Holder will be required to include all income or gain recognized for
United States federal income tax purposes with respect to its allocable share of
the Subordinated Debt Securities on its own income tax return.
THE EXCHANGE
An exchange of Old Capital Securities for New Capital Securities pursuant
to the Exchange Offer will not constitute a taxable event for federal income tax
purposes. As a result, US Holders who exchange their Old Capital Securities for
New Capital Securities should not recognize any income, gain or loss for federal
income tax purposes with respect to such exchange. An exchanging US Holder will
have the same adjusted basis and holding period in the New Capital Securities as
it had in the Old Capital Securities immediately before the exchange.
CHARACTERIZATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the Exchange Offer, Tax Counsel has rendered its opinion
that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Indenture (and other documents), and based on certain assumptions
and qualifications referenced in such counsel's written opinion, the New
Subordinated Debt Securities will be characterized for United States federal
income tax purposes as debt of the Company. The Company and the Trust have
agreed to treat the New Subordinated Debt Securities as indebtedness for all
United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debt Securities, the Company has the
option to defer payments of interest from time to time by extending the interest
payment period for a period not exceeding 20 consecutive quarterly periods, but
not beyond the maturity of the Subordinated Debt Securities. Recently issued
Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Subordinated Debt Securities will not be considered issued
with OID by reason of the Company's option to defer payments of interest if the
likelihood of deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of original issue of the Old Subordinated Debt Securities, the likelihood
of exercise of that option was "remote" within the meaning of the applicable
regulations, in part because exercising that option would prevent the Company
from declaring dividends on its stock and would prevent the Company from making
any payments with respect to debt securities that rank pari passu with or junior
to the Subordinated Debt Securities. Therefore, the Subordinated Debt Securities
should not be treated as issued with OID by reason of the Company's deferral
option. Moreover, the Company has determined that the Old Subordinated Debt
Securities were not otherwise issued with OID. Consequently, stated interest on
the Subordinated Debt Securities will generally be taxable to a US Holder as
ordinary income when paid or accrued in accordance with that holder's method of
accounting for
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income tax purposes. It should be noted, however, that these regulations may in
the future be analyzed and interpreted by the Service in rulings or other
published documents. Accordingly, it is possible that the Service could take a
position contrary to the interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Subordinated Debt Securities would be treated as reissued for OID
purposes and the sum of the remaining interest payments (and any de minimis OID)
on the Subordinated Debt Securities would thereafter be treated as OID, which
would accrue, and be includible in a US Holder's taxable income, on an economic
accrual basis (regardless of the US Holder's method of accounting for income tax
purposes) over the remaining term of the Subordinated Debt Securities (including
any period of interest deferral), without regard to the timing of payments under
the Subordinated Debt Securities. (Subsequent distributions of interest on the
Subordinated Debt Securities generally would not be taxable.) The amount of OID
that would accrue in any period would generally equal the amount of interest
that accrued on the Subordinated Debt Securities in that period at the stated
interest rate. Consequently, during any period of interest deferral, US Holders
will include OID in gross income in advance of the receipt of cash, and a US
Holder which disposes of a Capital Security prior to the record date for payment
of distributions on the Subordinated Debt Securities following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Trust with
respect to that OID.
If the Company's option to defer payments of interest were not treated as
remote, the Subordinated Debt Securities would be treated as initially issued
with OID in an amount equal to the aggregate stated interest (plus any de
minimis OID) over the term of the Subordinated Debt Securities. That OID would
generally be includible in a US Holder's taxable income, over the term of the
Subordinated Debt Securities, on an economic accrual basis.
CHARACTERIZATION OF INCOME
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of the
Capital Securities will not be entitled to a dividends-received deduction for
any income recognized with respect to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of the Capital Securities may be considered to have acquired their
undivided interests in the Subordinated Debt Securities with market discount,
premium or acquisition premium (as each phrase is defined for United States
federal income tax purposes).
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances described herein (See "Description of the New
Capital Securities-- Liquidation Distribution Upon Dissolution"), the Company
will have the right to distribute the Subordinated Debt Securities to holders in
exchange for the Capital Securities and in liquidation of the Trust. Except as
discussed below, such a distribution would not be a taxable event for United
States federal income tax purposes, and each US Holder would have an aggregate
adjusted basis in its Subordinated Debt Securities for United States federal
income tax purposes equal to such holder's aggregate adjusted basis in its
Capital Securities. For United States federal income tax purposes, a US Holder's
holding period in the Subordinated Debt Securities received in such a
liquidation of the Trust would include the period during which the Capital
Securities were held by the holder. If, however, the relevant event is a Tax
Event which results in the Trust being treated as an association taxable as a
corporation, the distribution would likely constitute a taxable event to US
Holders of the Capital Securities for United States federal income tax purposes.
Under certain circumstances described herein (see "Description of the New
Capital Securities" and "Description of the Subordinated Debt
Securities--Redemption"), the Subordinated Debt Securities may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US
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<PAGE> 67
Holder would recognize gain or loss as if it had sold the Capital Securities for
cash. See "--Sales of Capital Securities" below.
SALES OF CAPITAL SECURITIES
A US Holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted basis in the Capital Securities and the
amount realized on the sale of such Capital Securities. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition, and decreased by payments received on
the Capital Securities (other than any interest received with respect to the
period prior to the effective date of the Company's first exercise of its option
to defer payments of interest). Any such gain or loss generally will be capital
gain or loss, and generally will be a long-term capital gain or loss if the
Capital Securities have been held for more than one year.
A holder who disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Subordinated Debt Securities through the date of
disposition in its taxable income for United States federal income tax purposes
(notwithstanding that the holder may receive a separate payment from the
purchaser with respect to accrued interest), and to deduct that amount from the
sales proceeds received (including the separate payment, if any, with respect to
accrued interest) for the Capital Securities (or as to OID only, to add such
amount to such holder's adjusted tax basis in its Capital Securities). To the
extent the selling price is less than the holder's adjusted tax basis (which
will include accrued but unpaid OID, if any), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
PROPOSED TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. The President's Proposal would generally deny corporate
issuers a deduction for interest on certain debt obligations that have a maximum
term in excess of 15 years and are not shown as indebtedness on the separate
balance sheet of the issuer, or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related party
issues a related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. As drafted, the President's Proposal would not apply
retroactively to the Subordinated Debt Securities. However, if the President's
Proposal (or similar legislation) is enacted with retroactive effect with
respect to the Subordinated Debt Securities, the Company would not be entitled
to an interest deduction with respect to the Subordinated Debt Securities.
Fiscal year 1998 budget reconciliation legislation is currently pending
before the United States Congress. To date, neither the budget reconciliation
bill being considered by the House of Representatives nor the budget
reconciliation bill being considered by the Senate contains a provision
substantially similar to the President's Proposal.
There can be no assurance that the President's Proposal will not be
enacted, and that, if enacted, it will not apply retroactively to the
Subordinated Debt Securities or that other legislation enacted after the date
hereof will not otherwise adversely affect the ability of the Company to deduct
the interest payable on the Subordinated Debt Securities. Accordingly, there can
be no assurance that a Tax Event will not occur. See "Description of the New
Capital Securities--Redemption."
NON-US HOLDERS
The following discussion applies to an Initial Holder who is not a US
Holder (a "Non-US Holder").
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Capital Security is not a controlled
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<PAGE> 68
foreign corporation that is related to the Company through stock ownership, and
(c) either (i) the beneficial owner of the Capital Securities certifies to the
Trust or its agent, under penalties of perjury, that it is a Non-US Holder and
provides its name and address, or (ii) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Capital Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Trust or its agent
with a copy thereof.
As discussed above (see "--Proposed Tax Law Changes"), changes in
legislation affecting the income tax consequences of the Subordinated Debt
Securities are possible, and could adversely affect the ability of the Company
to deduct the interest payable on the Subordinated Debt Securities. Moreover,
any such legislation could adversely affect Non-US Holders by characterizing
income derived from the Subordinated Debt Securities as dividends, generally
subject to a 30% income tax (on a withholding basis) when paid to a Non-US
Holder, rather than as interest which, as discussed above, is generally exempt
from income tax in the hands of a Non-US Holder.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
A Non-US Holder which holds the Capital Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Subordinated Debt Securities.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Capital Securities held by a noncorporate
US Holder within the United States. In addition, payments made on, and payments
of the proceeds from the sale of, the Capital Securities to or through the
United States office of a broker are subject to information reporting unless the
holder thereof certifies as to its non-United States status or otherwise
establishes an exemption from information reporting and backup withholding. See
"--Backup Withholding." Taxable income on the Capital Securities for a calendar
year should be reported to US Holders on Forms 1099 by the following January
31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's income tax liability, or refunded,
provided the required information is provided to the Service.
* * *
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE EXCHANGE OFFER, AND OF THE OWNERSHIP
AND DISPOSITION OF THE CAPITAL SECURITIES. HOLDERS OF THE CAPITAL SECURITIES ARE
URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other
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<PAGE> 69
trading activities. The Company 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 of one year after the Expiration Date (subject to
extension under certain limited circumstances described herein). See "The
Exchange Offer--Resales of New Capital Securities." Neither the Company nor the
Trust will receive any cash proceeds from the issuance of the New Capital
Securities offered hereby. New Capital Securities received by broker-dealers for
their own accounts in connection with the Exchange Offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Capital
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of one year after the date on which the Exchange Offer is
consummated, the Company and the Trust will promptly send additional copies of
this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company and the Trust have agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Old Capital
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Old Capital Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
BENEFIT PLAN CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities (including Old and New Capital Securities).
Accordingly, among other factors, the fiduciary should consider whether the
investment would satisfy the prudence and diversification requirements of ERISA
and would be consistent with the documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in such Trust
and no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
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<PAGE> 70
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Trust, less than 25% of the value of each class of equity interests in the Trust
were held by Plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and entities
holding assets deemed to be "plan assets" of any Plan (collectively, "Benefit
Plan Investors"). No assurance can be given that the value of the Capital
Securities held by Benefit Plan Investors will be less than 25% of the total
value of such Capital Securities, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. All
of the Common Securities will be purchased and held by the Company.
Under another exception contained in the Plan Assets Regulation, if New
Capital Securities received as a result of the Exchange Offer were to qualify as
"publicly offered securities" under the Plan Assets Regulation, the assets of
the Trust would not be deemed to be "plan assets" by reason of a Plan's
acquisition or holding of such securities. The New Capital Securities would
qualify as "publicly offered securities" if, among other things, they are
offered pursuant to an effective registration statement, are owned by 100 or
more investors independent of the issuer and each other at the time of the
offering, and are subsequently registered under the Exchange Act. It is expected
that the 100 investor requirement will not be satisfied and that the New Capital
Securities will not be registered under the Exchange Act.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of such Plan and assets of the Trust were deemed to be "plan assets" of
Plans investing in the Trust. For example, if the Company is a Party in Interest
with respect to an investing Plan (either directly or by reason of its ownership
of its subsidiaries), extensions of credit between the Company and the Trust (as
represented by the Subordinated Debt Securities and the Guarantees) would likely
be prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the
Code, unless exemptive relief were available under an applicable exemption (see
below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the Capital Securities, assuming that
assets of the Trust were deemed to be "plan assets" of Plans investing in the
Trust (see above). Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts), and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
such purchase or holding is covered by the exemptive relief provided by PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption. If a
purchaser or holder of the Capital Securities that is a Plan or a Plan Asset
Entity elects to rely on an exemption other than PTCE 96-23, 95-60, 91-38, 90-1
or 84-14, the Company and the Trust may require a satisfactory opinion of
counsel or other evidence with respect to the availability of such exemption for
such purchase and holding. Any purchaser or holder of the Capital Securities or
any interest therein will be deemed to have represented by its purchase and
holding thereof that either (a) it is not a Plan or a Plan Asset Entity and is
not purchasing such securities on behalf of or with "plan assets" of any Plan or
(b) (i) it is covered by the exemptive relief provided by PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 or another applicable exemption with respect to such
purchase or holding, (ii) the Company and the Administrators are not
"fiduciaries," within the meaning of Section 3(21) of ERISA and the regulations
thereunder, with respect to its interest in the Capital Securities or the
Subordinated Debt Securities, and (iii) in purchasing the Capital Securities it
approves the purchase and holding of the Subordinated Debt Securities and the
appointment and retention of the Issuer Trustees.
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<PAGE> 71
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Trust were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14.
Governmental plans and certain church plans are not subject to ERISA and
are also not subject to the prohibited transaction provisions of Section 4975 of
the Code. However, state laws or regulations governing the investment and
management of the assets of such plans may contain fiduciary and prohibited
transaction provisions similar to those under ERISA and the Code discussed
above. Accordingly, fiduciaries of governmental plans and church plans, in
consultation with their advisers, should consider the impact of their respective
state laws on investments in the Capital Securities, and the considerations
discussed above, to the extent applicable.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Securities will be passed upon for the Trust by Richards, Layton & Finger, P.A.,
special Delaware counsel to the Trust and the Company. Certain matters of New
York and Tennessee law relating to the validity of the Subordinated Debt
Securities, the Guarantee and related matters will be passed upon for the
Company by Charles Neale, Vice President and General Counsel of the Company.
Certain United States federal income tax matters will be passed upon for the
Company and the Trust by Arnold & Porter, Washington, D.C. As of June 13, 1997,
Mr. Neale beneficially owned 80,000 shares of common stock of the Company and
vested options to purchase an additional 18,000 shares of common stock of the
Company.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated therein
by reference and incorporated herein by reference in reliance upon such report,
given upon the authority of such firm as experts in accounting and auditing.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following summary is qualified in its entirety by reference to the
complete text of the statute, Certificate of Incorporation, Bylaws, agreements
and Declaration referred to below.
Under Part 5 of Article 18 of the Tennessee Securities Act, a corporation
may indemnify a director or officer of the corporation who is made a party to a
proceeding against liability incurred in the proceeding if (1) he conducted
himself in good faith and (2) he reasonably believed (a) that his conduct was in
the best interest of the corporation in the case of conduct in his official
capacity, (b) that his conduct was at least not opposed to the corporation's
best interest in all other cases, and (c) he had no reasonable cause to believe
his conduct was unlawful in the case of a criminal proceeding. A corporation may
not indemnify a director in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or
in connection with any other proceeding charging improper personal benefit to
him, in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
The Company's Certificate of Incorporation provides that no director of the
Company shall be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except (i) for any
breach of the director's duty of loyalty to the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, or (iii) for unlawful distributions
under the laws of Tennessee.
The Company's Bylaws provide that the Company will indemnify any person who
is made a party to a suit by or in the right of the Company by reason of the
fact that he is or was an officer or director of the Company, against amounts
paid in settlement and reasonable expenses incurred as a result of such suit or
proceeding or any appeal therein to the extent permitted by, and in the manner
provided by, Tennessee law. The Company will indemnify any person made, or
threatened to be made, a party to a suit other than by or in the right of any
corporation, by reason of the fact that he was an officer or director of the
Company or served such other corporation in any capacity, against judgments,
fines, amounts paid in settlement and reasonable expenses incurred as a result
of such suit or proceeding or any appeal therein, if such director or officer
acted in good faith for a purpose he reasonably believed to be in the best
interest of the Company and, in criminal actions or proceedings, in addition,
had no reasonable cause to believe that this conduct was unlawful, and to the
extent permitted by, and in the manner provided by, Tennessee law.
The Company maintains a directors and officers liability insurance policy.
Such policy has a deductible of $150,000 and an annual per occurrence and
aggregate cap on coverage of $20 million. In addition, the Company maintains a
general liability insurance policy with an annual per occurrence and aggregate
cap of $20 million.
Under the Declaration, the Company shall indemnify, to the fullest extent
permitted by law, each trustee and administrator of the Trust (and any
affiliated party thereto) who was or is a party to any completed action, suit or
proceeding, whether civil, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
trustee or administrator against expenses (including attorneys' fees and
expenses), arising out of or in connection with the creation, operation or
dissolution of the Trust or any act or omission performed or omitted by such
person in good faith on behalf of the Trust and in a manner such person
reasonably believed to be within the scope of authority conferred on such person
by the Declaration, except that no such person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such person by
reason of negligence or willful misconduct with respect to such acts or
omissions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
An index of exhibits appears at page II-7, which is incorporated herein by
reference.
II-1
<PAGE> 73
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs 1(a) and 1(b) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrants pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first-class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
<PAGE> 74
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act, National Commerce
Bancorporation certifies that it has reasonable grounds to believe that it meets
all the requirements for filing this Pre-Effective Amendment No. 1 to
Registration Statement on Form S-4 and has duly caused this Pre-Effective
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, Tennessee, on July 1, 1997.
NATIONAL COMMERCE BANCORPORATION
By: /s/ LEWIS E. HOLLAND
------------------------------------
Lewis E. Holland
Executive Vice President
Pursuant to the requirements of the Securities Act, this Pre-Effective
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated below on July 1, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
*THOMAS M. GARROTT Chairman of the Board, President, Chief
- --------------------------------------------- Executive Officer and Director (Principal
Thomas M. Garrott Executive Officer)
/s/ LEWIS E. HOLLAND Executive Vice President, Treasurer and
- --------------------------------------------- Chief Financial Officer (Principal
Lewis E. Holland Financial Officer and Principal Accounting
Officer)
Director
- ---------------------------------------------
Frank G. Barton, Jr.
*R. GRATTAN BROWN, JR. Director
- ---------------------------------------------
R. Grattan Brown, Jr.
*BRUCE E. CAMPBELL, JR. Director
- ---------------------------------------------
Bruce E. Campbell, Jr.
*JOHN D. CANALE, III Director
- ---------------------------------------------
John D. Canale, III
*EDMOND D. CICALA Director
- ---------------------------------------------
Edmond D. Cicala
*THOMAS C. FARNSWORTH, JR. Director
- ---------------------------------------------
Thomas C. Farnsworth, Jr.
Director
- ---------------------------------------------
R. Lee Jenkins
*W. NEELY MALLORY, JR. Director
- ---------------------------------------------
W. Neely Mallory, Jr.
*JAMES E. MCGEHEE, JR. Director
- ---------------------------------------------
James E. McGehee, Jr.
</TABLE>
II-4
<PAGE> 76
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
*HARRY J. PHILLIPS, SR. Director
- ---------------------------------------------
Harry J. Phillips, Sr.
*RUDI E. SCHEIDT Director
- ---------------------------------------------
Rudi E. Scheidt
*SIDNEY A. STEWART, JR. Director
- ---------------------------------------------
Sidney A. Stewart, Jr.
*G. MARK THOMPSON Director
- ---------------------------------------------
G. Mark Thompson
</TABLE>
*By: /s/ LEWIS E. HOLLAND
-----------------------------------
Lewis E. Holland, as
Attorney-in-Fact
II-5
<PAGE> 77
Pursuant to the requirements of the Securities Act, National Commerce
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing this Pre-Effective Amendment No. 1 to
Registration Statement on Form S-4 and has duly caused this Pre-Effective
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, Tennessee on July 1, 1997.
NATIONAL COMMERCE CAPITAL TRUST I
By: /s/ LON M. MAGNESS
------------------------------------
Name: Lon M. Magness
Administrator
II-6
<PAGE> 78
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<C> <S>
3.1 Restated Charter of the Company, as amended and restated (incorporated by reference
to the Company's Form 10-K for the year ended December 31, 1996, File No. 0-6094)
3.2 Bylaws of the Company, as amended (incorporated by reference to the Company's Form
10-K for the year ended December 31, 1995, File No. 0-6094)
3.3 Certificate of Trust of the Trust, dated March 14, 1997, as filed with the Secretary
of State of the State of Delaware, previously filed
4.1 Indenture, dated as of March 27, 1997, between the Company and The Bank of New York,
as Trustee, previously filed
4.2 First Supplemental Indenture, dated March 27, 1997, between the Company and The Bank
of New York, as Trustee, previously filed
4.3 Amended and Restated Declaration of Trust, dated as of March 27, 1997, among the
Company, the Trust, The Bank of New York, as Institutional Trustee, The Bank of New
York (Delaware), as Delaware Trustee, and the Administrators named therein,
previously filed
4.4 Form of Guarantee Agreement entered into by the Company and The Bank of New York, as
Guarantee Trustee, and registered under the Securities Act of 1933, as amended,
previously filed
4.5 Registration Rights Agreement, dated March 27, 1997 between the Trust, the Company
and the Initial Purchasers named therein, previously filed
5.1 Opinion of Charles Neale, Vice President and General Counsel of the Company, as to
the legality of the Subordinated Debt Securities and the Guarantee, filed herewith
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to the legality
of the Capital Securities, filed herewith
8.1 Opinion of Arnold & Porter, special tax counsel, as to certain federal income tax
matters, filed herewith
23.1 Consent of Ernst & Young LLP, previously filed
23.2 Consent of Charles Neale (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
23.4 Consent of Arnold & Porter (included in Exhibit 8.1)
24.1 Powers of Attorney, previously filed
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Indenture, previously filed
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under
the Amended and Restated Declaration of Trust, previously filed
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the Guarantee for
the benefit of the holders of Capital Securities, previously filed
99.1 Form of Letter of Transmittal, previously filed
99.2 Form of Notice of Guaranteed Delivery, previously filed
99.3 Form of Exchange Agent Agreement, previously filed
</TABLE>
II-7
<PAGE> 1
Exhibits 5.1
June 23, 1997
National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee, 38150
Re: National Commerce Capital Trust I
Ladies and Gentlemen:
I am a Vice President and the General Counsel of
National Commerce Bancorporation (the "Company"), and in
such capacity have represented the Company in connection
with the registration under the Securities Act of 1933,
as amended (the "Act"), on a Registration Statement on
Form S-4 Registration Nos. 333-29251 and 333-29251-01
(the "Registration Statement"), of $50,000,000 aggregate
principal amount of the Company's Floating Rate Junior
Subordinated Debentures due 2027 ( The "Subordinated
Debentures"), and the related Guarantee Agreement (the
"Guarantee"), from the Company to The Bank of New York,
as Guarantee Trustee for the benefit of holders of the
Floating Rate Capital Trust Pass-through Securities
("Capital Securities") of National Commerce Capital
Trust I, a Delaware business trust (the "Trust"). I
have also represented the Company in connection the
qualification under the Trust Indenture Act of 1939, as
amended, of an Indenture with respect to the
Subordinated Debentures between the Company and The Bank
of New York, as Trustee (the "Indenture"), and of the
Guarantee. The Subordinated Debentures and the
Guarantee are being registered by the Company and
qualified under the Trust Indenture Act for purposes of
exchanging such instruments of like instruments
previously issued by the Company. Such exchange will
occur in connection with the offer of the Trust to
exchange Capital Securities registered under the Act on
the Registration Statement for Capital Securities
previously issued by the Trust.
In connection with the opinions contained herein,
I have examined the charter and bylaws of the Company,
the corporate action taken by the Company relating to
the Subordinated Debentures and their issuance under the
Indenture and to the Guarantee, and such other documents
as I have deemed appropriate as a basis for the opinions
hereinafter expressed.
<PAGE> 2
June 23, 1997
Page Two
Based upon the foregoing I am of the opinion as
follows:
(a) The Subordinated Debentures to be issued by
the Company have been duly and validly authorized and,
upon proper execution, authentication and delivery
thereof in accordance with the Indenture, will be
legally issued and will constitute binding obligation of
the Company entitled to the benefits of the Indenture.
(b) The Guarantee to be issued by the Company
has been duly and validly authorized and, upon proper
execution and delivery thereof, will be legally issued
and will constitute the binding obligations of the
Company.
I hereby consent to the use of this opinion as an
exhibit to the Registration Statement and to the use of
my name and reference to this opinion in the
Registration Statement and the related prospectus.
Very truly yours,
/s/ Charles Neale
Charles Neale
Vice President
and General Counsel
<PAGE> 1
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
July 1, 1997
National Commerce Capital Trust I
c/o National Commerce Bancorporation
One Commerce Square
Memphis, Tennessee 38150
Re: National Commerce Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for National Commerce Capital
Trust I, a Delaware business trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated March 14, 1997
(the "Certificate"), as filed in the office of the Secretary of
State of the State of Delaware (the "Secretary of State") on
March 14, 1997;
(b) The Declaration of Trust of the Trust, dated as of March 14,
1997, as amended and restated by the Amended and Restated
Declaration of Trust of the Trust, dated as of March 27, 1997
(including Exhibits A-1 and A-2 thereto) (collectively, the
"Declaration"), among National Commerce Bancorporation, a
Tennessee corporation (the "Company"), as Sponsor, the trustees
of the Trust named therein (collectively, the
<PAGE> 2
National Commerce Capital Trust I
July 1, 1997
Page 2
"Trustees") and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust;
(c) The Registration Statement (the "Registration Statement") on
Form S-4 including a prospectus with respect to the Company and
the Trust (the "Prospectus"), relating to the Floating Rate
Capital Trust Pass-through Securities of the Trust representing
preferred undivided beneficial interests in the assets of the
Trust (each, an "Exchange Security" and collectively, the
"Exchange Securities"), filed by the Company and the Trust with
the Securities and Exchange Commission; and
(d) A Certificate of Good Standing for the Trust, dated July 1,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to
be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due organization or due
formation, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii) the legal capacity of
natural persons who are parties to the documents examined by us, (iv) that each
of the parties to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such documents, (v)
the due authorization, execution and delivery by all parties thereto of all
<PAGE> 3
National Commerce Capital Trust I
July 1, 1997
Page 3
documents examined by us, (vi) the receipt by each Person to whom an Exchange
Security is to be used by the Trust (collectively, the "Security Holders") of a
certificate for such Exchange Security and the payment for the Exchange
Security acquired by it, in accordance with the Declaration and the Prospectus,
and (vii) that the Exchange Securities are issued and sold to the Security
Holders in accordance with the Declaration and the Prospectus. We have not
participated in the preparation of the Prospectus and assume no responsibility
for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder
which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. When issued and sold, the Exchange Securities will represent
valid and subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable undivided beneficial interests in the assets of the
Trust.
3. The Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Security Holders may
be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Legal Matters" in
the Prospectus. In giving the foregoing consents, we do not thereby admit that
we come within the category of Persons whose consent is required under Section
7 of the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder. Except as stated above,
without our prior written consent, this opinion may not be furnished or quoted
to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
<PAGE> 1
EXHIBIT 8.1
July 1, 1997
National Commerce Bancorporation
National Commerce Capital Trust I
One Commerce Square
Memphis, Tennessee 38150
Ladies and Gentlemen:
We have acted as special tax counsel to National
Commerce Bancorporation (the "Company") in connection
with the preparation and filing with the Securities and
Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), of a Form S-4 Registration
Statement Nos. 333-29251 and 333-29251-01 (the
"Registration Statement"). The Registration Statement
relates to the offer (the "Exchange Offer") by the
Company for all outstanding Floating Rate Capital Trust
Pass-Through Securities in exchange for registered
Floating Rate Capital Trust Pass-Through Securities (the
"Capital Securities").
This opinion letter relates to the principal
material federal income tax consequences of the Exchange
Offer and the ownership and disposition of the Capital
Securities. All capitalized terms used in this opinion
letter and not otherwise defined herein are used as
defined in the Registration Statement.
The opinion set forth herein is subject to the
assumptions and conditions set forth in the Registration
Statement under the heading "United States Federal
Income Taxation" and is premised on the assumption that
all of the factual information, descriptions,
representations and assumptions set forth or referred to
in this letter and in the Registration Statement are
accurate and complete. We have not independently
verified any factual matters relating to the Capital
Securities or the Exchange Offer in connection with or
apart from our preparation of this opinion and,
accordingly, our opinion does not take into account any
matters not set forth herein which might have been
<PAGE> 2
disclosed by independent verification. We have examined
the Registration Statement and such other documents as
we have deemed necessary to render our opinion expressed
below. In our examination of such material, we have
relied upon the current and continued accuracy of the
factual matters we have considered, and we have assumed
the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the
conformity to original documents of all copies of
documents submitted to us. Should any of the facts,
circumstances, or assumptions on which we have relied
subsequently be determined to be incorrect or
inaccurate, our conclusions may vary from those set
forth below and such variance could be material.
Based on and subject to the foregoing, and
subject to further qualifications set forth below, it is
our opinion that the statements in the Registration
Statement under the caption "Certain Federal Income Tax
Considerations," to the extent such statements
constitute a summary of applicable United States federal
income tax law, accurately describe the material United
States federal income tax consequences of the Exchange
Offer and the ownership and disposition of the Capital
Securities.
This opinion is based upon the Internal Revenue
Code of 1986, as amended, the Treasury regulations
promulgated thereunder and other relevant authorities
and law, all as in effect on the date hereof. All of
the above are subject to change or modification by
subsequent legislative, regulatory, administrative or
judicial decisions which could adversely affect our
opinions. Consequently, future changes in the law, or
administrative or judicial interpretations thereof, may
cause the tax treatment of the transactions referred to
herein to be materially different from that described
above.
Other than the specific tax opinion set forth in
this letter, no other opinion has been rendered with
respect to the tax treatment of the Exchange Offer and
the ownership and disposition of the Capital Securities,
including, but not limited to, their tax treatment under
other provisions of the Code and the regulations, the
tax treatment of any conditions existing at the time of,
<PAGE> 3
or effects resulting from, the Exchange Offer and the
ownership and disposition of the Capital Securities that
are not specifically covered by the above opinions, or
the tax treatment under state, local, foreign or any
other tax laws.
We hereby consent to the filing of this letter as
an exhibit to the Registration Statement and the use of
our name in the Registration Statement under the caption
"United States Federal Income Taxation." In giving such
consent, we do not concede that this consent is required
under Section 7 of the Securities Act of 1933.
Very truly yours,
ARNOLD & PORTER
