AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1997,
REGISTRATION NOS. 333-28651
333-28651-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - - - - - - - - - - - - - - - - - - - - - - -
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
- - - - - - - - - - - - - - - - - - - - - - - -
U.S.B. HOLDING CO., INC. UNION STATE CAPITAL TRUST I
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its trust agreement)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
------------ ------------
6712 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
36-3197969 13-7117454
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
100 DUTCH HILL ROAD
ORANGEBURG, NEW YORK 10962
(914) 365-4600
(Address, including zip code, and telephone number, including area
code, of Registrants' principal executive offices)
STEVEN T. SABATINI
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY
U.S.B. HOLDING CO., INC.
100 DUTCH HILL ROAD
ORANGEBURG, NEW YORK 10962
(914) 365-4600
(Name, address, including zip code, and telephone number, including
area code, of agents for service)
COPIES TO:
LOUIS J. BEVILACQUA, ESQ.
DERRICK D. CEPHAS, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE
NEW YORK, NEW YORK 10038
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Unit(1) Offering Price(1) Fee(2)
<S> <C> <C> <C> <C>
9.58% Series B Capital Securities
of Union State Capital Trust I... $20,000,000 100% $20,000,000 $6,060.60
Series B Junior Subordinated Debt
Securities of U.S.B. Holding Co.,
Inc. (2).........................
U.S.B. Holding Co., Inc. Guarantee
with respect to Capital
Securities(3)....................
Total....................... $20,000,000(4) 100% $20,000,000(5) $6,060.60
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Series B Junior
Subordinated Debt Securities of U.S.B. Holding Co., Inc. (the "Junior
Subordinated Debt Securities") distributed upon any liquidation of Union
State Capital Trust I.
(3) No separate consideration will be received for the U.S.B. Holding Co., Inc.
Guarantee.
(4) This Registration Statement is deemed to cover rights of holders of Junior
Subordinated Debt Securities under the Indenture, the rights of holders of
9.58% Series B Capital Securities (the "Capital Securities") of Union State
Capital Trust I under the Amended and Restated Declaration of Trust and the
rights of holders of such Capital Securities under the U.S.B. Holding Co.,
Inc. Guarantee.
(5) Such amount represents the liquidation amount of the Capital Securities to
be exchanged hereunder and the principal amount of Junior Subordinated Debt
Securities that may be distributed to holders of such Capital Securities
upon any liquidation of Union State Capital Trust I.
- - - - - - - - - - - - - - - - - - - - - - - -
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission (the "Commission"). These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there by any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
SUBJECT TO COMPLETION, DATED JULY 14, 1997
UNION STATE CAPITAL TRUST I
OFFER TO EXCHANGE ITS
9.58% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9.58% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
U.S.B. HOLDING CO., INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON AUGUST ___, 1997, UNLESS EXTENDED
---------------------
Union State Capital Trust I, a trust formed under the laws of the State of
Delaware (the "Trust"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $20,000,000 aggregate liquidation amount of its 9.58% Series B Capital
Securities (the "New Capital Securities") that have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like liquidation amount of its outstanding 9.58% Series A Capital
Securities (the "Old Capital Securities"), of which $20,000,000 aggregate
liquidation amount is outstanding. Pursuant to the Exchange Offer, U.S.B.
Holding Co., Inc., a Delaware corporation (the "Corporation" or "USB"), is also
offering to exchange (i) its guarantee of payments of cash distributions and
payments on liquidation of the Trust or redemption of the New Capital Securities
(the "New Guarantee") for a like guarantee in respect of the Old Capital
Securities (the "Old Guarantee") and (ii) all of its Series B Junior
Subordinated Debt Securities due February 1, 2027 (the "New Junior Subordinated
Debt Securities") for a like aggregate principal amount of its Series A Junior
Subordinated Debt Securities due February 1, 2027 (the "Old Junior Subordinated
Debt Securities"), which New Guarantee and New Junior Subordinated Debt
Securities also have been registered under the Securities Act. The Old Capital
Securities, the Old Guarantee and the Old Junior Subordinated Debt Securities
are collectively referred to herein as the "Old Securities," and the New Capital
Securities, the New Guarantee and the New Junior Subordinated Debt Securities
are collectively referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Securities, (ii) the
New Capital Securities will not provide for any increase in the Distribution
rate thereon, and (iii) the New Junior Subordinated Debt Securities will not
provide for any increase in the interest rate thereon. See "Description of New
Securities" and "Description of Old Securities." The New Capital Securities are
being offered for exchange in order to satisfy certain obligations of the
Corporation and the Trust under the Registration Agreement dated as of February
5, 1997 (the "Registration Rights Agreement") among the Corporation, the Trust
and the Initial Purchaser (as defined herein). In the event that the Exchange
Offer is consummated, any Old Capital Securities that remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued under
the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage in outstanding
liquidation amount thereof have taken certain actions or exercised certain
rights under the Declaration (as defined herein).
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Old Capital Securities on July ___, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE 22 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July ___, 1997.
<PAGE>
The New Capital Securities and the Old Capital Securities (collectively,
the "Capital Securities") represent beneficial interests in the assets of the
Trust. The Corporation is the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities," and
together with the Capital Securities, the "Trust Securities"). The Chase
Manhattan Bank is the Property Trustee of the Trust. The Trust exists for the
exclusive purposes of issuing the Trust Securities, and investing the proceeds
thereof in the Junior Subordinated Debt Securities (as defined herein). The
Junior Subordinated Debt Securities will mature on February 1, 2027 (the "Stated
Maturity"). The Capital Securities will have a preference over the Common
Securities under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise. See "Description of New
Capital Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
February 5, 1997, as amended and supplemented from time to time, between the
Corporation and The Chase Manhattan Bank, as Debenture Trustee (the "Debenture
Trustee"), (ii) the "Declaration" means the Amended and Restated Declaration of
Trust, dated as of February 5, 1997 relating to the Trust among the Corporation,
as Sponsor, The Chase Manhattan Bank as Property Trustee (the "Property
Trustee"), Chase Manhattan Bank Delaware, as Delaware Trustee, (the "Delaware
Trustee"), and four Administrative Trustees named therein (collectively, with
the Property Trustee and Delaware Trustee, the "Issuer Trustees"). In addition,
as the context may require, unless otherwise expressly stated, (i) the term
"Capital Securities" includes the Old Capital Securities and the New Capital
Securities, (ii) the term "Trust Securities" includes the Capital Securities and
the Common Securities, (iii) the term "Junior Subordinated Debt Securities"
includes the Old Junior Subordinated Debt Securities and the New Junior
Subordinated Debt Securities and (iv) the term "Guarantee" includes the Old
Guarantee and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions, in each case arising from the payment of interest
on the Junior Subordinated Debt Securities, payable semi-annually in arrears on
the 1st day of February and August of each year, at the annual rate of 9.58% of
the liquidation amount of $1,000 per New Capital Security ("Distributions")
accruing from February 5, 1997 to the extent New Capital Securities are
exchanged prior to the record date for purposes of the August 1, 1997 interest
payment. Subject to certain exceptions, the Corporation will have the right to
defer payments of interest on the Junior Subordinated Debt Securities at any
time and from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each deferral period (each, an "Extension Period");
provided, however, that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debt Security. Upon the termination of any
such Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the 9.58%, compounded semi-annually, to the
extent permitted by applicable law), the Corporation may elect to begin a new
Extension Period, subject to the requirements set forth herein. If interest
payments on the Junior Subordinated Debt Securities are so deferred,
Distributions on the Trust Securities will also be deferred and the Corporation
will not be permitted, subject to certain exceptions described herein, to
declare or pay any cash distributions with respect to the Corporation's capital
stock (which includes common and preferred stock) or to make any payment with
respect to debt securities of the Corporation that rank pari passu with or
junior to the Junior Subordinated Debt Securities. During an Extension Period,
interest on the Junior Subordinated Debt Securities will continue to accrue (as
well as the amount of Distributions to which holders of the Trust Securities are
entitled will accumulate) at the rate of 9.58% per annum, compounded
semi-annually, and holders of Trust Securities will be required to accrue
interest income for United States federal income tax purposes. See "Description
of New Junior Subordinated Debt Securities--Option to Extend Interest Payment
Date" and "Certain United States Federal Income Tax Considerations--Interest
Income and Original Issue Discount."
The Corporation will, through the New Guarantee, the Declaration, the New
Junior Subordinated Debt Securities and the Indenture (each as defined herein),
taken together, fully, irrevocably and unconditionally guarantee as described
herein, all of the Trust's obligations under the New Capital Securities. See
"Relationship Among the New Capital Securities, the New Junior Subordinated Debt
Securities and the New Guarantee--Full and Unconditional Guarantee." The
Corporation has agreed to guarantee the payment of Distributions and payments on
liquidation or redemption of the New Capital Securities, but only in each case
to the extent of funds held by the Trust, as described herein. See "Description
of New Guarantee." If the Corporation does not make interest payments on the
Junior Subordinated Debt Securities held by the Trust, the Trust will have
insufficient funds to pay Distributions on the Trust Securities. The Guarantee
does not cover the payment of Distributions when the Trust does not have
sufficient funds to pay such Distributions. In such event, a holder of Capital
Securities may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of or interest on Junior
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Capital Securities held by such holder (a "Direct
Action"). See "Description of New Junior Subordinated Debt
Securities--Enforcement of Certain Rights by Holders of Capital Securities." The
obligations of the Corporation under the Guarantee and the Junior Subordinated
Debt Securities are subordinate and junior in right of payment to all Senior
Debt (as defined in "Description of New Junior Subordinated Debt
Securities--Subordination") of the Corporation. In addition, because the
Corporation is a holding company, the Junior Subordinated Debt Securities and
the Guarantee are effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, including deposit liabilities of
its bank subsidiary.
The Trust Securities are subject to mandatory redemption (i) in whole, but
not in part, at the Stated Maturity of the Junior Subordinated Debt Securities
at a redemption price equal to the principal amount of, plus accrued and unpaid
interest on, the Junior Subordinated Debt Securities (the "Maturity Redemption
Price"), (ii) in whole, but not in part, at any time prior to February 1, 2007,
contemporaneously with the optional redemption of the Junior Subordinated Debt
Securities upon the occurrence and continuation of a Special Event (as defined
herein) at a redemption price equal to the Special Event Prepayment Price (as
defined herein) (the "Special Event Redemption Price"), and (iii) in whole or in
part on or after February 1, 2007 contemporaneously with any optional redemption
by the Corporation of Junior Subordinated Debt Securities at a redemption price
(the "Optional Redemption Price") equal to the Optional Prepayment Price (as
defined below). Any of the Maturity Redemption Price, the Special Event
Redemption Price or the Optional Redemption Price may be referred to herein as
the "Redemption Price." See "Description of New Capital Securities--Mandatory
Redemption." Subject to the Corporation having received prior approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve") to do
so if then required under applicable capital guidelines or policies of the
Federal Reserve, the Junior Subordinated Debt Securities are redeemable prior to
the Stated Maturity (i) at the option of the Corporation on or after February 1,
2007, in whole or in part at any time at a redemption price (the "Optional
Prepayment Price") equal to 104.790% of the principal amount thereof on February
1, 2007 declining ratably on each February 1 thereafter to 100% on or after
February 1, 2017, plus accrued and unpaid interest thereon to the date of
redemption or (ii) at any time prior to February 1, 2007, in whole but not in
part, upon the occurrence and continuation of a Special Event, at a redemption
price (the "Special Event Prepayment Price") equal to the greater of (a) 100% of
the principal amount thereof or (b) the sum, as determined by a Quotation Agent
(as defined herein), of the present values of the principal amount and premium
payable as part of the prepayment price with respect to an optional redemption
of such Junior Subordinated Debt Securities on February 1, 2007, together with
scheduled payments of interest accruing from the redemption date to February 1,
2007, in each case, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein), plus accrued but unpaid interest thereon to
the date of redemption. See "Description of New Junior Subordinated Debt
Securities--Optional Redemption" and "--Special Event Prepayment."
The Corporation has the right at any time to terminate the Trust and cause
a Like Amount (as defined herein) of the Junior Subordinated Debt Securities to
be distributed to the holders of the Trust Securities upon liquidation of the
Trust, subject to (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to the holders of
the Capital Securities and (ii) prior approval of the Federal Reserve to do so
if then required under applicable capital guidelines or policies of the Federal
Reserve. In the event of such termination of the Trust, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, the holders
of the Trust Securities generally will be entitled to receive a liquidation
amount of $1,000 per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment, which shall be in the form of a distribution of
a Like Amount of Junior Subordinated Debt Securities, subject to certain
exceptions. See "Description of New Capital Securities--Liquidation of the Trust
and Distribution of Junior Subordinated Debt Securities."
The Capital Securities will be issued, and may be transferred, only in
blocks having a Liquidation Value of not less than $100,000 (100 Capital
Securities) or any integral multiple of $1,000 (one Capital Security) in excess
thereof.
-----------------------------------------------------------------
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Corporation nor the Trust has sought its own interpretive letter and there can
be no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has made in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, the
Corporation and the Trust believe that the New Capital Securities issued
pursuant to this Exchange Offer in exchange for the Old Capital Securities may
be offered for resale, resold and otherwise transferred by a holder thereof
(other than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Capital Securities are acquired in the ordinary course of
such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who is an "affiliate" of the
Corporation or the Trust or who intends to participate in the Exchange Offer for
the purpose of distributing the New Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the Trust to resell pursuant to Rule
144A under the Securities Act ("Rule 144A") or any other available exemption
under the Securities Act, (a) will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of the Commission set forth in
the above-mentioned interpretive letters, (b) will not be permitted or entitled
to tender such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds the 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 the New Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Corporation or the Trust,
(ii) any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Corporation and the Trust may require such holder,
as a condition to such holder's eligibility to participate in the Exchange
Offer, to furnish to the Corporation and the Trust (or an agent thereof) in
writing information as to the number of "beneficial owners" (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) on behalf
of whom such holder holds the Capital Securities to be exchanged in the Exchange
Offer. Each broker-dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Trust believe that 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 that
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and the
Corporation have agreed that, ending on the close of business on the 180th day
following the Expiration Date (as described herein) (subject to extension under
certain limited circumstances described below) or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer,
they will make this Prospectus available to a Participating Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of New Capital Securities received in exchange for Old Capital
Securities pursuant to the Exchange Offer must notify the Corporation or the
Trust, or cause the Corporation or the Trust to be notified, on or prior to the
Expiration Date, that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at one of the addresses set forth herein
under "The Exchange Offer--Exchange Agent." Any Participating Broker-Dealer who
is an "affiliate" of the Corporation or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of any
fact that makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or that causes this Prospectus to omit
to state a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Capital Securities (or the New Guarantee or the New
Junior Subordinated Debt Securities, as applicable) pursuant to this Prospectus
until the Corporation or the Trust has amended or supplemented this Prospectus
to correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to such Participating Broker-Dealer or the
Corporation or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debt Securities,
as applicable) may be resumed, as the case may be. If the Corporation or the
Trust gives such notice to suspend the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debt Securities, as
applicable), it shall extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of New Capital Securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the New
Capital Securities or to and including the date on which the Corporation or the
Trust has given notice that the sale of New Capital Securities (or the New
Guarantee or the New Junior 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 Purchaser has informed the Corporation and the Trust that
it currently intends to make a market in the New Capital Securities, it is not
obligated to do so, and any such market making may be discontinued at any time
without notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Capital Securities. The Corporation and the
Trust do not intend to apply for listing of the New Capital Securities on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System ("NASDAQ").
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights that terminate upon the consummation of the Exchange
Offer). Following the consummation of the Exchange Offer, the holders of Old
Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation nor the Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act of
the Old Capital Securities held by them. To the extent that Old Capital
Securities are tendered and accepted in the Exchange Offer, a holder's ability
to sell untendered Old Capital Securities could be adversely affected. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on August ___, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
liquidation amount of the Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions that may
be waived by the Corporation or the Trust and to the terms and provisions of the
Registration Rights Agreement. Old Capital Securities may be tendered in whole
or in part in an aggregate liquidation amount of not less than $100,000 (100
Capital Securities) or any integral multiple of $1,000 liquidation amount (one
Capital Security) in excess thereof. The Corporation as Issuer of Junior
Subordinated Debt Securities has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer--Fees and Expenses." Holders of the Old Capital
Securities whose Old Capital Securities are accepted for exchange will not
receive Distributions on such Old Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Old Capital Securities
accumulated from and after February 5, 1997 but will receive such Distributions
on the New Capital Securities. See "The Exchange Offer--Distributions on New
Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
<PAGE>
--------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
--------------------
TABLE OF CONTENTS
Available Information.................................................11
Incorporation of Certain Documents by Reference.......................11
Summary...............................................................13
Risk Factors..........................................................22
Use of Proceeds.......................................................28
Union State Capital Trust I...........................................28
U.S.B. Holding Co., Inc...............................................29
Recent Developments...................................................31
Selected Historical Financial Information.............................32
Capitalization........................................................36
The Exchange Offer....................................................37
Description of New Capital Securities.................................46
Description of New Junior Subordinated Debt Securities................58
Description of New Guarantee..........................................68
Description of Old Securities.........................................71
Relationship Among the New Capital Securities, the New
Junior Subordinated Debt Securities and the New Guarantee......71
Certain United States Federal Income Tax Considerations...............72
Certain ERISA Considerations..........................................76
Plan of Distribution..................................................78
Legal Matters.........................................................78
Independent Auditors..................................................78
--------------------
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov.). The Corporation's common stock
is listed on the American Stock Exchange and all reports, proxy and information
statements and other information filed by the Corporation with the Commission
also may be inspected at the offices at the American Stock Exchange, 86 Trinity
Place, New York, New York 10006-1181.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Capital Securities because the Trust is a
newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than (i) issuing and selling the Trust Securities, (ii) using the proceeds
from the sale of the Trust Securities to acquire the Junior Subordinated Debt
Securities issued by the Corporation and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as registering the
transfer of Capital Securities). See "Union State Capital Trust I," "Description
of New Capital Securities," "Description of New Junior Subordinated Debt
Securities" and "Description of New Guarantee." In addition, the Corporation
does not expect that the Trust will file reports under the Exchange Act with the
Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Corporation and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the New Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended December
31, 1996;
2. The Corporation's Current Reports on Form 8-K dated January 28, 1997 and
February 6, 1997;
3. The Corporation's Registration Statement on Form 8-A dated March 17,
1997; and
4. The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
Each document or report filed by the Corporation pursuant to Section 13
(a), 13 (c), 14 or 15 (d) of the Exchange Act after the date hereof and prior to
the termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein or, in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
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 this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. The Corporation will provide
without charge to any person to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated by reference herein (other than exhibits not specifically
incorporated by reference into the texts of such documents). Requests for such
documents should be directed to:
U.S.B. Holding Co., Inc.
100 Dutch Hill Road
Orangeburg, New York 10962
Telephone: (914) 365-4600
Attention: Steven T. Sabatini, Executive
Vice President, Chief
Financial Officer and Assistant Secretary.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or incorporated by reference
herein.
UNION STATE CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration and (ii) the filing of a certificate of trust of the
Trust with the Delaware Secretary of State on January 27, 1997. The Trust's
business and affairs are conducted by the Issuer Trustees: The Chase Manhattan
Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee,
and four individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debt Securities
issued by the Corporation and (iii) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Capital Securities). The Junior Subordinated Debt Securities will be the
sole assets of the Trust, and payments under the Junior Subordinated Debt
Securities will be the sole revenues of the Trust. All of the Common Securities
are owned directly or indirectly by the Corporation.
U.S.B. HOLDING CO., INC.
U.S.B. Holding Co., Inc. (the "Corporation" or "USB"), a Delaware
corporation incorporated in 1982, is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, which provides financial services
through its wholly-owned subsidiaries. The Corporation and its subsidiaries
derive substantially all of their revenue and income from the furnishing of
banking and related financial services primarily to customers in Rockland and
Westchester Counties, New York.
Union State Bank (the "Bank"), the Corporation's sole banking subsidiary,
is a New York state chartered commercial bank established in 1969. The Bank
offers a wide range of banking services to individuals, municipalities,
corporations and small and medium-size businesses through its 18 retail banking
facilities in Rockland and Westchester Counties. The Bank's corporate offices
are located in Rockland County and the Bank also has a branch located in
Westchester County, which only closes loans and disburses funds. The Bank's
products and services include checking accounts, NOW accounts, money market
accounts, savings accounts (passbook and statement), certificates of deposit,
retirement accounts, business, personal, residential, construction, home equity,
second mortgage and condominium mortgage loans, loans for education, health and
similar expenditures, credit cards, other consumer oriented financial services
and safe deposit facilities. The Bank also makes available to its customers
automated teller machines (ATMs) and has a remote banking service for business
customers. The deposits of the Bank are insured to the extent permitted by law
pursuant to the Federal Deposit Insurance Act of 1950, as amended.
The Corporation currently has no banking subsidiaries other than the Bank,
although, prior to December 31, 1995, the Corporation owned Royal Oak Savings
Bank, F.S.B. ("Royal"), a federal thrift subsidiary located in Maryland. The
Corporation formed Royal in January 1991 to acquire deposits and certain assets
of two federal thrift institutions located in Maryland from the Resolution Trust
Company. Prior to its sale by the Corporation, Royal offered a wide range of
services to individuals and businesses in Baltimore and Carroll Counties,
Maryland. Royal had assets of approximately $47,000,000 as of December 31, 1995.
On December 31, 1995, all of the common stock of Royal was sold by the
Corporation to Monocacy Bancshares, Inc. Immediately prior to such sale,
substantially all of Royal's loans and investment securities, including its
credit card business, were purchased from Royal, for book value, by the Bank and
the Corporation, in effect transferring Royal's branch system, loan servicing
function, cash and certain immaterial assets to Monocacy Bancshares, Inc. The
Bank and the Corporation intend to maintain the loan portfolio purchased from
Royal, as the Corporation believes such portfolio represents an attractive
asset, and intend to continue to expand the credit card business acquired from
Royal. The Corporation does not intend, however, to expand its lending or other
business in the Maryland market, except for its credit card business.
The Corporation's assets at March 31, 1997 totaled $891.4 million, which
represents an increase of $87.9 million or 10.9% over assets as of December 31,
1996. The average annual growth rate in assets of the Corporation for the five
years ended December 31, 1996 was 15.6%. The Corporation has, through the Bank,
grown primarily by originating assets through the Bank's lending group and by
acquiring bank qualified securities. The Bank's funding requirements have been
met primarily through increased retail deposits which have been generated by the
Bank's expanding branch network and by an expansion of the Bank's existing
retail deposit base, as well as from municipal deposits and borrowings. The
Bank's current market shares are approximately 11.6% and .8% of Rockland and
Westchester deposits, respectively. The Bank is the largest independent bank
headquartered in Rockland County and believes it is able to attract and retain
customers because of its knowledge of its local markets, and the ability of its
professional staff to provide a high degree of service to its customers.
The Bank expects to continue to expand by opening new retail branches,
enhancing computerized and telephonic delivery channels, and expanding loan
originations in the Bank's market area. Acquisitions of other financial
institutions and branches will be considered to supplement growth in the Bank's
present markets and in contiguous markets. The Corporation has not made any
acquisitions of other banking institutions to date, other than its acquisition
of Royal.
The Corporation's net income was $9.4 million in 1996, compared to $9.3
million in 1995, or an increase of 1%. The 1995 amount includes net income of
$2.1 million as a result of the sale of Royal, while the 1996 amount includes
approximately $.3 million of net income attributable to the sale of a branch
facility which was previously part of Royal's branch system.
Developments."Excluding these amounts, as well as net income from Royal in 1995,
1996 net income increased $2.1 million or 30% over net income in 1995. Net
income for 1996 and 1995, excluding the effects of the transactions described
above and the net income of Royal in 1995, was $9.1 million and $7.0 million,
respectively.
Net income of the Corporation for the three months ended March 31, 1997 was
$2.3 million, an increase of $.1 million or 4% over earnings of $2.2 million for
the same period last year. Net income for the three months ended March 31, 1996
included net gains on securities transactions of $.3 million, while the same
period in 1997 did not include any material gains (or losses) from sale of
securities. Net income per common and common equivalent share for the quarter
ended March 31, 1997 was $.35 compared to $.34 per common and common equivalent
share for the same period in the previous year.
The Corporation's business strategy is to provide commercial and consumer
banking services to its local customer base. For the quarter ended March 31,
1997 and the fiscal year ended December 31, 1996, USB reported a return on
average assets and return on average common equity of 1.11% and 17.12% and 1.25%
and 18.60%, respectively. Management believes that the Corporation's net
interest margin on a tax equivalent basis and efficiency ratio for the quarter
ended March 31, 1997 and the fiscal year ended December 31, 1996 of 4.25% and
52.71%, and 4.43% and 51.09%, respectively, illustrate the underlying strength
of USB's business strategy. See "Selected Historical Financial Information."
The principal executive offices of USB are located at 100 Dutch Hill Road,
Orangeburg, New York 10962 and its telephone number is (914) 365-4600.
USB is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of USB to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(including depositors in the case of banking subsidiaries), except to the extent
that a claim of USB as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which present and future banking subsidiaries of USB can finance or otherwise
transfer funds to USB or its nonbanking subsidiaries, whether in the form of
loans, extensions of credit, investments or asset purchases, including
regulatory limitations on the payment of dividends directly or indirectly to USB
from the Bank. Federal and state bank regulatory agencies also have the
authority to limit further the Bank's payment of dividends based on such factors
as the maintenance of adequate capital for such subsidiary bank, which could
reduce the amount of dividends otherwise payable. Under applicable banking
statutes, at March 31, 1997, the Bank could have declared additional dividends
of approximately $14.6 million to USB without prior regulatory approval.
Under the policy of the Federal Reserve, USB is expected to act as a source
of financial strength to the Bank and any other subsidiary bank which USB might
own and to commit resources to support each subsidiary bank in circumstances
where USB might not do so absent such policy. In addition, any subordinated
loans by USB to the Bank or any other subsidiary bank which USB might own would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary banks.
THE EXCHANGE OFFER
The Exchange Offer............Up to $20,000,000 aggregate liquidation amount of
the New Capital Securities are being offered in
exchange for a like aggregate liquidation amount
of the Old Capital Securities. The Old Capital
Securities may be tendered for exchange in whole
or in part in a liquidation amount of $100,000
(100 Capital Securities) or any integral multiple
of $1,000 (one Capital Security) in excess
thereof. The Corporation and the Trust are making
the Exchange Offer in order to satisfy their
obligations under the Registration Rights
Agreement relating to the Old Capital Securities.
For a description of the procedures for tendering
Old Capital Securities, see "The Exchange
Offer--Procedures for Tendering Old Capital
Securities."
Expiration Date...............5:00 p.m., New York City time, on
August ___, 1997, unless the Exchange Offer is
extended by the Corporation or the Trust (in which
case the Expiration Date will be the latest date
and time to which the Exchange Offer is extended).
See "The Exchange Offer--Terms of the Exchange
Offer."
Conditions to the
Exchange Offer................The Exchange Offer is subject to certain
conditions, which may be waived by the Corporation
and the Trust in their sole discretion. The
Exchange Offer is not conditioned upon any minimum
liquidation amount of the Old Capital Securities
being tendered. See "The Exchange
Offer--Conditions to the Exchange Offer."
Offer.........................The Corporation and the Trust reserve the right in
their sole and absolute discretion, subject to
applicable law, at any time and from time to time,
(i) to delay the acceptance of the Old Capital
Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions
have not been satisfied, (iii) to extend the
Expiration 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 the Old Capital Securities to
withdraw their tendered Old Capital Securities, or
(iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. See
"The Exchange Offer--Terms of the Exchange Offer."
Withdrawal Rights.............Tenders of the 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 in
conformity with certain procedures set forth below
under "The Exchange Offer--Withdrawal Rights."
Procedures for Tendering
the Old Capital Securities ...Certain brokers, dealers, commercial banks, trust
companies and other nominees who hold Old Capital
Securities through The Depository Trust Company
("DTC") may effect tenders by book-entry transfer
through DTC's Automated Tender Offer Program
("ATOP"). Beneficial owners 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. Tendering holders
of Old Capital Securities that do not use ATOP
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
certificates of the Old Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Old Capital
Securities. Tendering holders of Old Capital
Securities that use ATOP will, by so doing,
acknowledge that they are bound by the terms of
the Letter of Transmittal. See "The Exchange Offer
-- Procedures for Tendering the Old Capital
Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Corporation or the Trust. Such
documents should only be sent to the Exchange
Agent.
Resales of the New
Capital Securities............The Corporation and the Trust are making the
Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of
the Commission as set forth in certain
interpretive letters addressed to third parties in
other transactions. However, neither the
Corporation nor the Trust has sought its own
interpretive letter and there can be no assurance
that the staff of the Division of Corporation
Finance of the Commission would make a similar
determination with respect to the Exchange Offer
as it has made in such interpretive letters to
third parties. Based on these interpretations by
the staff of the Division of Corporation Finance
of the Commission, and subject to the two
immediately following sentences, the Corporation
and the Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements
of the Securities Act, provided that such New
Capital Securities are acquired in the ordinary
course of such holder's business and that such
holder is not participating, and has no
arrangement or understanding with any person to
participate, in a distribution (within the meaning
of the Securities Act) of such New Capital
Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the
Corporation or the Trust or who intends to
participate in the Exchange Offer for the purpose
of distributing the New Capital Securities, or any
broker-dealer who purchased the Old Capital
Securities from the Trust 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
Division of Corporation Finance of the Commission
set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a
result of market-making or other trading
activities and exchanges such Old Capital
Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in
connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities who wishes
to exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required
to represent that (i) it is not an "affiliate" of
the Corporation or the Trust, (ii) any New Capital
Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it
has no arrangement or understanding with any
person to participate in a distribution (within
the meaning of the Securities Act) of such New
Capital Securities, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such
New Capital Securities. Each broker-dealer that
receives New Capital Securities for its own
account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital
Securities for its own account as the result of
market-making activities or other trading
activities and must agree that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such New Capital Securities. The Letter of
Transmittal states that, by so acknowledging and
by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based on
the position taken by the staff of the Division of
Corporation Finance of the Commission in the
interpretive letters referred to above, the
Corporation and the Trust believe that
Participating Broker-Dealers who acquired Old
Capital Securities for their own accounts as a
result of market-making activities or other
trading activities may fulfill their prospectus
delivery requirements with respect to the New
Capital Securities received upon exchange of such
Old Capital Securities (other than the Old Capital
Securities that represent an unsold allotment from
the original sale of the Old Capital Securities)
with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of distribution
with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in
connection with resales of New Capital Securities
received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by
such Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain provisions
set forth in the Registration Rights Agreement and
to the limitations described below under "The
Exchange Offer--Resales of New Capital
Securities," the Corporation and the Trust have
agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by
a Participating Broker-Dealer in connection with
resales of such New Capital Securities for a
period ending 180 days after the Expiration Date
(subject to extension under certain limited
circumstances) or, if earlier, when all such New
Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of
Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Corporation or the Trust
may not rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See "The
Exchange Offer--Resales of New Capital
Securities."
Exchange Agent................The exchange agent with respect to the Exchange
Offer is The Chase Manhattan Bank (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.
Use of Proceeds...............Neither the Corporation nor the Trust will receive
any cash proceeds from the issuance of the New
Capital Securities offered hereby. See "Use of
Proceeds."
Certain United States
Federal Income Tax
Considerations;
ERISA Considerations..........Holders of Old Capital Securities should review
the information set forth under "Certain United
States Federal Income Tax Considerations" and
"ERISA Considerations" prior to tendering Old
Capital Securities pursuant to the Exchange Offer.
THE NEW CAPITAL SECURITIES
Securities Offered............Up to $20,000,000 aggregate liquidation amount of
the Trust's New Capital Securities that have been
registered under the Securities Act (liquidation
amount $1,000 per New Capital Security). The New
Capital Securities will be issued and the Old
Capital Securities were issued under the
Declaration. The New Capital Securities and any
Old Capital Securities that remain outstanding
after consummation of the Exchange Offer will vote
together as a single class for purposes of
determining whether holders of the requisite
percentage in outstanding liquidation amount
thereof have taken certain actions or exercised
certain rights under the Declaration. See
"Description of New Capital Securities--Voting
Rights; Amendment of the Declaration." The terms
of the New Capital Securities are identical in all
material respects to the terms of the Old Capital
Securities, except that the New Capital Securities
have been registered under the Securities Act and
will not be subject to certain restrictions on
transfer applicable to the Old Capital Securities
and will not provide for any increase in the
Distribution rate thereon. See "The Exchange
Offer--Purpose of the Exchange Offer,"
"Description of New Capital Securities,"
"Description of New Junior Subordinated Debt
Securities," "Description of New Guarantee" and
"Description of Old Securities."
Distribution Dates...........February 1 and August 1 of each year, commencing
August 1, 1997.
Extension Periods............Distributions on the New Capital Securities may be
deferred for the duration of any Extension Period
elected by the Corporation with respect to the
payment of interest on the New Junior Subordinated
Debt Securities. No Extension Period will exceed
10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior
Subordinated Debt Securities. See "Description of
New Junior Subordinated Debt Securities--Option to
Extend Interest Payment Date" and "Certain United
States Federal Income Tax Considerations--Interest
Income and Original Issue Discount."
Ranking......................The New Capital Securities will rank pari passu,
and payments thereon will be made pro rata, with
the Common Securities except as described under
"Description of New Capital Securities --
Subordination of Common Securities." The New
Junior Subordinated Debt Securities will rank pari
passu with all other junior subordinated debt
securities to be issued by the Corporation
pursuant to the Indenture with substantially
similar subordination terms ("Other Debentures"),
and which will be issued and sold (if at all) to
other trusts to be established by the Corporation
(if any), in each case similar to the Trust
("Other Trusts"), and will be unsecured and
subordinate and junior in right of payment to the
extent and in the manner set forth in the
Indenture to all Senior Debt of the Corporation.
See "Description of New Junior Subordinated Debt
Securities." The New Guarantee will rank pari
passu with all other guarantees (if any) to be
issued by the Corporation with respect to capital
securities (if any) to be issued by the Trust, if
any, and will constitute an unsecured obligation
of the Corporation and will rank subordinate and
junior in right of payment to the extent and in
the manner set forth in the Guarantee to all
Senior Debt. See "Description of New Guarantee."
In addition, because the Corporation is a holding
company, the New Junior Subordinated Debt
Securities and the New Guarantee are effectively
subordinated to all existing and future
liabilities of the Corporation's subsidiaries,
including deposit liabilities of the Bank.
Redemption...................The New Capital Securities and Common Securities
are subject to mandatory redemption (i) in whole,
but not in part, at the Stated Maturity of the New
Junior Subordinated Debt Securities upon the
redemption thereof, (ii) in whole, but not in
part, at any time prior to February 1, 2007,
contemporaneously with the optional redemption of
the New Junior Subordinated Debt Securities upon
the occurrence and continuation of a Special Event
(as defined herein) and (iii) in whole or in part
at any time on or after February 1, 2007
contemporaneously with any optional redemption by
the Corporation of New Junior Subordinated Debt
Securities, in each case at the applicable
Redemption Price. See "Description of New Capital
Securities--Mandatory Redemption."
No Rating....................The New Capital Securities are not expected to be
rated by any rating service, nor is any security
issued by the Corporation so rated.
Transfer Restrictions........The 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) or any integral multiple of $1,000
(one Capital Security) in excess thereof. 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. See
"Description of New Capital Securities --
Restrictions on Transfer."
ERISA Considerations.........Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Certain
ERISA Considerations."
Absence of Market for
the New Capital Securities...The New Capital Securities will be a new issue of
securities for which there is currently no market.
Although the Initial Purchaser has informed the
Trust and the Corporation that it currently
intends to make a market in the New Capital
Securities, the Initial Purchaser is not obligated
to do so, and any such market making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the New
Capital Securities. The Trust and the Corporation
do not intend to apply for listing of the New
Capital Securities on any securities exchange or
for quotation through NASDAQ. See "Plan of
Distribution."
Risk Factors.................Prospective investors should carefully consider
the matters set forth under "Risk Factors."
<PAGE>
RISK FACTORS
Prospective purchasers of the New Capital Securities should carefully
review the information contained elsewhere in this Prospectus or incorporated by
reference herein and should particularly consider the following matters.
Ranking of Obligations Under the Guarantee and the Junior Subordinated Debt
Securities
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debt Securities are unsecured and rank subordinate and
junior in right of payment to all Senior Debt of the Corporation. At March 31,
1997, the Corporation had no Senior Debt outstanding. Upon the issuance of the
Junior Subordinated Debt Securities, the Corporation will not have any
indebtedness that ranks pari passu with or junior to its obligations under the
Guarantee and the Junior Subordinated Debt Securities. Because the Corporation
is a bank holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including the Bank, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the New Capital Securities to benefit indirectly from such
distribution) is subject to the prior claims of creditors of such subsidiary,
except to the extent that the Corporation may itself be recognized as a creditor
of such subsidiary. Accordingly, the Junior Subordinated Debt Securities will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debt Securities
should look only to the assets of the Corporation for payments on the Junior
Subordinated Debt Securities. Because the Corporation is a holding company with
limited assets and liabilities, a substantial portion of the consolidated
liabilities of the Corporation are liabilities of its subsidiaries. The
Guarantee will constitute an unsecured obligation of the Corporation and will
rank subordinate and junior in right of payment to all Senior Debt in the same
manner as the Junior Subordinated Debt Securities. See "USB." None of the
Indenture, the Guarantee or the Declaration places any limitation on the amount
of secured or unsecured debt, including Senior Debt, that may be incurred by the
Corporation or any subsidiary. See "Description of New Junior Subordinated Debt
Securities--Subordination" and "Description of New Guarantee--Status of the
Guarantee."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior Subordinated
Debt Securities as and when required.
In addition, there are various statutory and regulatory limitations on the
extent to which present and future banking subsidiaries of USB can finance or
otherwise transfer funds to USB or its nonbanking subsidiaries, whether in the
form of loans, extensions of credit, investments or asset purchases, including
regulatory limitations on the payment of dividends directly or indirectly to USB
from the Bank. Federal and state bank regulatory agencies also have the
authority to limit further the Bank's payment of dividends based on such factors
as the maintenance of adequate capital for such subsidiary bank, which could
reduce the amount of dividends otherwise payable. Under applicable banking
statutes, at March 31, 1997, the Bank could have declared additional dividends
of approximately $14.6 million to USB without prior regulatory approval.
Option to Extend Interest Payment Date; Tax Consequences; Market Price
Consequences
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, the Corporation has the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debt Securities at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period; provided, however, that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debt Securities. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will also be deferred (and
the amount of Distributions to which holders of the Capital Securities are
entitled will accumulate additional Distributions thereon at the rate of 9.58%
per annum, compounded semi-annually) from the relevant payment date for such
Distributions during any such Extension Period. During any Extension Period, the
Corporation may not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Corporation's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in interest to, the Junior
Subordinated Debt Securities or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation (including Other Guarantees) if such guarantee ranks pari passu
with or junior in interest to the Junior Subordinated Debt Securities (other
than (a) dividends or distributions in common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) purchases or acquisitions of shares of the
Corporation's common stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debt Securities),
(e) as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock or (f) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged). Prior to the termination of any
Extension Period, the Corporation may further extend such Extension Period;
provided, however, that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods or to extend beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid on the Junior Subordinated Debt Securities
(together with interest thereon at the annual rate of 9.58%, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period, subject to the above requirements. There
is no limitation on the number of times that the Corporation may elect to begin
an Extension Period. See "Description of New Capital Securities--Distributions"
and "Description of New Junior Subordinated Debt Securities--Option to Extend
Interest Payment Date."
Because the Corporation believes that the likelihood of its exercising its
option to defer payments of interest is remote, the Junior Subordinated Debt
Securities will be treated under Treasury regulations as issued without
"original issue discount" ("OID") for United States federal income tax purposes.
As a result, holders of Capital Securities generally will include their
allocable share of the interest on the Junior Subordinated Debt Securities in
taxable income under their own methods of tax accounting (i.e., cash or
accrual). The Corporation currently has no intention to exercise its option to
defer payments of interest. Under certain Treasury regulations, however, if the
Corporation exercises its right to defer payments of interest, the Junior
Subordinated Debt Securities will become OID instruments. Consequently, holders
of Capital Securities will be required to include their pro rata share of OID in
gross income as it accrues for United States federal income tax purposes in
advance of the receipt of cash attributable to such interest income. See
"Certain United States Federal Income Tax Considerations--Interest Income and
Original Issue Discount" and "--Sales of Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debt Securities in the future, the market
price of the Capital Securities is likely to be adversely affected. A holder
that disposes of its Capital Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Capital Securities. In addition, as a result of the existence of the
Corporation's right to defer interest payments on the Junior Subordinated Debt
Securities, the market price of the Capital Securities (which represent
beneficial ownership interests in the Trust holding the Junior Subordinated Debt
Securities as its sole assets) may be more volatile than the market prices of
other securities that are not subject to such deferrals.
Special Event Redemption
Upon the occurrence and continuation of a Special Event prior to February
1, 2007, the Corporation may, at its option and subject to receipt of prior
approval of the Federal Reserve if such approval is then required under
applicable law, rules, guidelines or policies, redeem the Junior Subordinated
Debt Securities in whole, but not in part, at the Special Event Prepayment Price
(as defined herein). In such event, the Trust will redeem the Trust Securities
to the same extent as the Junior Subordinated Debt Securities are redeemed by
the Corporation. See "Description of New Junior Subordinated Debt
Securities--Special Event Prepayment," "Description of New Capital
Securities--Mandatory Redemption" and "Description of New Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debt Securities."
A "Special Event" means a Tax Event or a Regulatory Capital Event, as the
case may be.
A "Tax Event" means the receipt by the Corporation of an opinion of
independent counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced proposed change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
Issue Date, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Junior
Subordinated Debt Securities, (ii) interest payable by the Corporation on the
Junior Subordinated Debt Securities is not, or within 90 days of the date of
such opinion, will not be, deductible by the Corporation, in whole or in part,
for United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have received
an opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any rules, guidelines or policies of the Federal Reserve or (b)
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Capital Securities, the Capital Securities do not constitute, or
within 90 days of the date thereof, will not constitute, Tier 1 capital (as
defined herein) (or its then equivalent); provided, however, that the
distribution of the Junior Subordinated Debt Securities in connection with the
liquidation of the Trust by the Corporation and the treatment thereafter of the
Junior Subordinated Debt Securities as other than Tier 1 capital shall not in
and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event.
Proposed Legislation
On February 6, 1997, as part of President Clinton's fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation (the
"Proposed Legislation") that would, among other things, deny an issuer a federal
income tax deduction for interest in respect of certain debt obligations, such
as the Junior Subordinated Debt Securities, but only if the debt obligations are
issued on or after "the date of the first committee action." However, neither of
the tax bills passed by the House of Representatives (H.R. 2014) and the Senate
(S. 949) in June 1997, and currently scheduled for reconciliation, contains a
similar proposal. If the Proposed Legislation is, nevertheless, enacted in its
current form, it should not apply to the Junior Subordinated Debt Securities,
which were issued prior to the date of first committee action (which has not yet
occurred). There can be no assurances, however, that the Proposed Legislation,
if enacted, or similar legislation enacted after the date hereof, would not
adversely affect the tax treatment of the Junior Subordinated Debt Securities,
resulting in a Tax Event. A Tax Event would permit the Corporation, upon the
receipt of any required regulatory approval, to cause a redemption of the Trust
Securities at the Special Event Redemption Price. See "Description of New
Capital Securities--Mandatory Redemption" and "Description of New Junior
Subordinated Debt Securities--Special Event Prepayment."
Liquidation Distribution of Junior Subordinated Debt Securities
The Corporation has the right at any time to liquidate the Trust and
distribute the Junior Subordinated Debt Securities to holders of the Trust
Securities. Such right is subject to (i) the Corporation having received an
opinion of counsel to the effect that such distribution will not be a taxable
event to the holders of the Capital Securities, and (ii) the prior approval of
the Federal Reserve if such approval is then required. Under current United
States federal income tax law, a distribution of Junior Subordinated Debt
Securities upon the dissolution of the Trust would not be a taxable event to
holders of the Capital Securities. If, however, the Trust is liquidated upon the
occurrence of a Special Event, a dissolution of the Trust in which holders of
the Capital Securities receive cash would be a taxable event to such holders.
See "Certain United States Federal Income Tax Considerations--Distribution of
Junior Subordinated Debt Securities or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debt Securities that may be distributed in exchange for
Capital Securities if a liquidation of the Trust occurs. Accordingly, the
Capital Securities or the Junior Subordinated Debt Securities may trade at a
discount to the price that the investor paid to purchase the Capital Securities
offered hereby. Because holders of Capital Securities may receive Junior
Subordinated Debt Securities on termination of the Trust, prospective purchasers
of New Capital Securities are also making an investment decision with regard to
the New Junior Subordinated Debt Securities and should carefully review all the
information regarding the New Junior Subordinated Debt Securities contained
herein. See "Description of New Capital Securities--Liquidation of the Trust and
Distribution of Junior Subordinated Debt Securities" and "Description of New
Junior Subordinated Debt Securities--General."
Rights Under the Guarantee
The New Guarantee will guarantee, and the Old Guarantee guarantees, as the
case may be, to the holders of the Capital Securities the following payments, to
the extent not paid by the Trust: (i) any accumulated and unpaid Distributions
required to be paid on the Capital Securities, to the extent that the Trust has
funds on hand available therefor at such time, (ii) the applicable Redemption
Price with respect to any Capital Securities called for redemption, to the
extent that the Trust has funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation of
the Trust (unless the Junior Subordinated Debt Securities are distributed to
holders of the Trust Securities), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Trust has funds on hand available therefor at
such time, and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Capital Securities after the satisfaction of
liabilities to creditors of the Trust as provided by applicable law.
The holders of not less than a majority in aggregate liquidation amount of
the Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee (as
defined herein) in respect of the Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Guarantee. Any holder
of the Capital Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Trust, the Guarantee Trustee or any other person
or entity. If the Corporation were to default on its obligation to pay amounts
payable under the Junior Subordinated Debt Securities, the Trust would lack
funds for the payment of Distributions or amounts payable on redemption of the
Capital Securities or otherwise, and, in such event, holders of the Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default shall have occurred
and be continuing and such event is attributable to the failure of the
Corporation to pay principal of or interest on the Junior Subordinated Debt
Securities on the applicable payment date, then a holder of Capital Securities
may institute a Direct Action. Notwithstanding any payments made to a holder of
Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of and interest on the
Junior Subordinated Debt Securities, and the Corporation shall be subrogated to
the rights of the holder of such Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by the Corporation to
such holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debt Securities or assert directly any
other rights in respect of the Junior Subordinated Debt Securities. See
"Description of New Junior Subordinated Debt Securities--Enforcement of Certain
Rights by Holders of Capital Securities," "Description of New Junior
Subordinated Debt Securities--Debenture Events of Default" and "Description of
New Guarantee." The Declaration provides that each holder of Capital Securities
by acceptance thereof agrees to the provisions of the Guarantee and the
Indenture. The Chase Manhattan Bank will act as Guarantee Trustee under the
Guarantee and will hold the Guarantee for the benefit of the holders of the
Capital Securities. The Chase Manhattan Bank will also act as Property Trustee
under the Declaration and as Debenture Trustee under the Indenture.
Limited Voting Rights
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the dissolution,
winding-up or liquidation of the Trust, and the exercise of the Trust's rights
as holder of Junior Subordinated Debt Securities. The right to vote to appoint,
remove or replace the Property Trustee or the Delaware Trustee is vested
exclusively in the holder of the Common Securities, except upon the occurrence
of certain events described herein. The Property Trustee, the Administrative
Trustees and the Corporation may amend the Declaration without the consent of
holders of Capital Securities to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust, even if such
action adversely affects the interests of such holders. See "Description of New
Capital Securities--Removal of Issuer Trustees" and "--Voting Rights; Amendment
of the Declaration."
Key Employees
The Corporation's success depends to a significant degree upon the
continued contributions of its key management, including Thomas E. Hales, its
Chairman of the Board, President and Chief Executive Officer. The Corporation's
success also depends upon its ability to attract and retain highly qualified
personnel. Competition for such personnel is intense, and there can be no
assurance that the Corporation will be successful in hiring or retaining
qualified personnel. Loss of key personnel or the inability to hire or retain
qualified personnel could have an adverse effect on the Corporation's business.
Regional Concentration
The Corporation's lending activities are concentrated principally in
Rockland and Westchester Counties, two counties which are part of the greater
New York metropolitan area. In addition, a significant portion of the
Corporation's loans are secured by real estate located in these areas. An
economic downturn in Rockland and Westchester Counties or in the greater New
York metropolitan area or a severe reduction in real estate values in such areas
may adversely affect the performance of the Corporation's loans and consequently
the performance, financial condition and outlook of the Corporation.
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 that 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 that
remain outstanding will not be entitled to any rights to have such Old Capital
Securities registered under the Securities Act or to any similar rights under
the Registration Rights Agreement (subject to certain limited exceptions). The
Corporation and the Trust do not intend to register under the Securities Act any
Old Capital Securities that remain outstanding after consummation of the
Exchange Offer (subject to such limited exceptions, if applicable). To the
extent that Old Capital Securities are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Capital Securities could be
adversely affected.
The New Capital Securities and any Old Capital Securities that remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding liquidation amount thereof have taken certain actions
or exercised certain rights under the Declaration. See "Description of New
Capital Securities--Voting Rights; Amendment of the Declaration."
Upon consummation of the Exchange Offer, holders of Old Capital Securities
will not be entitled to any increase in the Distribution rate thereon or any
further registration rights under the Registration Rights Agreement, except
under limited circumstances. See "Description of Old Securities."
Absence of Public Market
The Old Capital Securities were issued to, and the Corporation believes
such securities are currently owned by, a relatively small number of beneficial
owners. The Old Capital Securities have not been registered under the Securities
Act and will be subject to certain restrictions on transferability if they are
not exchanged for the New Capital Securities. Although the New Capital
Securities may be resold or otherwise transferred by the holders (who are not
affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act (subject to certain
limitations), 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) or any integral multiple of $1,000 (one Capital Security) in
excess thereof. The Corporation and the Trust have been advised by the Initial
Purchaser that the Initial Purchaser presently intends to make a market in the
New Capital Securities. However, the Initial Purchaser is not obligated to do so
and any market-making activity with respect to the New Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Capital Securities or the Old Capital Securities or as to the liquidity
of or the trading market for the New Capital Securities or the Old Capital
Securities. If an active public market does not develop, the market price and
liquidity of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices will depend on many factors, including, among other things,
prevailing interest rates, the Corporation's performance and the market for
similar securities. Depending on these and other factors, the New Capital
Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
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 Trust 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. Neither the Corporation nor the Trust is under any
duty to give notification of defects or irregularities with respect to the
tenders of the Old Capital Securities for exchange.
<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like liquidation amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and canceled.
All of the proceeds from the sale of the Old Capital Securities and Common
Securities were invested by the Trust in the Old Junior Subordinated Debt
Securities. The Corporation applied $3,250,000 of the net proceeds from the sale
of the Old Junior Subordinated Debt Securities to the redemption of its
outstanding preferred stock and $14.5 million was contributed to the Bank as an
additional capital contribution. The remainder of such net proceeds was applied
to the Corporation's general funds to be used by its management for general
corporate purposes, including, from time to time, the making of additional
investments in, and advances to, its subsidiaries, principally the Bank. A
portion of such proceeds could be used in connection with one or more future
acquisitions. From time to time, the Corporation investigates and holds
discussions and negotiations in connection with possible transactions with other
banks. As of the date of this Prospectus, the Corporation has not entered into
any agreements or understandings with respect to any potential acquisition or
any other material transactions of the type referred to above and no discussions
or negotiations are taking place. Pending such application by the Corporation,
such net proceeds have been and, in the future may be, invested in short-term
interest-bearing securities and in equity securities, or used to reduce
borrowings.
UNION STATE CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the original declaration of trust executed by the Corporation, as
Depositor, Chase Manhattan Bank Delaware, as Delaware Trustee, and the
Administrative Trustees named therein, which original declaration of trust will
be amended and restated and executed by the Corporation, as Depositor, The Chase
Manhattan Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and the Administrative Trustees named therein (the "Declaration"), and
(ii) the filing of a certificate of trust with the Delaware Secretary of State
on January 27, 1997. The Trust exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of the
Trust Securities to acquire the Junior Subordinated Debt Securities and (iii)
engaging in only those other activities necessary, advisable or incidental
thereto (such as registering the transfer of the Capital Securities).
Accordingly, the Junior Subordinated Debt Securities will be the sole assets of
the Trust, and payments under the Junior Subordinated Debt Securities will be
the sole revenues of the Trust. All of the Common Securities are owned directly
by the Corporation. The Common Securities rank pari passu, and payments will be
made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of an Event of Default under the Declaration
resulting from a Debenture Event of Default, the rights of the Corporation as
holder of the Common Securities to payments in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Capital Securities. See "Description of New Capital
Securities--Subordination of Common Securities." The Corporation acquired Common
Securities in an aggregate liquidation amount equal to approximately 3% of the
total capital of the Trust. The Trust has a term of 40 years, but may terminate
earlier as provided in the Declaration. The Trust's business and affairs are
conducted by its trustees, each appointed by the Corporation as holder of the
Common Securities. The trustees for the Trust will be The Chase Manhattan Bank,
as the Property Trustee, Chase Manhattan Bank Delaware, as the Delaware Trustee,
and, as Administrative Trustees, four individuals who are employees or officers
of or are otherwise affiliated with the Corporation (collectively, the "Issuer
Trustees"). The Chase Manhattan Bank, as Property Trustee, will act as sole
indenture trustee under the Declaration. The Chase Manhattan Bank will also act
as trustee under the Guarantee Agreement and the Indenture. See "Description of
Junior Subordinated Debt Securities" and "Description of Guarantee." The holder
of the Common Securities of the Trust, or the holders of a majority in
liquidation amount of the Capital Securities if an Event of Default under the
Declaration resulting from a Debenture Event of Default has occurred and is
continuing, will be entitled to appoint, remove or replace the Property Trustee
and/or Delaware Trustee. In no event will the holders of the Capital Securities
have the right to vote to appoint, remove or replace the Administrative
Trustees; such voting rights are vested exclusively in the holder of the Common
Securities. The duties and obligations of each Issuer Trustee are governed by
the Declaration. Pursuant to the expense provisions under the Indenture, the
Corporation, as obligor on the Junior Subordinated Debt Securities, will pay all
fees and expenses related to the Trust and the offering of the Capital
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the Trust. See "Description of New Capital Securities--Expenses
and Taxes." The principal executive office of the Trust is:
c/o U.S.B. Holding Co., Inc.
100 Dutch Hill Road
Orangeburg, New York 10962
Telephone: (914) 365-4600
Attention: Steven T. Sabatini, Executive
Vice President, Chief
Financial Officer and Assistant Secretary.
U.S.B. HOLDING CO., INC.
U.S.B. Holding Co., Inc. (the "Corporation" or "USB"), a Delaware
corporation incorporated in 1982, is a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, which provides financial services
through its wholly-owned subsidiaries. The Corporation and its subsidiaries
derive substantially all of their revenue and income from the furnishing of
banking and related financial services primarily to customers in Rockland and
Westchester Counties, New York.
Union State Bank (the "Bank"), the Corporation's sole banking subsidiary,
is a New York state chartered commercial bank established in 1969. The Bank
offers a wide range of banking services to individuals, municipalities,
corporations and small and medium-size businesses through its 18 retail banking
facilities in Rockland and Westchester Counties. The Bank's corporate offices
are located in Rockland County and the Bank also has a branch located in
Westchester County, which only closes loans and disburses funds. The Bank's
products and services include checking accounts, NOW accounts, money market
accounts, savings accounts (passbook and statement), certificates of deposit,
retirement accounts, business, personal, residential, construction, home equity,
second mortgage and condominium mortgage loans, loans for education, health and
similar expenditures, credit cards, other consumer oriented financial services
and safe deposit facilities. The Bank also makes available to its customers
automated teller machines (ATMs) and has a remote banking service for business
customers. The deposits of the Bank are insured to the extent permitted by law
pursuant to the Federal Deposit Insurance Act of 1950, as amended.
The Corporation currently has no banking subsidiaries other than the Bank,
although, prior to December 31, 1995, the Corporation owned Royal Oak Savings
Bank, F.S.B. ("Royal"), a federal thrift subsidiary located in Maryland. The
Corporation formed Royal in January 1991 to acquire deposits and certain assets
of two federal thrift institutions located in Maryland from the Resolution Trust
Company. Prior to its sale by the Corporation, Royal offered a wide range of
services to individuals and businesses in Baltimore and Carroll Counties,
Maryland. Royal had assets of approximately $47,000,000 as of December 31, 1995.
On December 31, 1995, all of the common stock of Royal was sold by the
Corporation to Monocacy Bancshares, Inc. Immediately prior to such sale,
substantially all of Royal's loans and investment securities, including its
credit card business, were purchased from Royal, for book value, by the Bank and
the Corporation, in effect transferring Royal's branch system, loan servicing
function, cash and certain immaterial assets to Monocacy Bancshares, Inc. The
Bank and the Corporation intend to maintain the loan portfolio purchased from
Royal, as the Corporation believes such portfolio represents an attractive
asset, and intend to continue to expand the credit card business acquired from
Royal. The Corporation does not intend, however, to expand its lending or other
business in the Maryland market, except for its credit card business.
The Corporation's assets at March 31, 1997 totaled $891.4 million, which
represents an increase of $87.9 million or 10.9% over assets as of December 31,
1996. The average annual growth rate in assets of the Corporation for the five
years ended December 31, 1996 was 15.6%. The Corporation has, through the Bank,
grown primarily by originating assets through the Bank's lending group and by
acquiring bank qualified securities. The Bank's funding requirements have been
met primarily through increased retail deposits which have been generated by the
Bank's expanding branch network and by an expansion of the Bank's existing
retail deposit base, as well as from municipal deposits and borrowings. The
Bank's current market shares are approximately 11.6% and .8% of Rockland and
Westchester deposits, respectively. The Bank is the largest independent bank
headquartered in Rockland County and believes it is able to attract and retain
customers because of its knowledge of its local markets, and the ability of its
professional staff to provide a high degree of service to its customers.
The Bank expects to continue to expand by opening new retail branches,
enhancing computerized and telephonic delivery channels, and expanding loan
originations in the Bank's market area. Acquisitions of other financial
institutions and branches will be considered to supplement growth in the Bank's
present markets and in contiguous markets. The Corporation has not made any
acquisitions of other banking institutions to date, other than its acquisition
of Royal.
The Corporation's net income was $9.4 million in 1996, compared to $9.3
million in 1995, or an increase of 1%. The 1995 amount includes net income of
$2.1 million as a result of the sale of Royal, while the 1996 amount includes
approximately $.3 million of net income attributable to the sale of a branch
facility which was previously part of Royal's branch system.
Developments."Excluding these amounts, as well as net income from Royal in 1995,
1996 net income increased $2.1 million or 30% over the net income in 1995. Net
income for 1996 and 1995, excluding the effects of the transactions described
above and net income of Royal in 1995, was $9.1 million and $7.0 million,
respectively.
Net income of the Corporation for the three months ended March 31, 1997 was
$2.3 million, an increase of $.1 million or 4% over earnings of $2.2 million for
the same period last year. Net income for the three months ended March 31, 1996
included net gains on securities transactions of $.3 million, while the same
period in 1997 did not include any material gains (or losses) from sales of
securities. Net income per common and common equivalent share for the quarter
ended March 31, 1997 was $.35 compared to $.34 per common and common equivalent
share for the same period in the previous year.
The Corporation's business strategy is to provide commercial and consumer
banking services to its local customer base. For the quarter ended March 31,
1997 and the fiscal year ended December 31, 1996, USB reported a return on
average assets and return on average common equity of 1.11% and 17.12%, and
1.25% and 18.60%, respectively. Management believes that the Corporation's net
interest margin on a tax equivalent basis and efficiency ratio for the quarter
ended March 31, 1997 and the fiscal year ended December 31, 1996 of 4.25% and
52.71%, and 4.43% and 51.09%, respectively, illustrate the underlying strength
of USB's business strategy. See "Selected Historical Financial Information."
The principal executive offices of USB are located at 100 Dutch Hill Road,
Orangeburg, New York 10962 and its telephone number is (914) 365-4600.
USB is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of USB to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(including depositors in the case of banking subsidiaries), except to the extent
that a claim of USB as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which present and future banking subsidiaries of USB can finance or otherwise
transfer funds to USB or its nonbanking subsidiaries, whether in the form of
loans, extensions of credit, investments or asset purchases, including
regulatory limitations on the payment of dividends directly or indirectly to USB
from the Bank. Federal and state bank regulatory agencies also have the
authority to limit further the Bank's payment of dividends based on such factors
as the maintenance of adequate capital for such subsidiary bank, which could
reduce the amount of dividends otherwise payable. Under applicable banking
statutes, at March 31, 1997, the Bank could have declared additional dividends
of approximately $14.6 million to USB without prior regulatory approval.
Under the policy of the Federal Reserve, USB is expected to act as a source
of financial strength to the Bank and any other subsidiary bank which USB might
own and to commit resources to support each subsidiary bank in circumstances
where USB might not do so absent such policy. In addition, any subordinated
loans by USB to the Bank or any other subsidiary bank which USB might own would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary banks.
RECENT DEVELOPMENTS
The Corporation listed its stock on the American Stock Exchange and began
trading under the symbol "UBH" on April 16, 1997. The Corporation has been a
publicly traded stockholder-owned corporation since 1983 (and the Bank has been
publicly owned from 1969 to 1983, at which time all shares of Bank stock were
exchanged for stock of the Corporation on a one-for-one basis), but its stock
had not previously traded on an exchange or through NASDAQ.
On May 14, 1997, the stockholders of U.S.B. Holding Co., Inc. approved (i)
an amendment to the Certificate of Incorporation of the Corporation to increase
the amount of common stock authorized to be issued from 7,000,000 shares to
20,000,000 and (ii) the 1997 Employee Stock Option Plan, which authorizes
issuance of options to purchase up to 600,000 common shares by employees of the
Company.
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following summary sets forth selected consolidated financial data for
USB and its subsidiaries for the quarters ended March 31, 1997 and 1996, and for
each of the years in the five-year period ended December 31, 1996. Such
information is derived from audited financial information for the years ended
December 31, 1992, 1993, 1994, 1995 and 1996, and from unaudited financial
information for the quarters ended March 31, 1996 and 1997. The following
summary should be read in conjunction with the financial information
incorporated herein by reference to other documents or included elsewhere
herein. See "Incorporation of Certain Documents by Reference."
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended
March 31, Years Ended December 31,
1997 1996 1996 1995 1994 1993 1992
(in thousands, except ratios and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated summary of
operations:
Interest income......................... $15,953 $13,080 $57,216 $49,692 $39,601 $34,544 $34,007
Interest expense........................ 7,950 6,245 27,601 24,318 15,933 13,138 15,293
Net interest income..................... 8,003 6,835 29,615 25,374 23,668 21,406 18,714
Provision for loan losses............... (630) (475) (2,275) (1,200) (993) (763) (745)
Net gain on sale of Royal Oak Savings -- -- -- 3,520 -- -- --
Bank, F.S.B.......................
Net gain on sale of branch facility -- -- 600 -- -- -- --
Other non-interest income............... 874 778 3,608 3,628 3,086 3,123 2,949
Net security gains (losses)............. (3) 447 819 167 69 780 321
Non-interest expense.................... (4,899) (4,242) (18,179) (17,851) (15,704) (14,741) (13,790)
------- ------- -------- -------- -------- -------- --------
Income before income taxes.............. 3,345 3,343 14,188 13,638 10,126 9,805 7,449
Provision for income taxes.............. 1,013 1,093 4,774 4,311 3,126 3,605 2,699
Net income.............................. $2,332 $2,250 $9,414 $9,327 $7,000 $6,200 $4,750
Weighted average common and common
equivalent shares outstanding.....6,632,592 6,433,517 6,512,997 6,304,758 6,080,892 5,687,112 5,459,509
Common shares outstanding at
period end........................6,196,816 6,166,233 6,183,036 6,146,978 5,926,783 5,804,510 5,566,391
Consolidated per share data:
Net income per common and common
equivalent share.................. $0.35 $0.34 $1.40 $1.43 $1.10 $1.03 $0.81
Cash dividends per common share........ $0.09 $0.068 $.30 $.27 $.22 $.16 $.12
Book value per common share at
period end........................ $8.76 $7.80 $8.67 $7.74 $5.83 $5.29 $4.41
Consolidated balance sheet data at the
end of the period:
Securities available-for-sale.......... $206,202 $183,609 $168,756 $170,889 $75,944 $99,981 $88,609
Securities held-to-maturity............ 99,901 58,877 81,019 60,266 149,580 100,025 95,250
Loans, net of unearned income
and fees.......................... 528,575 419,503 503,511 391,341 333,570 275,823 232,249
Allowance for loan losses.............. 6,265 4,265 5,742 3,904 3,320 2,852 2,496
Total assets........................... 891,360 701,239 803,451 678,783 602,603 508,638 462,634
Deposits............................... 742,056 630,409 682,280 610,635 543,862 469,016 429,272
Borrowings............................. 68,471 14,000 59,692 10,000 15,900 -- --
Long-term debt qualifying as
regulatory capital................ -- -- -- -- 1,800 1,800 2,000
Corporation-Obligated Mandatory
Redeemable Capital Securities
of Subsidiary Trust............... 20,000 -- -- -- -- -- --
Stockholders' equity................... 54,259 51,873 56,866 51,333 38,319 34,435 28,525
Consolidated average balance sheet data:
Securities............................. $277,449 $230,390 $252,716 $243,255 $219,017 $206,441 $155,481
Loans, net of unearned income
and fees.......................... 507,703 403,634 449,785 352,244 305,411 244,813 235,921
Total assets........................... 841,240 690,529 751,376 655,147 568,010 494,615 435,547
Deposits............................... 709,082 621,722 665,450 593,853 514,869 454,462 403,925
Borrowings............................. 62,520 12,145 30,857 13,243 10,147 2,858 --
Long-term debt qualifying as
regulatory capital................ -- -- -- 710 1,800 1,908 1,940
Corporation-Obligated Mandatory
Redeemable Capital Securities
of Subsidiary Trust............... 12,000 -- -- -- -- -- --
Stockholders' equity................... 55,919 51,806 52,534 44,408 37,756 31,762 26,374
Selected financial ratios:
Return on average total assets......... 1.11% 1.30% 1.25% 1.42% 1.23% 1.25% 1.09%
Return on average common stockholders'
equity........................... 17.12% 18.07% 18.60% 22.17% 19.66% 21.08% 19.76%
Net interest margin on a tax equivalent
basis............................ 4.25% 4.37% 4.43% 4.46% 4.82% 5.08% 4.94%
Efficiency ratio....................... 52.71% 52.31% 51.09% 57.61% 54.12% 56.19% 60.86%
Tier 1 capital ratio................... 12.65% 11.10% 10.45% 11.37% 10.58% 10.33% 9.67%
Total risk based capital ratio......... 13.93% 12.01% 11.50% 12.26% 11.82% 11.74% 11.22%
Leverage ratio......................... 8.88% 7.53% 7.06% 7.43% 6.86% 6.64% 6.13%
Allowance for loan losses to net loans. 1.20% 1.03% 1.15% 1.01% 1.01% 1.04% 1.09%
Allowance for loan losses/
nonperforming loans............... 81.33% 59.35% 70.98% 96.73% 56.23% 71.91% 64.76%
Net charge-offs to average net loans... .09% .11% .10% .17% .17% .17% .06%
Nonperforming assets to total assets... .94% 1.21% 1.09% .73% 1.07% .96% 1.27%
Ratio of earnings to fixed charges:
Excluding interest on deposits.. 3.69x 16.26x 8.08x 13.91x 14.71x 28.44x 29.50x
Including interest on deposits.. 1.42x 1.53x 1.51x 1.56x 1.63x 1.74x 1.48x
Ratio of earnings to combined fixed
charges and preferred stock
dividend requirements:
Excluding interest on deposits.. 3.55x 0.59x 6.62x 9.68x 9.10x 11.60x 9.70x
Including interest on deposits.. 1.41x 1.50x 1.49x 1.53x 1.58x 1.67x 1.43x
Proforma ratio of earnings to
combined fixed charges and
preferred stock dividend
requirements, assuming issuance
of Capital Securities and repayment
of existing preferred stock at
beginning of period:
Excluding interest on deposits.. 2.65x -- 4.10x -- -- -- --
Including interest on deposits.. 1.34x -- 1.41x -- -- -- --
</TABLE>
<PAGE>
Notes to Selected Historical Financial Information
(1) Net income for the years ended December 31, 1996 and 1995, excluding the
nonrecurring gain on the sale of Royal in 1995 of $2.1 million, as well as
Royal's 1995 net income and net income from the sale of a branch, which was
previously part of the Royal branch system, in 1996 of $.3 million, would have
been approximately $9.1 million, or $1.35 per share, and $7,000,000, or $1.06
per share, respectively. Return on average total assets and return on average
total common equity, excluding the effect of the Royal transactions discussed
above, was 1.21% and 17.99%, and 1.07% and 16.48% for the years ended December
31, 1996 and 1995, respectively.
(2) Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The Statement requires that securities available-for-sale be
reported at fair value, with unrealized gains and losses reflected as a separate
component of stockholders' equity.
(3) In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a fair value based method of accounting
for stock-based compensation plans and encourages, but does not require,
entities to adopt that method in place of the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," for all arrangements under which employees receive shares of stock
or other equity instruments of the employer or the employer incurs liabilities
to employees in amounts based on the price of the Corporation's stock. SFAS No.
123 requires significantly expanded disclosure in complete financial statements,
including disclosure of pro forma net income and earnings per share as if the
fair value based method were used to account for stock based compensation, if
the intrinsic value method of APB No. 25 is retained. SFAS No. 123 also
establishes fair value as the measurement basis for transactions in which an
entity acquires goods for services from non-employees in exchange for equity
instruments. The accounting provisions of SFAS No. 123 are effective for
transactions entered into after December 15, 1995. Effective January 1, 1996,
the Corporation adopted SFAS No. 123 and has decided that it will continue to
measure compensation cost for employee stock compensation plans in accordance
with the provisions of APB No. 25. Information on the Corporation's net income
and net income per common equivalent share, determined as if the Corporation had
accounted for its stock options under the fair value method of SFAS No. 123
resulted in pro forma net income of $8,925,000 and $8,988,000, and net income
per common and common equivalent share of $1.34 and $1.38 for the years ended
December 31, 1996 and 1995, respectively.
(4) The Corporation declared a 10% stock dividend on April 24, 1996 to
stockholders of record on May 31, 1996, which was distributed on June 14, 1996.
In addition, the Corporation declared a two-for-one stock split in the form of a
100% stock dividend on November 20, 1996 to stockholders of record on December
13, 1996, which was distributed on December 30, 1996. The weighted average
common and common equivalent shares outstanding, common shares outstanding, and
per share amounts have been adjusted to reflect the stock dividend and
two-for-one stock split distributed in 1996.
(5) The efficiency ratio is calculated based upon operating expenses divided by
net interest income on a tax equivalent basis plus non-interest income,
excluding gain or loss on security and loan sales and gain on sale of Royal in
1995, and the gain on sale of the Royal branch in 1996.
(6) The leverage ratio is computed based on Tier 1 capital divided by fourth
quarter average assets for each year.
(7) For the purpose of computing the consolidated ratios of earnings to fixed
charges, earnings represent consolidated income before taxes plus fixed charges.
Fixed charges excluding interest on deposits consist of interest on long-term
and short-term borrowings, including interest related to the Capital Securities
for the quarter ended March 31, 1997, and one-third of rental expense (which is
deemed representative of the interest factor). Fixed charges including interest
on deposits consist of the foregoing items plus interest on deposits. Preferred
stock dividend requirements represent pre-tax earnings that would be required to
cover dividends on preferred stock. Proforma ratio of earnings to combined fixed
charges and preferred stock dividend requirements is adjusted for the issuance
of the Capital Securities offered hereby and the application of a portion of the
net proceeds thereof to redeem the existing preferred stock as of the first day
of the period reflected.
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
USB at March 31, 1997 and December 31, 1996, and December 31, 1996 as adjusted
for Capital Securities issuance, and use of proceeds. The issuance of the New
Capital Securities in the Exchange Offer will have no effect on the
capitalization of USB. This table is based on, and is qualified in its entirety
by, the historical consolidated financial statements of USB, including the
related notes thereto, which are included in documents incorporated by reference
or included elsewhere herein, and should be read in conjunction therewith.
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------
As Adjusted
For Capital
Securities
Issuance, and March 31, 1997
Actual Use of Proceeds Actual
------------ ---------------- ----------------
<S> <C> <C> <C>
(in thousands, except percentages)
Federal Home Loan Bank Long-Term Advances............. $25,267 $25,267 $24,996
Total Long-Term Borrowings..... $25,267 $25,267 $24,996
Corporation-Obligated Mandatory Redeemable Capital
Securities of Subsidiary Trust(1).................. $-- $20,000 $20,000
Minority interest-junior preferred stock of
consolidated subsidiary $-- $-- $137
============ ================ ================
Stockholders' Equity:
Preferred Stock, no par value; authorized 100,000
shares; 32,500 shares outstanding (actual)........ $3,250 $-- $--
Common Stock, authorized 7,000,000 shares; $5.00
par value; issued 6,334,338 shares and 6,326,808
shares at March 31, 1997 and December 31, 1996,
respectively (2).................................. 31,634 31,634 31,672
Additional paid in capital........................... 10,783 10,783 10,899
Retained earnings.................................... 12,664 12,664 14,406
Unrealized losses on securities available-for-sale, (570) (570) (1,788)
net of taxes
Treasury stock, at cost, 137,522 shares at March 31,
1997 and 143,772 shares at December 31, 1996...... (895) (895) (930)
------- -------- -------
Total Stockholders' Equity.......... $56,866 $53,616 $54,259
======= ======= =======
Capital Ratios
Equity/Assets 7.08% 6.54% 6.09%
Tier 1 Capital Ratios(3)(4) 10.45% 13.07% 12.65%
Risk Adjusted Capital Ratios(3) 11.50% 14.47% 13.93%
Leverage Ratio (4) 7.06% 8.89% 8.88%
======= ======= =======
</TABLE>
(1) The "Corporation-Obligated Mandatory Redeemable Capital Securities of
Subsidiary Trust" reflects the Capital Securities at their issue price. As
described herein, the sole asset of the Trust is $20,619,000 of Junior
Subordinated Debt Securities (including the amounts attributable to the
issuance of the Common Securities of the Trust), which will mature on
February 1, 2027. The Corporation owns all of the Common Securities of the
Trust. It is anticipated that the Trust will not be subject to the
reporting requirements under the Exchange Act.
(2) On May 14n/1997, the stockholders of U.S.B. Holding Co., Inc. approved an
amendment to the Certificate of Incorporation of the Corporation to
increase the amount of common stock authorized to be issued from 7,000,000
shares to 20,000,000 shares.
(3) Assumes the proceeds from the issuance of Capital Securities are invested
in mortgage-backed securities at December 31, 1996 which have a twenty
percent risk weight.
(4) Capital Securities are included in the Tier 1 and leverage capital ratios
to the extent such amount of Capital Securities does not exceed 25 percent
of total Tier 1 or leverage capital, as per regulations of the Federal
Reserve Board.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into a registration rights agreement with the Initial
Purchaser (the "Registration Rights Agreement") wherein the Corporation and the
Trust agreed, for the benefit of the holders of the Capital Securities, (i) to
file with the Commission within 150 calendar days after February 5, 1997 the
Registration Statement relating to the Exchange Offer for (1) the New Capital
Securities, which will have terms identical in all material respects to the Old
Capital Securities, (2) the New Guarantee, which will have terms identical in
all material respects to the Old Guarantee, and (3) the New Junior Subordinated
Debt Securities, which will have terms identical in all material respects to the
Old Junior Subordinated Debt Securities, and (ii) to use their best efforts to
cause the Registration Statement to be declared effective under the Securities
Act within 180 calendar days after February 5, 1997.
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company
("DTC") and who desires to deliver such Old Capital Securities by book-entry
transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
the Old Junior Subordinated Debt Securities, in an amount corresponding to the
Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debt Securities. The New Guarantee and New
Junior Subordinated Debt Securities have been registered under the Securities
Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $20,000,000 aggregate liquidation amount of New Capital
Securities for a like aggregate liquidation amount of Old Capital Securities
properly tendered on or prior to the Expiration Date (as defined herein) and not
properly withdrawn in accordance with the procedures described below. The Trust
will issue, promptly after the Expiration Date (as defined herein), an aggregate
liquidation amount of up to $20,000,000 of New Capital Securities in exchange
for a like principal amount of outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their Old
Capital Securities in whole or in part in a liquidation amount of not less than
$100,000 (100 Capital Securities) or any integral multiple of $1,000 liquidation
amount (one Capital Security) in excess thereof.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$20,000,000 aggregate liquidation amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities that 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" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY
ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER BASED ON SUCH HOLDERS OWN FINANCIAL POSITION AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m., New York City time, on August
___, 1997 unless the Exchange Offer is extended by the Corporation or the Trust
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Trust determines, in its
sole and absolute discretion, that any of the events or conditions referred to
under "--Conditions to the Exchange Offer" have occurred or exist or have not
been satisfied, (iii) to extend the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to withdraw
their tendered Old Capital Securities as described under "--Withdrawal Rights,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a material condition of the Exchange Offer, the
Corporation and the Trust will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the holders of the Old Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
Acceptance for Exchange and Issuance of the New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, the New Capital
Securities for the Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of the New Capital Securities in exchange for the
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) the Old Capital Securities or a book-entry confirmation of a book-entry
transfer of the 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, including an agent's
message, 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 Trust will
be deemed to have accepted for exchange, and thereby exchanged, the Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
the Old Capital Securities, Letters of Transmittal and related documents, and as
agent for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Trust's acceptance for exchange of
Old Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange the Old Capital Securities tendered pursuant to
the Exchange Offer, then, without prejudice to the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Trust and subject
to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital Securities
and such Old Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described under
"--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of the 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 the Old
Capital Securities, that the Trust will acquire good, marketable and
unencumbered title to the tendered Old Capital Securities, free and clear of all
liens, restrictions, charges and encumbrances, and the Old Capital Securities
tendered for exchange are not subject to any adverse claims or proxies. The
holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Trust or the Exchange Agent to be
necessary or desirable to complete the exchange, sale, assignment, and transfer
of the Old Capital Securities tendered pursuant to the Exchange Offer. Tendering
holders of Old Capital Securities that use ATOP will, by doing so, acknowledge
that they are bound by the terms of the Letter of Transmittal.
Procedures for Tendering the Old Capital Securities
Valid Tender. Except as set forth below, in order for the 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, or (ii) such Old Capital Securities must be tendered pursuant to
the procedures for book-entry transfer set forth below and a book-entry
confirmation must be received by the Exchange Agent, in each case on or prior to
the Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's ATOP procedures for transfers. Such holder of Old Capital
Securities using ATOP should transmit its acceptance to DTC on or prior to the
Expiration Date (or comply with the guaranteed delivery procedures set forth
below). DTC will verify such acceptance, execute a book-entry transfer of the
tendered Old Capital Securities into the Exchange Agent's account at DTC and
then send to the Exchange Agent confirmation of such book-entry transfer,
including an agent's message confirming that DTC has received an express
acknowledgment from such holder that such holder has received and agrees to be
bound by the Letter of Transmittal and that the Trust and the Corporation may
enforce the Letter of Transmittal against such holder (a "book-entry
confirmation").
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial owner
wishes to participate in the Exchange Offer.
Certificates. If the tender is not made through ATOP, certificates
representing Old Capital Securities, as well as the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
under "-- Exchange Agent" on or prior to the Expiration Date in order for such
tender to be effective (or the guaranteed delivery procedures set forth below
must be complied with).
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for the 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 the Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Old Capital Securities may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is received by
the Exchange Agent, as provided below, on or prior to the Expiration Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of the New Capital
Securities in exchange for the 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 the 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
the New Capital Securities might not be made to all tendering holders at the
same time, and will depend upon when the Old Capital Securities, book-entry
confirmations with respect to the Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of the Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and subject
to the conditions of the Exchange Offer.
Determination Of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of the 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 Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of the Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Resales of the New Capital Securities
The Trust is making the Exchange Offer for the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Corporation nor the Trust
sought its own interpretive letter and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that the
New Capital Securities issued pursuant to this Exchange Offer in exchange for
the Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of the Old Capital
Securities who is an "affiliate" of the Corporation or the Trust or who intends
to participate in the Exchange Offer for the purpose of distributing the New
Capital Securities, or any broker-dealer who purchased the Old Capital
Securities from the Trust 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 Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made pursuant to an exemption
from such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for the New Capital Securities, then such broker-dealer must deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange the Old
Capital Securities for the New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if such
holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to participate
in the Exchange Offer, to furnish to the Corporation and the Trust (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder
holds the Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives the New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Trust believe that Participating Broker-Dealers who acquired the 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 the Old Capital Securities that
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
180 days after the Expiration Date (subject to extension under certain limited
circumstances described below) or, if earlier, when all such New Capital
Securities have been disposed of by such Participating Broker-Dealer. See "Plan
of Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of the New Capital Securities received
in exchange for Old Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "--Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or the Trust may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
In that regard, each Participating Broker-Dealer who surrenders the 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
Corporation or the Trust of the occurrence of any event or the discovery of any
fact that makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or that 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 the New Capital Securities (or the New Guarantee or the New Junior
Subordinated Debt Securities, as applicable) pursuant to this Prospectus until
the Corporation or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debt Securities, as applicable)
may be resumed, as the case may be. If the Corporation or the Trust gives such
notice to suspend the sale of the New Capital Securities (or the New Guarantee
or the New Junior Subordinated Debt Securities, as applicable), it shall extend
the 180-day period referred to above during which Participating Broker-Dealers
are entitled to use this Prospectus in connection with the resale of the New
Capital Securities by the number of days during the period from and including
the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Capital
Securities or to and including the date on which the Corporation or the Trust
has given notice that the sale of the New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debt Securities, as applicable) may be
resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of the Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at 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 principal amount of the 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 the 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 the Old Capital Securities tendered for the
account of an Eligible Institution. If the Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Old Capital Securities," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of the Old Capital Securities, in which case a notice of withdrawal
will be effective if delivered to the Exchange Agent by written, telegraphic,
telex or facsimile transmission. Withdrawals of tenders of the Old Capital
Securities may not be rescinded. The Old Capital Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but may
be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties.
Neither the Corporation, the Trust, any affiliates or assigns of the Corporation
or the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
Distributions on the New Capital Securities
Holders of the Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after February
5, 1997. Accordingly, holders of the New Capital Securities as of the record
date for the payment of Distributions on August 1, 1997 will be entitled to
receive Distributions accumulated from and after February 5, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the staff
of the Commission that permits the New Capital Securities issued pursuant to the
Exchange Offer in exchange for the Old Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder that is an "affiliate" of the Corporation 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; or
(b) any law, statute, rule or regulation shall have been adopted or enacted
which, in the judgment of the Corporation or the Trust, would reasonably be
expected to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Corporation
or the Trust, threatened for that purpose any governmental approval has not been
obtained, which approval the Corporation or the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities and will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
Exchange Agent
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT DELIVERY:
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street, 15th Floor 450 West 33rd Street, 15th Floor
New York, New York 10001-2697 New York, New York 10001-2697
Attention: Global Trust Services Attention: Global Trust Services
Shiek Wiltshire Shiek Wiltshire
Confirm By Telephone:
(212) 946-3082
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 946-8158
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of the Old Capital Securities,
and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, the
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 the 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 Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Issuer Trustees on behalf of
the Trust have issued the Old Capital Securities and will issue the New Capital
Securities. The New Capital Securities will represent beneficial ownership
interests in the Trust and the holders thereof will be entitled to a preference
in certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust over the Common
Securities, as well as other benefits as described in the Declaration. See
"--Subordination of Common Securities." The Declaration has been qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). This
summary of certain provisions of the New Capital Securities and the Declaration
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Declaration, including the
definitions therein of certain terms. The form of the Declaration is available
upon request from the Issuer Trustees.
General
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) are limited to $20 million aggregate liquidation amount at
any one time outstanding. The Capital Securities will rank pari passu, and
payments will be made thereon pro rata with the Common Securities except as
described under "--Subordination of Common Securities." Legal title to the
Junior Subordinated Debt Securities will be held by the Property Trustee on
behalf of the Trust in trust for the benefit of the holders of the Capital
Securities and Common Securities. The Guarantee Agreement executed by the
Corporation for the benefit of the holders of the Capital Securities (the
"Guarantee Agreement") will provide for the New Guarantee on a subordinated
basis with respect to the New Capital Securities but will not guarantee payment
of Distributions or amounts payable on redemption of the New Capital Securities
or on liquidation of the Trust when the Trust does not have funds on hand
available to make such payments. See "Description of New Guarantee."
Distributions
Distributions on each New Capital Security will be payable at the annual
rate of 9.58% of the stated liquidation amount of $1,000, and will be payable
semi-annually in arrears on February 1 and August 1 of each year to the holders
of the New Capital Securities at the close of business on January 15 or July 15
(each, a "record date"), as the case may be, next preceding the relevant
Distribution Date (as defined herein). Distributions on the Capital Securities
will be cumulative. Distributions will accumulate from the date of original
issuance. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which Distributions are payable on the New Capital Securities is not a
Business Day (as defined herein), payment of the Distributions payable on such
date will be made on the next succeeding day that is a Business Day (and without
any additional Distributions or other payments in respect to any such delay)
with the same force and effect as if made on the date such payment was
originally payable (each date on which Distributions are payable in accordance
with the foregoing, a "Distribution Date"). A "Business Day" shall mean any day
other than a Saturday or a Sunday, or a day on which banking institutions in The
City of New York are authorized or required by law or executive order to remain
closed, or a day on which the corporate trust office of the Property Trustee or
the Debenture Trustee is closed for business.
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest on the New Junior Subordinated Debt Securities at any time or from time
to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the New Junior Subordinated Debt Securities. As a
consequence of any such election, semi-annual Distributions on the New Capital
Securities by the Trust will be deferred during any such Extension Period.
Distributions to which holders of the New Capital Securities are entitled will
accumulate additional Distributions thereon at the rate per annum of 9.58%
thereof, compounded semi-annually from the relevant payment date for such
Distributions. The term "Distributions" as used herein shall include any such
additional Distributions.
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of, the Corporation (including Other Debentures) that rank pari passu
with or junior in interest to the New Junior Subordinated Debt Securities, or
(iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in interest to the New Junior Subordinated Debt Securities (other than (a)
dividends or distributions in common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' 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, (c)
payments under the Guarantee, (d) purchases or acquisitions of shares of the
Corporation's common stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the New Junior Subordinated Debt
Securities), (e) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock or,
(f) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged).
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or to
extend beyond the Stated Maturity of the New Junior Subordinated Debt
Securities. Upon the termination of any such Extension Period and the payment of
all amounts then due, and subject to the foregoing limitations, the Corporation
may elect to begin a new Extension Period. The Corporation must give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election of any such Extension Period at least five Business Days prior
to the earlier of (i) the date the Distributions on the New Capital Securities
would have been payable except for the election to begin such Extension Period
or (ii) the date the Administrative Trustees are required to give notice to any
automated quotation system or to holders of such New Capital Securities of the
record date or the date such Distributions are payable, but in any event not
less than five Business Days prior to such record date. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Description of New Junior Subordinated Debt Securities--Option to
Extend Interest Payment Date" and "Certain United States Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
Although the Corporation may in the future exercise its right to defer
payments of interest on the Junior Subordinated Debt Securities, the Corporation
has no such current intention.
The revenue of the Trust available for distribution to holders of the New
Capital Securities will be limited to payments under the New Junior Subordinated
Debt Securities in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. See "Description of New Junior Subordinated
Debt Securities--General." If the Corporation does not make interest payments on
the New Junior Subordinated Debt Securities, the Property Trustee will not have
funds available to pay Distributions on the New Capital Securities. The payment
of Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on a limited basis as set forth herein under
"Description of New Guarantee."
Mandatory Redemption
Upon the repayment in full at the Stated Maturity or a redemption at any
time in whole or in part of the New Junior Subordinated Debt Securities (other
than following the distribution of the New Junior Subordinated Debt Securities
to the holders of the Trust Securities), the proceeds from such repayment or
redemption shall be applied by the Property Trustee to redeem a Like Amount of
Trust Securities, upon not less than 30 nor more than 60 days' notice of a date
of redemption (the "Redemption Date"), at the applicable Redemption Price, which
shall be equal to (i) in the case of the repayment of the New Junior
Subordinated Debt Securities at the Stated Maturity, the Maturity Redemption
Price (equal to the principal of, and accrued but unpaid interest on, the New
Junior Subordinated Debt Securities), (ii) in the case of the redemption of the
New Junior Subordinated Debt Securities prior to February 1, 2007 in connection
with the occurrence of a Special Event, the Special Event Redemption Price
(equal to the Special Event Prepayment Price (as defined under "Description of
New Junior Subordinated Debt Securities--Special Event Prepayment")) or (iii) in
the case of the optional redemption of the New Junior Subordinated Debt
Securities on or after February 1, 2007, the Optional Redemption Price (equal to
the Optional Prepayment Price (as defined under "Description of New Junior
Subordinated Debt Securities--Optional Redemption")). If less than all of the
New Junior Subordinated Debt Securities are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Trust Securities.
Redemption of the New Junior Subordinated Debt Securities prior to Stated
Maturity may be subject to receipt of prior approval by the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay such
additional sums on the New Junior Subordinated Debt Securities.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Trust Securities shall not be reduced as a result of any additional
taxes, duties and other governmental charges to which the Trust has become
subject as a result of a Tax Event.
Redemption Procedures
Trust Securities shall be redeemed, if at all, at the applicable Redemption
Price with the proceeds from the contemporaneous repayment or redemption of the
Junior Subordinated Debt Securities. Redemptions of the Trust Securities shall
be made and the applicable Redemption Price shall be payable on each Redemption
Date only to the extent that the Trust has funds on hand available for the
payment of such applicable Redemption Price. See also "--Subordination of Common
Securities."
If the Trust gives a notice of redemption in respect of the New Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, with respect to the New Capital Securities held
in global form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the applicable Redemption Price to the holders
of the Capital Securities. See "--Form, Denomination, Book-Entry Procedures and
Transfer." With respect to the New Capital Securities held in certificated form,
the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the New Capital Securities funds sufficient to
pay the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the applicable Redemption Price to the holders
thereof upon surrender of their certificates evidencing the New Capital
Securities. See "--Payment and Paying Agency." Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date shall be payable to the
holders of the New Capital Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
the holders of the New Capital Securities will cease, except the right of the
holders of the New Capital Securities to receive the applicable Redemption
Price, but without interest on such Redemption Price, and the New Capital
Securities will cease to be outstanding. In the event that any date fixed for
redemption of New Capital Securities is not a Business Day, then payment of the
applicable Redemption Price 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), 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 applicable Redemption
Price is improperly withheld or refused and not paid either by the Trust or by
the Corporation pursuant to the Guarantee as described under "Description of New
Guarantee," Distributions on New Capital Securities will continue to accrue at
the then applicable rate, from the Redemption Date originally established by the
Trust to the date such applicable Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for purposes
of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding New Capital Securities by tender, in the
open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Corporation defaults in payment of the applicable
Prepayment Price on, or in the repayment of, the New Junior Subordinated Debt
Securities, on and after the Redemption Date, Distributions will cease to accrue
on the Trust Securities called for redemption.
Liquidation of the Trust and Distribution of Junior Subordinated Debt Securities
The Corporation will have the right at any time to terminate the Trust and
cause a Like Amount of the Junior Subordinated Debt Securities to be distributed
to the holders of the Trust Securities in liquidation of the Trust. Such right
is subject to (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of New
Capital Securities and (ii) the prior approval of the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal Reserve.
Upon liquidation of the Trust and certain other events, the New Junior
Subordinated Debt Securities may be distributed to holders of the Capital
Securities. Under current United States federal income tax law, a distribution
of New Junior Subordinated Debt Securities upon the dissolution of the Trust
would not be a taxable event to holders of the New Capital Securities.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated Debt
Securities to the holders of the Trust Securities if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate the
Trust (which direction is optional and, except as described above, wholly within
the discretion of the Corporation, as Depositor); (iii) redemption of all of the
Trust Securities as described under "Mandatory Redemption" above; (iv)
expiration of the term of the Trust; and (v) the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv) or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of such Trust Securities a Like Amount of the New Junior Subordinated
Debt Securities, unless such distribution would not be practical, in which event
such holders will be entitled to receive out of the assets of the Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the liquidation amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the 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 holder(s) of the
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities. See
"--Subordination of Common Securities."
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a liquidation amount equal to the principal amount of
Junior Subordinated Debt Securities to be contemporaneously redeemed in
accordance with the Indenture, allocated to the Trust Securities based upon
their relative liquidation amounts and the proceeds of which will be used to pay
the Redemption Price of such Trust Securities and (ii) with respect to a
distribution of Junior Subordinated Debt Securities to holders of Trust
Securities in connection with a dissolution or liquidation of the Trust, Junior
Subordinated Debt Securities having a principal amount equal to the liquidation
amount of the Trust Securities of the holder to whom such Junior Subordinated
Debt Securities are distributed.
If the Corporation elects not to redeem the Junior Subordinated Debt
Securities prior to maturity and the Trust is not liquidated and the Junior
Subordinated Debt Securities are not distributed to holders of the Trust
Securities, the Capital Securities will remain outstanding until the repayment
of the Junior Subordinated Debt Securities at the Stated Maturity.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debt Securities to holders of the Trust Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as the record holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution with respect to Capital Securities held
by DTC or its nominee and (iii) any certificates representing Capital Securities
not held by DTC or its nominee will be deemed to represent Junior Subordinated
Debt Securities having a principal amount equal to the liquidation amount of
such Capital Securities and bearing accrued and unpaid interest in an amount
equal to the accumulated and unpaid Distributions on such Capital Securities
until such certificates are presented to the Administrative Trustees or their
agent for cancellation, whereupon the Corporation will issue to such holder, and
the Debenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debt Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debt Securities that the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Capital Securities offered
hereby.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Trust
Securities shall be made pro rata to the holders of the Trust Securities based
on the liquidation amount of the Trust Securities; provided, however, that if on
any Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default or an Event of Default under the Declaration shall
have occurred and be continuing, no payment of any Distribution on, or
applicable Redemption Price of, any of the Common Securities, and no other
payment on account of the redemption, liquidation or other acquisition of such
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or, in
the case of payment of the applicable Redemption Price, the full amount of such
Redemption Price on all of the outstanding Capital Securities, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, the Capital Securities then due and payable.
In the case of any Event of Default under the Declaration resulting from a
Debenture Event of Default, the Corporation as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event of
Default until the effect of all such Events of Default have been cured, waived
or otherwise eliminated. Until all such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the holders of such Capital Securities and not on behalf of the Corporation
as holder of the Common Securities, and only the holders of the Capital
Securities will have the right to direct the Property Trustee to act on their
behalf.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under the
Declaration (an "Event of Default") (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see
"Description of New Junior Subordinated Debt Securities--Debenture
Events of Default"); or
(ii) default by the Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in the
Declaration (other than a covenant or warranty, a default in the
performance of which or the breach of which is addressed in clause
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or
certified mail, to the defaulting Issuer Trustee or Issuer Trustees by
the holders of at least 25% in aggregate liquidation amount of the
outstanding Capital Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Declaration; or
(v) the occurrence of certain events of bankruptcy or insolvency
with respect to the Property Trustee and the failure by the
Corporation to appoint a successor Property Trustee within 60 days
thereof.
Within 10 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Depositor, unless such Event of
Default shall have been cured or waived. The Corporation, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default or an Event of Default under the
Declaration has occurred and is continuing, the Capital Securities shall have a
preference over the Common Securities as described above. See "--Liquidation of
the Trust and Distribution of New Junior Subordinated Debt Securities" and
"--Subordination of Common Securities."
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in liquidation amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Declaration.
Co-trustees and Separate Property Trustee
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's property
may at the time be located, the Corporation, as the holder of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of such Trust's property, or to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the Declaration. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
Merger or Consolidation of Issuer Trustees
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise set forth in the Declaration. The Trust may, at
the request of the Corporation, as Depositor, with the consent of the
Administrative Trustees but without the consent of the holders of the Capital
Securities, the Property Trustee or the Delaware Trustee, merge with or into,
consolidate, amalgamate or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, a trust organized as such
under the laws of any state; provided, however, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Trust with respect to
the Capital Securities or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Capital Securities rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) the Corporation expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Junior Subordinated Debt
Securities, (iii) if the Capital Securities are then listed or traded, the
Successor Securities are listed or traded, or any Successor Securities will be
listed or traded upon notification of issuance, on any national securities
exchange or other organization on which the Capital Securities are then listed
or traded, if any, (iv) if the Capital Securities (including any Successor
Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect,
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Corporation has received an opinion from independent
counsel to the Trust experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Capital Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
(viii) the Corporation or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it, if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
Voting Rights; Amendment of the Declaration
Except as provided below and under "Description of New
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the New Capital Securities will have no voting
rights.
The Declaration may be amended from time to time by the Corporation, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities, (i) to cure any ambiguity, correct or
supplement any provision in the Declaration that may be inconsistent with any
other provision, or to make any other provisions with respect to matters or
questions arising under the Declaration, which shall not be inconsistent with
the other provisions of the Declaration, or (ii) to modify, eliminate or add to
any provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (i) such action shall not adversely affect in any material respect the
interests of any holder of Trust Securities, and any amendments of the
Declaration shall become effective when notice thereof is given to the holders
of the Trust Securities. The Declaration may be amended by the Issuer Trustees
and the Corporation with (i) the consent of holders representing not less than a
majority (based upon liquidation amounts) of the outstanding Trust Securities,
and (ii) receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not affect the Trust's status as a
grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the Investment Company
Act. In addition, without the consent of each holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debt Securities are held by the Trust,
the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Property Trustee with respect to
the Junior Subordinated Debt Securities, (ii) waive any past default that is
waivable under Section 5.13 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debt Securities shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated Debt
Securities, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation amount of all outstanding Capital Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debt Securities affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of each holder
of the Capital Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Capital Securities of any notice of default with respect
to the Junior Subordinated Debt Securities. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association or as a publicly traded partnership taxable as a
corporation for United States federal income tax purposes on account of such
action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the New Capital 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 by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the Indenture, the Corporation, as issuer of the Junior Subordinated
Debt Securities, has agreed to pay all debts and other obligations (other than
with respect to payments of Distributions, amount payable upon redemption and
the liquidation amount of the Trust Securities) and all costs and expenses of
the Trust (including costs and expenses relating to the organization of the
Trust, the fees and expenses of the Issuer Trustees and the costs and expenses
relating to the operation of the Trust) and the offering of the New Capital
Securities, and to pay any and all taxes and all costs and expenses with respect
to the foregoing (other than United States withholding taxes) to which the Trust
might become subject. The foregoing obligations of the Corporation under the
Indenture are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Corporation directly against the
Corporation, and the Corporation has irrevocably waived any right or remedy to
require that any such Creditor take any action against the Trust or any other
person before proceeding against the Corporation. The Corporation has also
agreed in the Indenture to execute such additional agreement(s) as may be
necessary or desirable to give full effect to the foregoing.
Form, Denomination, Book-Entry Procedures and Transfer
The New Capital Securities initially will be represented by one or more New
Capital Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 Capital Securities. Beneficial interests in the
Global Capital Securities may not be exchanged for Capital Securities in
certificated form except in the limited circumstances described below.
Depositary Procedures
DTC has advised the Trust and the Corporation as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
to accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchaser), banks, trust companies, clearing corporations
and certain other organizations. Indirect access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial Purchaser
with portions of the principal amount of the Global Capital Securities and (ii)
ownership of such interests in the Global Capital Securities will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Capital Securities).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC, if they are Participants in DTC, or indirectly through
organizations which are Participants in such system. All interests in a Global
Capital Security will be subject to the procedures and requirements of DTC. The
laws of some states require that certain persons take physical delivery in
certificated form. Consequently, the ability to transfer beneficial interests in
a Global Capital Security to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants and certain banks, the ability of a person having
beneficial interests in a Global Capital Security to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests. For certain other restrictions on the
transferability of the Capital Securities, see "Exchange of Book-Entry Capital
Securities for Certificated Capital Securities."
Except as described below, owners of beneficial interests in the Global
Capital Securities will not be entitled to have Capital Securities registered in
their names, will not receive or be entitled to receive physical delivery of
Capital Securities in certificated form and will not be considered the
registered owners or holders thereof under the Declaration for any purpose.
Payments in respect of the Global Capital Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC or its
nominee as the registered holder under the Declaration by wire transfer in
immediately available funds on each interest payment date. Under the terms of
the Declaration, the Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to, or payments made on account of, beneficial ownership interests in
the Global Capital Securities, or for maintaining, supervising or reviewing any
of DTC's records or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Capital Securities, or (ii)
any other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the
Corporation that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in liquidation amount of beneficial
interests in the Global Capital Security, as shown on the records of DTC, unless
DTC has reason to believe it will not receive payment on such payment date.
Payments by the Participants and the Indirect Participants to the beneficial
owners of Capital Securities represented by Global Capital Securities held
through such Participants will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Property
Trustee or the Trust. Neither the Trust nor the Property Trustee will be liable
for any delay by DTC or any of its Participants in identifying the beneficial
owners of the Capital Securities, and the Trust and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such interests
will therefore settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Trust and the Corporation that it will take any action
permitted to be taken by a holder of New Capital Securities (including, without
limitation, the presentation of New Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose account with
DTC interests in the Global Capital Securities are credited and only in respect
of such portion of the aggregate liquidation amount of the New Capital
Securities represented by the Global Capital Securities as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Declaration, DTC reserves the right to exchange
the Global Capital Securities for New Capital Securities in certificated form
and to distribute such New Capital Securities to its Participants.
So long as DTC or its nominee is the registered owner of the Global Capital
Securities, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Capital Securities represented by the Global Capital
Security for all purposes under the Declaration.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Capital Securities among Participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trust nor the
Property Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for New Capital Securities in
registered certificated form if: (i) DTC (x) notifies the Trust that it is no
longer willing or able to properly discharge its responsibilities with respect
to the Global Capital Securities and the Corporation is unable to locate a
qualified successor, or (y) has ceased to be a "clearing agency" registered
under the Exchange Act; (ii) the Corporation at its option elects to terminate
the book-entry system through DTC; or (iii) there shall have occurred and be
continuing a Debenture Event of Default. In addition, beneficial interests in a
Global Capital Security may be exchanged by or on behalf of DTC for certificated
New Capital Securities upon request by DTC, but only upon at least 20 days prior
written notice given to the Property Trustee in accordance with DTC's customary
procedures. In all cases, certificated New Capital Securities delivered in
exchange for any Global Capital Security or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of DTC (in accordance with its customary procedures, unless the
Property Trustee (based on an opinion of counsel) determines otherwise in
compliance with applicable law.
The Chase Manhattan Bank has informed the Trust that so long as it serves
as paying agent for the Capital Security, it anticipates that information
regarding Distributions on the Capital Security including payment date, Record
Date and redemption information will be made available through The Chase
Manhattan Bank at (212) 946-3082.
Payment and Paying Agency
Payments in respect of the New Capital Securities held in global form shall
be made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of the New Capital
Securities that are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on the register. The paying agent (the "Paying Agent") shall initially be
the Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and the Corporation. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee, the Administrative Trustees and the Corporation. In the event
that the Property Trustee shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Administrative Trustees and the Corporation) to
act as Paying Agent.
Restriction on Transfer
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 New Capital
Securities) or any integral multiple of $1,000 (one Capital Security) in excess
thereof. Any attempt, transfer or other disposition of 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 New Capital Securities for any purpose, including but
not limited to the receipt of Distributions on such New Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such New
Capital Securities.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the New
Capital Securities.
Registration of transfers of the New Capital Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer of the New Capital Securities after they have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Declaration and, during the existence of an Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Trust
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of the Capital Securities or the
Common Securities are entitled under the Declaration to vote, then the Property
Trustee shall take such action as is directed by the Corporation and, if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Trust Securities and will have no liability except for its
own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes, and so that the Junior Subordinated Debt Securities will be treated as
indebtedness of the Corporation for United States federal income tax purposes.
In this connection, the Corporation and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Declaration, that the Corporation and
the Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBT SECURITIES
The Old Junior Subordinated Debt Securities were issued and the New Junior
Subordinated Debt Securities will be issued as a separate series under a Junior
Subordinated Indenture, as supplemented from time to time (as so supplemented,
the "Indenture"), between the Corporation and The Chase Manhattan Bank, as
trustee (the "Debenture Trustee"). The Indenture has been qualified under the
Trust Indenture Act. This summary of certain terms and provisions of the Junior
Subordinated Debt Securities and the Indenture does not purport to be complete,
and where reference is made to particular provisions of the Indenture, such
provisions, including the definitions of certain terms, some of which are not
otherwise defined herein, are qualified in their entirety by reference to all of
the provisions of the Indenture and those terms made a part of the Indenture by
the Trust Indenture Act.
General
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Old Junior Subordinated Debt
Securities issued by the Corporation. Pursuant to the Exchange Offer, the
Corporation will exchange the Old Junior Subordinated Debt Securities, in an
amount corresponding to the Old Capital Securities accepted for exchange, for a
like aggregate principal amount of the New Junior Subordinated Debt Securities
as soon as practicable after the date hereof.
The New Junior Subordinated Debt Securities will bear interest at the
annual rate of 9.58% of the principal amount thereof, payable semi-annually in
arrears on February 1 and August 1 of each year (each, an "Interest Payment
Date"), commencing August 1, 1997, to the extent Old Capital Securities are
exchanged for New Capital Securities prior to the record date for such payment,
to the person in whose name each New Junior Subordinated Debt Security is
registered, subject to certain exceptions, at the close of business on the
January 15 or July 15 next preceding such Interest Payment Date. It is
anticipated that, until the liquidation of the Trust, each New Junior
Subordinated Debt Security will be held by the Trust for the benefit of the
holders of the Trust Securities. The amount of interest payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on the New Junior 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 the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 9.58% thereof, compounded
semi-annually from the relevant Interest Payment Date. The term "interest" as
used herein shall include semi-annual interest payments, interest on semi-annual
interest payments not paid on the applicable Interest Payment Date and
Additional Sums, as applicable.
The New Junior Subordinated Debt Securities will be issued as a series of
New Junior Subordinated Debt Securities under the Indenture. Unless previously
redeemed or repurchased, the New Junior Subordinated Debt Securities will mature
on February 1, 2027.
The New Junior Subordinated Debt Securities will rank pari passu with the
Old Junior Subordinated Debt Securities, will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt to the extent provided
in the Indenture. With respect to all matters on which holders of Junior
Subordinated Debt Securities are entitled to vote, the New Junior Subordinated
Debt Securities and the Old Junior Subordinated Debt Securities will vote
together as a class. Because the Corporation is a bank holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary, including the Bank, upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the New Capital
Securities to benefit indirectly from such distribution) is subject to the prior
claims of creditors of such subsidiary, except to the extent that the
Corporation may itself be recognized as a creditor of such subsidiary.
Accordingly, the New Junior Subordinated Debt Securities will be subordinated to
all Senior Debt and effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of New Junior
Subordinated Debt Securities should look only to the assets of the Corporation
for payments on the New Junior Subordinated Debt Securities. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Debt, whether under the Indenture or any existing
or other indenture that the Corporation may enter into in the future or
otherwise. See "--Subordination."
The New Junior Subordinated Debt Securities will rank pari passu with all
Other Debentures issued under the Indenture and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt of the Corporation. See
"--Subordination." The Corporation is a non-operating holding company and almost
all of the operating assets of the Corporation and its consolidated subsidiaries
are owned by such subsidiaries. The Corporation relies primarily on dividends
from such subsidiaries to meet its obligations. The Corporation is a legal
entity separate and distinct from its present and future banking and non-banking
affiliates. The Corporation's bank subsidiaries are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from such banks unless the
loans are secured by various types of collateral. In addition, payment of
dividends to the Corporation by a bank subsidiary 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. The
Corporation does not have any present intention to issue any Other Debentures.
The Other Debentures will be issuable in one or more series pursuant to an
indenture supplemental to the Indenture or a resolution of the Corporation's
Board of Directors or a committee thereof.
Form, Registration and Transfer
If the New Junior Subordinated Debt Securities are distributed to holders
of the Trust Securities upon the termination of the Trust, such New Junior
Subordinated Debt Securities may be represented by one or more global
certificates registered in the name of Cede and Company as the nominee of DTC.
The depository arrangements for such New Junior Subordinated Debt Securities are
expected to be substantially similar to those in effect for the Capital
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of New Capital
Securities--Form, Denomination, Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of (and premium, if any) and any interest on New
Junior Subordinated Debt Securities will be made at the office of the Debenture
Trustee in the City of New York or at the office of such Paying Agent or Paying
Agents as the Corporation may designate from time to time, except that at the
option of the Corporation payment of any interest may be made (except in the
case of New Junior Subordinated Debt Securities in global form), (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the register for New Junior Subordinated Debt Securities or (ii) by
transfer to an account maintained by the person entitled thereto as specified in
such register, provided that proper transfer instructions have been received by
the relevant Record Date. Payment of any interest on any New Junior Subordinated
Debt Security will be made to the person in whose name such New Junior
Subordinated Debt Security is registered at the close of business on the Record
Date for such interest, except in the case of defaulted interest. The
Corporation may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however the Corporation will at all times be
required to maintain a Paying Agent in each Place of Payment for the New Junior
Subordinated Debt Securities.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any New Junior Subordinated Debt Security and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of the Corporation, be
repaid to the Corporation and the holder of such New Junior Subordinated Debt
Security shall thereafter look, as a general unsecured creditor, only to the
Corporation for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period; provided,
however, that no Extension Period may extend beyond the Stated Maturity of the
New Junior Subordinated Debt Securities. At the end of an Extension Period, the
Corporation must pay all interest then accrued and unpaid on the New Junior
Subordinated Debt Securities (together with interest thereon at the annual rate
of 9.58%, compounded semi-annually from the relevant Interest Payment Date, to
the extent permitted by applicable law). During an Extension Period, interest
will continue to accrue and holders of New Junior Subordinated Debt Securities
(and holders of the Trust Securities while Trust Securities are outstanding)
will be required to accrue interest income (in the form of OID) for United
States federal income tax purposes. See "Certain United States Federal Income
Tax Considerations--Interest Income and Original Issue Discount."
During any Extension Period, the Corporation may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation (including any Other Debentures) that rank pari
passu with or junior in interest to the New Junior Subordinated Debt Securities
or (iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in interest to the New Junior Subordinated Debt Securities (other than
(a) dividends or distributions in common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' 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, (c)
payments under the Guarantee, (d) purchases or acquisitions of shares of the
Corporation's common stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the New Junior Subordinated Debt
Securities), (e) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock, or
(f) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged). Prior to the termination of any
Extension Period, the Corporation may further extend such Extension Period;
provided, however, that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods or to extend beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid on the New Junior Subordinated Debt Securities
(together with interest thereon at the annual rate of 9.58%, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period, subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Corporation must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any Extension
Period (or an extension thereof) at least five Business Days prior to the
earlier of (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to any
automated quotation system or to holders of Capital Securities of the record
date or the date such Distributions are payable, but in any event not less than
five Business Days prior to such record date. The Debenture Trustee shall give
notice of the Corporation's election to begin or extend a new Extension Period
to the holders of the Capital Securities. There is no limitation on the number
of times that the Corporation may elect to begin an Extension Period.
Optional Redemption
The New Junior Subordinated Debt Securities will be redeemable, in whole or
in part, at the option of the Corporation at any time prior to Stated Maturity
and on or after February 1, 2007, subject to the Corporation having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, at a redemption price (the
"Optional Prepayment Price") equal to the following prices, expressed in
percentages of the principal amount of the New Junior Subordinated Debt
Securities plus accrued but unpaid interest to but excluding the date fixed for
redemption. If redeemed during the 12-month period beginning February 1:
Year Percentage
---- ----------
2007................................ 104.790
2008................................ 104.311
2009................................ 103.832
2010................................ 103.353
2011................................ 102.874
2012................................ 102.395
2013................................ 101.916
2014................................ 101.437
2015................................ 100.958
2016................................ 100.479
and at 100% on or after February 1, 2017.
Special Event Prepayment
If a Special Event shall occur and be continuing prior to February 1, 2007,
the Corporation may, at its option and subject to receipt of prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, prepay the New Junior Subordinated Debt
Securities within 90 days after the occurrence of such Special Event, in whole,
but not in part, at a prepayment price (the "Special Event Prepayment Price")
equal to the greater of (i) 100% of the principal amount of such New Junior
Subordinated Debt Securities or (ii) the sum, as determined by a Quotation
Agent, of the present values of the principal amount and premium payable as part
of the Redemption Price with respect to an optional redemption of such New
Junior Subordinated Debt Securities on February 1, 2007, together with scheduled
payments of interest accruing from the prepayment date to February 1, 2007 (the
"Remaining Life"), in each case discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, accrued interest thereon to
the date of prepayment. See "Description of New Capital Securities--Liquidation
of the Trust and Distribution of New Junior Subordinated Debt Securities."
"Special Event" means a Tax Event or a Regulatory Capital Event.
"Tax Event" means the receipt by the Corporation of an opinion of
independent counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced proposed change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
Issue Date, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the New Junior
Subordinated Debt Securities, (ii) interest payable by the Corporation on the
New Junior Subordinated Debt Securities is not, or within 90 days of the date of
such opinion, will not be, deductible by the Corporation, in whole or in part,
for United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Regulatory Capital Event" means that the Corporation shall have received
an opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any rules, guidelines or policies of the Federal Reserve or (b)
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Capital Securities, the Capital Securities do not constitute, or
within 90 days of the date thereof, will not constitute Tier 1 capital (or its
then equivalent); provided, however, that the distribution of the New Junior
Subordinated Debt Securities in connection with the liquidation of the Trust by
the Corporation and the treatment thereafter of the New Junior Subordinated Debt
Securities as other than Tier 1 capital shall not in and of itself constitute a
Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor publication that is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity corresponding to the
Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such prepayment date, in each case calculated on the third Business Day
preceding the prepayment date, plus in each case (a) 2.25% if such prepayment
date occurs on or prior to February 1, 1998 and (b) 1.50% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life of the New Junior Subordinated Debt Securities to be prepaid that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity with the Remaining Life of the New Junior Subordinated Debt Securities.
If no United States Treasury security has a maturity which is within a period
from three months before to three months after February 1, 2007, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the Adjusted Treasury Rate shall be interpolated
or extrapolated on a straight-line basis, rounding to the nearest month using
such securities.
"Quotation Agent" means the Reference Treasury Dealer selected by the
Debenture Trustee to act as such after consultation with the Corporation.
"Reference Treasury Dealer" means: (i) a nationally-recognized U.S. Government
Securities dealer selected by the Debenture Trustee after consultation with the
Corporation and its respective successors; provided, however, that if the
foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Corporation shall substitute
therefor another Primary Treasury Dealer; or (ii) any other Primary Treasury
Dealer selected by the Debenture Trustee after consultation with the
Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (a) the average
of five Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (b) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of New Junior Subordinated
Debt Securities to be redeemed at its registered address. Unless the Corporation
defaults in payment of the Special Event Prepayment Price, on and after the
prepayment date interest ceases to accrue on the New Junior Subordinated Debt
Securities.
Additional Sums
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the New Junior Subordinated Debt Securities such amounts
as shall be required so that the Distributions payable by the Trust shall not be
reduced as a result of any such additional taxes, duties or other governmental
charges. The Corporation has covenanted in the Indenture, if and so long as (i)
the Trust is the holder of all New Junior Subordinated Debt Securities and (ii)
a Tax Event in respect of the Trust has occurred and is continuing, to pay to
the Trust such Additional Sums (as defined under "Description of Capital
Securities--Mandatory Redemption").
Restrictions on Certain Payments
The Corporation will also covenant that, if at such time (i) there shall
have occurred and is continuing a Debenture Event of Default, (ii) the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee or (iii) the Corporation shall have given notice of its
election of an Extension Period as provided in the Indenture and shall not have
rescinded such notice, or such Extension Period, or any extension thereof shall
be continuing, it will not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in interest to the New Junior
Subordinated Debt Securities (other than with respect to the New Junior
Subordinated Debt Securities) or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any subsidiary of
the Corporation (including under Other Guarantees) if such guarantee ranks pari
passu with or junior in interest to the New Junior Subordinated Debt Securities
(other than (a) dividends or distributions in common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' 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, (c)
payments under the Guarantee, (d) purchases or acquisitions of shares of the
Corporation's common stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior in interest to the New Junior Subordinated
Debt Securities), (e) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock or (f) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged).
Modification of Indenture
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of New Junior Subordinated Debt Securities, amend,
waive or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of New
Junior Subordinated Debt Securities or the holders of the Capital Securities so
long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Corporation and the Debenture Trustee, with
the consent of the holders of not less than a majority in principal amount of
New Junior Subordinated Debt Securities, to modify the Indenture in a manner
affecting the rights of the holders of New Junior Subordinated Debt Securities;
provided, however, that no such modification may, without the consent of the
holder of each outstanding New Junior Subordinated Debt Security so affected,
(i) change the Stated Maturity, or reduce the principal amount of the New Junior
Subordinated Debt Securities, or reduce the rate or extend the time of payment
of interest thereon or (ii) reduce the percentage of principal amount of New
Junior Subordinated Debt Securities, the holders of which are required to
consent to any such modification of the Indenture.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of New Junior Subordinated Debt Securities, any
supplemental Indenture for the purpose of creating any Other Debentures.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the New Junior Subordinated Debt Securities that has
occurred and is continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay any interest on the New Junior
Subordinated Debt Securities when due (subject to the deferral of any
due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the New
Junior Subordinated Debt Securities when due, whether at maturity,
upon redemption, by declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants contained in the Indenture for 90 days after
written notice to the Corporation from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of
the New Junior Subordinated Debt Securities; or
(iv) certain events in bankruptcy, insolvency or reorganization
of the Corporation; or
(v) the voluntary or involuntary dissolution, winding-up or
termination of the Trust, except in connection with the distribution
of the New Junior Subordinated Debt Securities to the holder of Trust
Securities in liquidation of the Trust, the redemption of all of the
Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
New Junior Subordinated Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the New Junior Subordinated Debt
Securities may declare the principal due and payable immediately upon a
Debenture Event of Default and, should the Debenture Trustee or such holders of
New Junior Subordinated Debt Securities fail to make such declaration, the
holders of at least 25% in aggregate liquidation amount of the Capital
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of the New Junior Subordinated Debt Securities may
annul such declaration and waive the default if the default (other than the
non-payment of the principal of the New Junior Subordinated Debt Securities
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of New Junior Subordinated Debt Securities fail to annul such
declaration and waive such default, the holders of a majority in aggregate
liquidation amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
New Junior Subordinated Debt Securities affected thereby may, on behalf of the
holders of all the New Junior Subordinated Debt Securities, waive any past
default, except a default in the payment of principal of (or premium, if any) or
interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding New Junior
Subordinated Debt Security. Should the holders of such New Junior Subordinated
Debt Securities fail to annul such declaration and waive such default, the
holders of a majority in aggregate liquidation amount of the Capital Securities
shall have such right. The Corporation is required to file annually with the
Debenture Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case a Debenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the New Junior Subordinated Debt Securities, and any other amounts
payable under the Indenture, to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the New Junior Subordinated Debt
Securities.
Enforcement of Certain Rights by Holders of New Capital Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay interest or
principal on the New Junior Subordinated Debt Securities on the date such
interest or principal is otherwise payable, a holder of Capital Securities may
institute a Direct Action. The Corporation may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Capital Securities. Notwithstanding any payments
made to a holder of Capital Securities by the Corporation in connection with a
Direct Action, the Corporation shall remain obligated to pay the principal of or
interest on the New Junior Subordinated Debt Securities, and the Corporation
shall be subrogated to the rights of the holder of such Capital Securities with
respect to payments on the Capital Securities to the extent of any payments made
by the Corporation to such holder in any Direct Action.
The holders of the Capital Securities will not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph, available
to the holders of the New Junior Subordinated Debt Securities unless there shall
have been an Event of Default under the Declaration. See "Description New of
Capital Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation shall not consolidate with or
merge with or into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge with or into the Corporation or convey, transfer or
lease its properties and assets substantially as an entirety to the Corporation,
unless (i) in case the Corporation consolidates with or merges with or into
another Person or conveys or transfers its properties and assets substantially
as an entirety to any Person, the successor Person is organized under the laws
of the United States or any state or the District of Columbia, and such
successor Person expressly assumes the Corporation's obligations on the New
Junior Subordinated Debt Securities issued under the Indenture; (ii) immediately
after giving effect thereto, no Debenture Event of Default, and no event which,
after notice or lapse of time or both, would become a Debenture Event of
Default, shall have occurred and be continuing; (iii) such transaction is
permitted under the Declaration and the Guarantee and does not give rise to any
breach or violation of the Declaration or the Guarantee; and (iv) certain other
conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the New
Junior Subordinated Debt Securities protection in the event of a highly
leveraged or other transaction involving the Corporation that may adversely
affect holders of the New Junior Subordinated Debt Securities.
Subordination
In the Indenture, the Corporation has covenanted and agreed that any New
Junior Subordinated Debt Securities issued thereunder shall be subordinate and
junior in right of payment to all Senior Debt to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Debt will first
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of New Junior
Subordinated Debt Securities will be entitled to receive or retain any payment
or distribution in respect thereof; provided, however, that holders of Senior
Debt shall not be entitled to receive payment of any such amounts to the extent
that such holders would be required by the subordination provisions of such
Senior Debt to pay such amounts over to the obligees on trade accounts payable
or other liabilities arising in the ordinary course of business.
In the event of the acceleration of the maturity of the New Junior
Subordinated Debt Securities, the holders of all Senior Debt outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration) before the
holders of the New Junior Subordinated Debt Securities will be entitled to
receive or retain any payment in respect of the principal of (or premium, if
any) or interest, if any, on the New Junior Subordinated Debt Securities;
provided, however, that holders of Senior Debt shall not be entitled to receive
payment of any such amounts to the extent that such holders would be required by
the subordination provisions of such Senior Debt to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of business.
In the event that the Corporation shall default in the payment of any
principal of (or premium, if any), or interest, if any, on any Senior Debt when
the same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise, then, unless and
until such default shall have been cured or waived or shall have ceased to exist
or all Senior Debt shall have been paid, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made for principal, premium, if any, or interest, if any, on the New Junior
Subordinated Debt Securities, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the New Junior Subordinated
Debt Securities.
"Debt" means (i) the principal of (and premium, if any), and unpaid
interest on indebtedness for money borrowed, (ii) purchase money and similar
obligations, (iii) obligations under capital leases, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Corporation is responsible for the payment of such
indebtedness of others, (v) renewals, extensions and refunding of any such
indebtedness, (vi) interest or obligations in respect of any such indebtedness
accruing after the commencement of any insolvency or bankruptcy proceedings and
(vii) obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity contracts and
similar arrangements; provided, however, that Debt shall not include trade
accounts payable or accrued liabilities in the ordinary course of business.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Corporation whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt of the
Corporation, whether incurred on or prior to the date of the Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the New Junior Subordinated
Debt Securities or the Other Debentures; provided, however, that Senior Debt
shall not be deemed to include (i) any Debt of the Corporation which, when
incurred and without respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the
Corporation, (ii) any Debt of the Corporation to any of its subsidiaries, (iii)
Debt to any employee of the Corporation, (iv) Debt which by its terms is
subordinated to trade accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made to the holders of
such Debt by the holders of the New Junior Subordinated Debt Securities as a
result of the subordination provisions of the Indenture would be greater than
such payments otherwise would have been as a result of any obligation of such
holders of such debt to pay amounts over to the obligees on such trade accounts
payable or accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which such Debt is subject, and (v) any
other debt securities issued pursuant to the Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation may from time to time incur
indebtedness constituting Senior Debt. On June 30, 1997 the Corporation had no
outstanding Senior Debt.
Governing Law
The Indenture and the New Junior Subordinated Debt Securities will be
governed by and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of New Junior Subordinated Debt
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of such Old Capital Securities. The
Chase Manhattan Bank will act as trustee (the "Guarantee Trustee") under the
Guarantee Agreement. As soon as practicable after the date hereof, the Old
Securities will be exchanged by the Corporation for the New Securities for the
benefit of the holders from time to time of the New Capital Securities. The
Guarantee Agreement will be qualified under the Trust Indenture Act. This
summary of certain provisions of the New Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the New Guarantee, including the definitions therein of
certain terms, and the Trust Indenture Act. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Capital Securities.
General
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined
herein) to the holders of the New Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the New Capital Securities, to the extent not paid by or on behalf of
the Trust (the "Guarantee Payments"), will be subject to the New Guarantee: (i)
any accrued and unpaid Distributions required to be paid on the New Capital
Securities, to the extent that the Trust has funds on hand available therefor at
such time, (ii) the applicable Redemption Price with respect to New Capital
Securities called for redemption, to the extent that the Trust has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (other than in connection
with the distribution of New Junior Subordinated Debt Securities to the holders
of the New Capital Securities or the redemption of all of the Capital
Securities) the lesser of (a) the Liquidation Distribution, 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 New Capital Securities
upon liquidation of the Trust after satisfaction of liabilities to creditors of
the Trust as required by applicable law. The Corporation's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Corporation to the holders of the New Capital Securities or by causing the
Trust to pay such amounts to such holders.
The New Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the Trust Securities, although it will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection. If the Corporation does not make interest
payments on the New Junior Subordinated Debt Securities held by the Trust, the
Trust will not be able to pay Distributions on the New Capital Securities and
will not have funds legally available therefor.
The New Guarantee will rank subordinate and junior in right of payment to
all Senior Debt to the same extent that the New Junior Subordinated Debt
Securities are so subordinated. See "--Status of the New Guarantee." Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary, upon such subsidiary's liquidation
or reorganization or otherwise, is subject to the prior claims of creditors of
such subsidiary, except to the extent the Corporation may itself be recognized
as a creditor of that subsidiary. Accordingly, the Corporation's obligations
under the New Guarantee will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, including deposits, and
claimants should look only to the assets of the Corporation for payments
thereunder. See "U.S.B. Holding Co., Inc." The New Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Debt, whether under the Indenture, any other indenture that the
Corporation may enter into in the future or otherwise.
The Corporation has, through the New Guarantee, the Declaration, the New
Junior Subordinated Debt Securities and the Indenture, taken together, fully,
irrevocably and unconditionally guaranteed all of the Trust's obligations under
the New Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the New Capital Securities. See "Relationship Among
the New Capital Securities, the New Junior Subordinated Debt Securities and the
New Guarantee."
Status of the New Guarantee
The New Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Debt in the same manner as New Junior Subordinated Debt Securities.
The Guarantee will rank pari passu with all Other Guarantees issued by the
Corporation. The New Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the New Guarantee without
first instituting a legal proceeding against any other person or entity). The
New Guarantee will be held for the benefit of the holders of the Capital
Securities. The New Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the Trust Securities of the New Junior
Subordinated Debt Securities. The New Guarantee does not place a limitation on
the amount of additional Senior Debt that may be incurred by the Corporation.
The Corporation may from time to time incur indebtedness constituting Senior
Debt.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the New Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate liquidation amount of
such outstanding New Capital Securities. The manner of obtaining any such
approval will be as set forth under "Description of New Capital
Securities--Voting Rights; Amendment of the Declaration." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Corporation and shall inure to
the benefit of the holders of the New Capital Securities then outstanding.
Events of Default
An event of default under the New Guarantee will occur upon the failure of
the Corporation to perform any of its payment or other obligations thereunder;
provided, however, that except with respect to a default in payment of any
Guarantee Payment, the Corporation shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice.
The holders of not less than a majority in aggregate liquidation amount of the
New 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.
Any holder of the New Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the New
Guarantee.
Consolidation, Merger, Sale of Assets and Other Transactions
The New Guarantee provides that the Corporation shall not consolidate with
or merge with or into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and no Person
shall consolidate with or merge with or into the Corporation or convey, transfer
or lease its properties and assets substantially as an entirety to the
Corporation, unless (i) in case the Corporation consolidates with or merges with
or into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia and
such successor Person expressly assumes the Corporation's obligations under the
New Guarantee; (ii) immediately after giving effect thereto, no event of default
under the New Guarantee, and no event which, after notice or lapse of time or
both, would become an event of default under the New Guarantee, shall have
happened and be continuing; (iii) such transaction is permitted under the
Declaration and the Indenture and does not give rise to any breach or violation
of the Declaration or the Indenture; and (iv) certain other conditions as
prescribed in the New Guarantee are met.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the New Guarantee, undertakes to
perform only such duties as are specifically set forth in the New Guarantee and,
after default with respect to the New Guarantee, must exercise the same degree
of care and skill as a prudent person would exercise or use in the conduct of
his or her own affairs. Subject to this provision, the Guarantee Trustee is
under no obligation to exercise any of the powers vested in it by the New
Guarantee at the request of any holder of the New Capital Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
Termination of the Guarantee
The New Guarantee will terminate and be of no further force and effect upon
full payment of the applicable Redemption Price of the New Capital Securities,
upon full payment of the amounts payable upon liquidation of the Trust or upon
distribution of New Junior Subordinated Debt Securities to the holders of the
New Capital Securities. The New Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of the New Capital
Securities must restore payment of any sums paid under the New Capital
Securities or the New Guarantee.
Governing Law
The New Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange Offer,
except under limited circumstances), (ii) the New Capital Securities will not
provide for any increase in the Distribution rate thereon, and (iii) the New
Junior Subordinated Debt Securities will not provide for any increase in the
interest rate thereon. The Old Securities provide that, in the event that a
registration statement relating to the Exchange Offer has not been filed by July
5, 1997 and been declared effective by August 4, 1997 or, in certain limited
circumstances, in the event a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Old Capital
Securities is not declared effective by July 5, 1997, then interest will accrue
(in addition to the stated interest rate on the Old Junior Subordinated Debt
Securities) at the rate of 0.25% per annum on the principal amount of the Old
Junior Subordinated Debt Securities and Distributions will accrue (in addition
to the stated Distribution rate on the Old Capital Securities) at the rate of
0.25% per annum on the liquidation amount of the Old Capital Securities, for the
period from the occurrence of such event until such time as such required
Exchange Offer is consummated or any required Shelf Registration Statement is
effective. The New Securities are not, and upon consummation of the Exchange
Offer the Old Securities will not be, entitled to any such additional interest
or Distributions. Accordingly, holders of Old Capital Securities should review
the information set forth under "Risk Factors -- Certain Consequences of a
Failure to Exchange Old Capital Securities" and "Description of New Securities."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES,
THE NEW JUNIOR SUBORDINATED DEBT SECURITIES AND THE NEW GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of New Guarantee." Taken together, the
Corporation's obligations under the New Junior Subordinated Debt Securities, the
Indenture, the Declaration and the New Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Capital Securities. If and to the extent that the
Corporation does not make payments on the New Junior Subordinated Debt
Securities, the Trust will not pay Distributions or other amounts due on the New
Capital Securities. The New Guarantee does not cover payment of Distributions
when the Trust does not have sufficient funds to pay such Distributions. In such
event, the remedy of a holder of New Capital Securities is to institute a Direct
Action. The obligations of the Corporation under the New Guarantee are
subordinate and junior in right of payment to all Senior Debt.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
New Junior Subordinated Debt Securities, such payments will be sufficient to
cover Distributions and other payments due on the New Capital Securities,
primarily because (i) the aggregate principal amount or Prepayment Price of the
New Junior Subordinated Debt Securities will be equal to the sum of the
aggregate liquidation amount or Redemption Price, as applicable, of the Trust
Securities; (ii) the interest rate and interest and other payment dates on the
New Junior Subordinated Debt Securities will match the Distribution rate and
Distribution and other payment dates for the New Capital Securities; (iii) the
Corporation, as issuer of the Junior Subordinated Debt Securities, shall pay for
all costs, expenses and liabilities of the Trust except the Trust's obligations
to holders of Trust Securities under such Trust Securities; and (iv) the
Declaration further provides that the Trust will not engage in any activity that
is not consistent with the limited purposes thereof.
Enforcement Rights of Holders of New Capital Securities
A holder of any New Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
A default or event of default under any Senior Debt would not constitute a
default or Event of Default under the Declaration. However, in the event of
payment defaults under, or acceleration of, Senior Debt, the subordination
provisions of the Indenture provide that no payments may be made in respect of
the New Junior Subordinated Debt Securities until such Senior Debt has been paid
in full or any payment default thereunder has been cured or waived. Failure to
make required payments on New Junior Subordinated Debt Securities would
constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
The Trust Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Trust Securities, investing the
proceeds of the Trust Securities in Junior Subordinated Debt Securities and
engaging in other activities necessary or incidental thereto.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the New Junior Subordinated Debt
Securities, after satisfaction of the liabilities of creditors of the Trust as
required by applicable law, the holders of the Trust Securities will be entitled
to receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of New Capital Securities--Liquidation of the Trust and
Distribution of New Junior Subordinated Debt Securities." Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the New Junior Subordinated Debt Securities, would be a
subordinated creditor of the Corporation, subordinated in right of payment to
all Senior Debt as set forth in the Indenture, but entitled to receive payment
in full of principal and interest, before any stockholders of the Corporation
receive payments or distributions. Since the Corporation is the guarantor under
the New Guarantee and has agreed to pay for all costs, expenses and liabilities
of the Trust (other than the Trust's obligations to the holders of its Trust
Securities), the positions of a holder of New Capital Securities and a holder of
New Junior Subordinated Debt Securities relative to other creditors and to
stockholders of the Corporation in the event of liquidation or bankruptcy of the
Corporation are expected to be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
The following summary of certain federal income tax considerations is based
on the advice of Cadwalader, Wickersham & Taft, special counsel to the
Corporation and the Trust ("Tax Counsel"). This summary describes the principal
federal income tax consequences of the purchase, beneficial ownership and
disposition of Capital Securities purchased at initial issuance and held as
capital assets, but does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to a decision to purchase Capital
Securities. Except to the extent discussed below under "Non-United States
Holders," this summary deals only with (i) citizens or residents of the United
States or any State or political subdivision thereof, (ii) corporations,
partnerships and other business entities created or organized under the laws of
the United States, (iii) estates the income of which is subject to U.S. federal
income taxation regardless of its source, and (iv) trusts with respect to which
a court within the United States is able to exercise primary supervision over
its administration and one or more U.S. fiduciaries have the authority to
control all substantive decisions (each, a "United States Holder"). This summary
does not address investors that may be subject to special rules, such as banks,
tax-exempt entities, insurance companies, dealers in securities or currencies,
persons whose functional currency is not the U.S. dollar, and persons that will
hold the Capital Securities as part of a "straddle" or "conversion transaction"
for federal income tax purposes or otherwise as part of an integrated
transaction.
This summary is based on laws, regulations, rulings and decisions in effect
as of the date of this Offering Memorandum, all of which are subject to change,
with possible retroactive effect. No ruling from the Internal Revenue Service
(the "IRS") will be sought with respect to the Capital Securities, and the IRS
could take a contrary view with respect to the matters described below.
PROSPECTIVE HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE FEDERAL, STATE,
LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF CAPITAL SECURITIES. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION
OF THE CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE
"DESCRIPTION OF NEW CAPITAL SECURITIES--LIQUIDATION OF THE TRUST AND
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES."
Consequences of the Exchange
The exchange of New Capital Securities for Old Capital Securities pursuant
to the Exchange Offer will not constitute a taxable event for U.S. federal
income tax purposes. Accordingly, no gain or loss will be recognized by a Holder
upon receipt of a New Capital Security, the holding period of the New Capital
Security will include the holding period of the Old Capital Security exchanged
therefor and the adjusted tax basis of the New Capital Security will be the same
as the adjusted tax basis immediately before the exchange of the Old Capital
Security exchanged therefor.
Classification of the Junior Subordinated Debt Securities
Tax Counsel has advised the Corporation that, in its opinion, and based on
certain representations, facts and assumptions set forth in such opinion, the
Junior Subordinated Debt Securities will be classified as indebtedness of the
Corporation for U.S. federal income tax purposes. The Corporation and the Trust,
and holders of the Capital Securities (by acceptance of a beneficial interest in
a Capital Security), will agree to treat the Junior Subordinated Debt Securities
as indebtedness for all U.S. federal, state and local income and franchise tax
purposes.
Classification of the Trust
Tax Counsel has advised the Corporation that, in its opinion, under current
law and assuming full compliance with the terms of the Declaration and other
documents, and based upon certain facts and assumptions contained in such
opinion, the Trust will be classified as a grantor trust for United States
federal income tax purposes and not as an association taxable as a corporation.
Accordingly, for U.S. federal income tax purposes, each holder of Capital
Securities will be considered the owner of an undivided interest in the Junior
Subordinated Debt Securities and will be required to include in gross income its
allocable share of interest (or original issue discount ("OID")) on the Junior
Subordinated Debt Securities.
Interest Income and Original Issue Discount
Under applicable Treasury regulations, a debt instrument is deemed to be
issued with OID if there is more than a remote contingency that periodic stated
interest payments due on the instrument will not be timely paid. The exercise by
the Corporation of its option to defer the payment of stated interest on the
Capital Securities would prevent the Corporation from declaring dividends on any
class of equity. The Corporation believes that the likelihood of its exercising
its option to defer payment of stated interest is remote within the meaning of
such regulations. As a result, the Corporation intends to take the position,
based on the advice of Tax Counsel, that the Junior Subordinated Debt Securities
will not be deemed to be issued with OID and stated interest on the Junior
Subordinated Debt Securities generally will be taxable to a holder as ordinary
interest income at the time it is paid or accrued in accordance with such
holder's regular method of tax accounting.
If, however, the Corporation exercises its right to defer payments of
interest on the Junior Subordinated Debt Securities, the Junior Subordinated
Debt Securities will become OID instruments at such time and, consequently, each
holder of the Capital Securities will be required to accrue as OID the
difference between all remaining amounts payable on its pro rata share of the
Junior Subordinated Debt Securities and its adjusted tax basis in the Capital
Securities. In general, any OID will be accrued by all holders (including cash
method holders) on a constant yield basis over the remaining term of the Junior
Subordinated Debt Securities (and even during the Extension Period when the
Corporation will not pay interest). Moreover, even after the end of an Extension
Period, all holders will be required to continue to include their pro rata share
of any OID on the Junior Subordinated Debt Securities in income under the
constant yield method, regardless of their method of tax accounting and in
advance of the receipt of the cash attributable to such interest income. Under
the OID constant yield method, a holder will accrue an amount of interest income
each year that approximates the stated interest payments called for under the
terms of the Junior Subordinated Debt Securities, and actual cash payments of
interest on the Junior Subordinated Debt Securities will not be reported
separately as taxable income. Any amount of OID included in a holder's gross
income (whether or not during an Extension Period) with respect to a Capital
Security will increase such holder's tax basis in such Capital Security, and the
amount of distributions received by a holder in respect of such accrued OID will
reduce the tax basis of such Capital Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS successfully asserts that the Junior
Subordinated Debt Securities are issued with OID regardless of whether the
Corporation actually exercises its option to defer payments of interest, all
holders of Capital Securities would be required to include such OID in income on
a constant yield basis as described above.
Corporate holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized by such
holders with respect to the Capital Securities.
Distribution of Junior Subordinated Debt Securities or Cash Upon Liquidation of
the Trust
As described under the caption "Description of New Capital
Securities--Liquidation of the Trust and Distribution of New Junior Subordinated
Debt Securities," Junior Subordinated Debt Securities may be distributed to
holders in exchange for the Capital Securities and in liquidation of the Trust
at any time subject to the prior receipt of the approval of the Federal Reserve
if such approval is then so required and the Corporation having received an
opinion of counsel to the effect that such liquidation and distribution would
not be a taxable event to the holders of Capital Securities. Such a distribution
will be non-taxable and will result in the holder receiving directly its pro
rata share of the Junior Subordinated Debt Securities previously held indirectly
through the Trust, with a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis such holder had in its Capital Securities
before such distribution.
A holder will accrue interest (or OID) in respect of the Junior
Subordinated Debt Securities received from the Trust in the same manner that the
holder was required to accrue interest (or OID) in respect of the Capital
Securities. See "--Interest Income and Original Issue Discount."
Sales of Capital Securities
A holder that sells Capital Securities (including a redemption of Capital
Securities by the Corporation for cash) will recognize gain or loss equal to the
difference between the amount realized by the holder on the sale of the Capital
Securities (except to the extent that such amount realized is characterized as a
payment in respect of accrued but unpaid interest on such holder's allocable
share of the Junior Subordinated Debt Securities that the holder had not
previously included in gross income) and the holder's adjusted tax basis in the
Capital Securities sold or redeemed. Such gain or loss will be capital gain or
loss, and will be long-term capital gain or loss if the Capital Securities have
been held for more than one year. Analogous treatment will apply to the sale or
redemption of any Junior Subordinated Debt Securities distributed to holders in
redemption of their Capital Securities.
Proposed Legislation
On February 6, 1997, as part of President Clinton's fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation (the
"Proposed Legislation") that would, among other things, deny an issuer a federal
income tax deduction for interest in respect of certain debt obligations, such
as the Junior Subordinated Debt Securities, but only if the debt obligations are
issued on or after "the date of the first committee action." However, neither of
the tax bills passed by the House of Representatives (H.R. 2014) and the Senate
(S. 949) in June 1997, and currently scheduled for reconciliation, contains a
similar proposal. If the Proposed Legislation is, nevertheless, enacted in its
current form, it should not apply to the Junior Subordinated Debt Securities,
which were issued prior to the date of first committee action (which has not yet
occurred). There can be no assurances, however, that the Proposed Legislation,
if enacted, or similar legislation enacted after the date hereof, would not
adversely affect the tax treatment of the Junior Subordinated Debt Securities,
resulting in a Tax Event. A Tax Event would permit the Corporation, upon the
receipt of any required regulatory approval, to cause a redemption of the Trust
Securities at the Special Event Redemption Price. See "Description of New
Capital Securities--Mandatory Redemption" and "Description of New Junior
Subordinated Debt Securities--Special Event Prepayment."
Non-United States Holders
In the case of a holder that is, for U.S. federal income tax purposes, a
foreign corporation, a nonresident alien individual, a nonresident alien
fiduciary of a foreign estate or trust, or a foreign partnership one or more of
the members of which is, for U.S. federal income tax purposes, a foreign
corporation, a nonresident alien individual or a nonresident alien fiduciary of
a foreign estate or trust, and does not hold the Capital Securities in
connection with the conduct of a trade or business in the United States (each a
"Non-United States Holder"): (a) distributions of principal and interest
(including OID) on the Junior Subordinated Debt Securities, and distributions on
the Capital Securities, each with respect to a Non-United States Holder, will
not be subject to U.S. withholding tax, provided that (i) the holder does not
actually or constructively own 10 percent or more of the combined voting power
of all classes of stock of the Corporation, (ii) the holder is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (iii) the holder provides a statement signed under penalties of perjury that
includes its name and address and certifies that it is not a United States
holder; (b) gain realized on the sale, exchange or redemption of Capital
Securities will not be subject to U.S. federal income tax unless the holder is
an individual who is present in the United States for 183 days or more in the
taxable year of the sale, exchange or redemption, and certain other conditions
are met; and (c) Capital Securities will not be subject to U.S. federal estate
tax as a result of the death of a holder who is not a citizen or resident of the
United States at the time of death, provided that such holder did not at the
time of death actually or constructively own 10 percent or more of the combined
voting power of all classes of stock of the Corporation and, at the time of such
holder's death, payments of interest on such Capital Securities would not have
been effectively connected with the conduct by such holder of a trade or
business in the United States.
Treasury regulations have been proposed that would affect the persons
required to provide the statement described above under clause (a). In
particular, these proposed regulations, if finalized as proposed, would require
a statement to be submitted by direct (and certain indirect) owners of certain
entities that are treated as foreign partnerships for federal income tax
purposes. If finalized as proposed, these proposed Treasury regulations could
affect certain holders of Capital Securities.
Backup Withholding and Information Reporting
Information reporting requirements apply to certain payments of principal
of and interest on (and the amount of OID, if any, accrued on) a debt
obligation, and to proceeds of certain sales of a debt obligation before
maturity, paid to certain nonexempt persons. In addition, a backup withholding
tax also may apply with respect to such amounts if such a holder fails to
provide correct taxpayer identification numbers and other information. The
backup withholding tax rate is 31%. The Corporation, or a paying agent or a
broker, as the case may be, will be required to withhold from any payment that
is subject to backup withholding unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations and certain other conditions are met.
Under current law, payments on Capital Securities owned by a Non-United
States Holder will not be subject to information reporting requirements or
backup withholding tax if the statement described above in clause (a) under
"Non-United States Holders" is duly provided.
Under current law, information reporting requirements and backup
withholding tax will not apply to any payment of the proceeds of the sale of
Capital Securities effected outside the United States by the foreign office of a
"broker" (as defined in applicable Treasury regulations), provided that such
broker (i) is not a U.S. person, (ii) derives less than 50 percent of its gross
income for certain periods from the conduct of a trade or business in the United
States, and (iii) is not a controlled foreign corporation as to the United
States (a person described in (i), (ii) and (iii), a "foreign controlled
person"). Under current law, payment of the proceeds of the sale of Capital
Securities effected outside the United States by the foreign office of a broker
that is not a foreign controlled person will not be subject to backup
withholding tax, but will be subject to information reporting requirements
unless such broker has documentary evidence in its records that the beneficial
owner is not a U.S. person and certain other conditions are met, or the holder
otherwise establishes an exemption. Payment by a U.S. office of a broker of the
proceeds of a sale of Capital Securities will be subject to backup withholding
and information reporting unless the holder certifies that it is not a U.S.
person under penalties of perjury or otherwise establishes an exemption.
Treasury regulations have been proposed that would alter certain of these
rules. If finalized as proposed, these proposed Treasury regulations could
affect certain holders of Capital Securities.
Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a refund or a credit against such holder's U.S.
federal income tax.
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
(a "Plan") subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), should consider the fiduciary standards of ERISA in
the context of the Plan's particular circumstances before authorizing an
investment in the 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 Internal Revenue Code of 1986,
as amended (the "Code") prohibit Plans, as well as individual retirement
accounts and Keogh plans subject to Section 4975 of the Code (also "Plans"),
from engaging in certain transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") with respect to such Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other liabilities
under ERISA and/or Section 4975 of the Code for such persons, unless exemptive
relief is available under an applicable statutory or administrative exemption.
Employee benefit plans that are governmental plans (as defined in Section 3(32)
of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and
foreign plans (as described in Section 4(b)(5) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to
include assets of Plans owning New Capital Securities for purposes of ERISA and
Section 4975 of the Code if the New Capital Securities constituted equity
interests in the Trust and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to exceptions contained in the Plan Assets Regulation, the assets
of the Trust would not be deemed to include assets of Plans owning New Capital
Securities if the aggregate investment in New Capital Securities by Plans, other
employee benefit plans not subject to Title I of ERISA or Section 4975 of the
Code, and entities whose underlying assets include Plan assets (collectively,
"Benefit Plan Investors") is not "significant", or if the New Capital Securities
qualify as "publicly offered securities" as defined in the Plan Asset
Regulation. For this purpose, equity participation by Benefit Plan Investors
will not be considered "significant" on any date only if, immediately after the
most recent acquisition of New Capital Securities, the aggregate interest in the
New Capital Securities held by Benefit Plan Investors will be less than 25% of
the value of the New Capital Securities. Although it is possible that the equity
participation by Benefit Plan Investors in New Capital Securities on any date
will not be "significant" for purposes of the Plan Assets Regulation, such
result cannot be assured.
The New Capital Securities may qualify as "publicly offered securities"
under the Plan Assets Regulations if, at the time of the Exchange Offer, they
are "widely held" and "freely transferable". Under the Plan Assets Regulation, a
class of securities is "widely held" only if it is a class of securities that is
owned by 100 or more investors independent of the issuer and of one another.
Although it is possible that at the time of the Exchange Offer the New Capital
Securities will be "widely held", such result cannot be assured. Whether a
security is "freely transferable" for purposes of the Plan Assets Regulation is
a factual question to be determined on the basis of all relevant facts and
circumstances. If at the time of the Exchange Offer the New Capital Securities
qualify as "publicly offered securities", the assets of the Trust should not
include assets of Plans acquiring New Capital Securities. If the New Capital
Securities do not qualify as "publicly offered securities", the plan asset
considerations discussed herein could be applicable in connection with the
investment by Plans in the New Capital Securities.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code if the assets of the Trust were deemed to include assets of Plans owning
New Capital Securities. For example, if the Corporation is a Party in Interest
with respect to an investing Plan (either directly or by reason of its ownership
of the Trust or of any of the Corporation's other subsidiaries), extensions of
credit between the Corporation and the Trust (as represented by the New Junior
Subordinated Debt Securities and the New Guarantee) would likely be prohibited
by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless
exemptive relief were available under an applicable administrative exemption
(see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the New Capital Securities, assuming
that assets of the Trust were deemed to include assets of Plans owning such
securities. 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 pooled separate accounts) and PTCE
84-14 (for certain transactions determined by independent qualified professional
asset managers).
Because the New Capital Securities may constitute equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the New
Capital Securities may not be purchased or held by any Plan, or any person
investing the assets of a Plan, unless such purchaser or holding meets the
conditions for exemptive relief acting on behalf of or under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14. See "Notice to Investors." Furthermore, to avoid certain
prohibited transactions under ERISA and the Code that could result under certain
circumstances if the New Capital Securities are deemed to be such equity
interests.
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 New
Capital Securities on behalf of or with the assets of any Plan consult with
their counsel regarding the potential consequences if the assets of the Trust
were deemed to include plan assets and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
PLAN OF DISTRIBUTION
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. 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 Trust and the Corporation have agreed that, starting on
the Expiration Date and ending on the close of business on the 180th day
following the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, for a period of 180 days after the Expiration Date, all
dealers effecting transactions in the New Capital Securities may be required to
deliver a prospectus.
The Trust and the Corporation will not receive any proceeds from any sale
of New Capital Securities by broker-dealers or other parties. New Capital
Securities received by broker-dealers for their own account pursuant to 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 pursuant to 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
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 180 days after the Expiration Date, the Trust and the
Corporation 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 Trust and the Corporation have
agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Capital Securities) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Capital Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Corporation and the Trust
by Cadwalader, Wickersham & Taft and Ashby & Geddes.
INDEPENDENT AUDITORS
The consolidated financial statements of U.S.B. Holding Co., Inc. and
subsidiaries as of December 31, 1996 and 1995 and for each of the years in the
three year period ended December 31, 1996, included in this Prospectus or
incorporated by reference in this Prospectus from the Corporation's 1996 Annual
Report on Form 10-K and appearing in the Corporation's 1996 Annual Report to
Shareholders, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report dated January 24, 1997 (February 5, 1997 as to Note
17) which is also incorporated by reference herein.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a
corporation to indemnify any director, officer, employee or other agent of the
corporation to whatever extent specified in or authorized by (i) the articles of
organization, (ii) a by-law adopted by the stockholders or (iii) a vote adopted
by the holders of a majority of the shares of stock entitled to vote on the
election of directors.
The Corporation's By-laws provide indemnity to the Corporation's directors
and officers in such capacity or as directors or officers of a wholly-owned
subsidiary of the Corporation for liability resulting from judgments, fines,
expenses or settlement amounts incurred in connection with any action, including
an action by or in the right of the Corporation, brought against such person in
such capacity. Under Delaware law and the By-laws, no indemnification may be
provided for any person with respect to any matter as to which he or she shall
have been adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of the
Corporation or of such subsidiary. The By-laws also provide that, with respect
to any matter disposed of by a compromise payment by such director or officer
pursuant to a consent decree or otherwise, no indemnification shall be provided
unless such compromise shall be ordered by a court or shall be approved as being
in the best interest of the Corporation, after notice that it involves such
indemnification: (a) by a disinterested majority of the directors then in office
or (b) by a majority of the disinterested directors then in office, provided
that there has been obtained an opinion in writing of independent counsel to the
effect that such person does not appear not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the
Corporation or (c) by the holders of a majority of the outstanding stock at the
time entitled to vote for directors, exclusive of any stock owned by any
interested director or officer. Under Delaware law, a court may uphold
indemnification in connection with a suit in which there is a recovery or by in
the right of a corporation.
The By-laws also provide for indemnification for all other directors and
officers of the Corporation's wholly-owned subsidiaries to the extent authorized
by the Board of Directors in each individual case, based on the same statutory
standard set forth in the preceding paragraph. Where such a person is wholly
successful in defending the claim, he or she shall be entitled to
indemnification. Directors and officers of other subsidiaries and employees and
agents of the Corporation and any subsidiaries may be indemnified as determined
by the Board from time to time.
In addition, as permitted under Delaware law, the Corporation maintains
liability insurance covering directors and officers of the Corporation and its
subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT DESCRIPTION
4.1 Indenture of U.S.B. Holding Co., Inc. relating to the Junior Subordinated
Debt Securities*
4.2 Form of Certificate of New Junior Subordinated Debt Securities*
4.3 Certificate of Trust of Union State Capital Trust I*
4.4 Declaration of Trust of Union State Capital Trust I*
4.5 Amended and Restated Declaration of Trust for Union State Capital Trust I*
4.6 Form of New Capital Security Certificate for Union State Capital Trust I*
4.7 Form of New Guarantee of U.S.B. Holding Co., Inc. relating to the New
Capital Securities*
4.8 Registration Agreement*
5.1 Opinion and consent of Cadwalader, Wickersham & Taft to U.S.B. Holding Co.,
Inc. as to legality of the New Guarantee to be issued by U.S.B. Holding
Co., Inc.*
5.2 Opinion of Ashby & Geddes, special Delaware counsel, as to legality of the
New Capital Securities and the New Junior Subordinated Debt Securities to
be issued by Union State Capital Trust I and U.S.B. Holding Co., Inc.*
8.1 Opinion of Cadwalader, Wickersham & Taft, special tax counsel, as to
certain federal income tax matters.*
12.1 Amended Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2 Amended Computation of ratio of earnings to fixed charges (including
interest on deposits)
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)*
23.3 Consent of Ashby & Geddes (included in Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of U.S.B. Holding Co.,
Inc. (included on the signature page hereto)*
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the Indenture*
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the Amended and Restated Declaration of Trust of Union State
Capital Trust I*
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
Trustee under the New Guarantee for the benefit of the holders of New
Capital Securities of Union State Capital Trust I*
99.1 Amended Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees*
99.5 Form of Letter to Clients*
- ---------------------------------
* Previously filed as Exhibits to the Registration Statement on Form S-4 of
U.S.B. Holding Co., Inc. (No. 333-28651) filed June 6, 1997.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing, where applicable, 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling person of each
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 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.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, U.S.B. Holding
Co., Inc. certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Amendment to
be signed on its behalf by the undersigned, thereunto duly authorized, in New
York, New York, as of the 14th of July, 1997.
U.S.B. HOLDING CO., INC.
By /s/ Thomas E. Hales
------------------------
(Thomas E. Hales)
(Chairman of the Board, President,
Chief Executive Officer and Director)
Pursuant to the requirements of the Securities Act of 1933,
this Amendment has been signed by the following persons in the capacities and as
of the dates indicated.
SIGNATURE TITLE DATE
/s/ Thomas E. Hales Chairman of the Board, July 14, 1997
- -------------------------------- President, Chief
(Thomas E. Hales) Executive Officer and Director
/s/ Steven T. Sabatini Executive Vice President, Chief
- -------------------------------- Financial Officer and
(Steven T. Sabatini) Assistant Secretary July 14, 1997
_____________________________ Director ______________
(Kenneth J. Torsoe)
/s/ Raymond J. Crotty Executive Vice President, Chief
- -------------------------------- Credit Officer, Assistant
(Raymond J. Crotty) Secretary and Director July 14, 1997
/s/ Fred F. Graziano Treasurer and Director July 14, 1997
- --------------------------------
(Fred F. Graziano)
/s/ Michael H. Fury Secretary, General Counsel July 14, 1997
- -------------------------------- and Director
(Michael H. Fury)
Director _____________
- --------------------------------
(Howard V. Ruderman)
/s/ Herbert Peckman Director July 14, 1997
- --------------------------------
(Herbert Peckman)
Pursuant to the requirements of the Securities Act of 1933, Union State
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-4 and has duly caused this
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York, as of the 14th day of July, 1997.
UNION STATE CAPITAL TRUST I
By /s/ Thomas E. Hales
------------------------
Thomas E. Hales,
as Administrative Trustee
By /s/ Steven T. Sabatini
------------------------
Steven T. Sabatini,
as Administrative Trustee
By /s/ Michael H. Fury
-------------------------
Michael H. Fury,
as Administrative Trustee
By /s/ Raymond J. Crotty
------------------------
Raymond J. Crotty,
as Administrative Trustee
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Indenture of U.S.B. Holding Co., Inc. relating to the Junior Subordinated
Debt Securities*
4.2 Form of Certificate of New Junior Subordinated Debt Securities*
4.3 Certificate of Trust of Union State Capital Trust I*
4.4 Declaration of Trust of Union State Capital Trust I*
4.5 Amended and Restated Declaration of Trust for Union State Capital Trust I*
4.6 Form of New Capital Security Certificate for Union State Capital Trust I*
4.7 Form of New Guarantee of U.S.B. Holding Co., Inc. relating to the New
Capital Securities*
4.8 Registration Agreement*
5.1 Opinion and consent of Cadwalader, Wickersham & Taft to U.S.B. Holding Co.,
Inc. as to legality of the New Guarantee to be issued by U.S.B. Holding
Co., Inc.*
5.2 Opinion of Ashby & Geddes, special Delaware counsel, as to legality of the
New Capital Securities and the New Junior Subordinated Debt Securities to
be issued by Union State Capital Trust I and U.S.B. Holding Co., Inc.*
8.1 Opinion of Cadwalader, Wickersham & Taft, special tax counsel, as to
certain federal income tax matters.*
12.1 Amended Computation of ratio of earnings to fixed charges (excluding
interest on deposits)
12.2 Amended Computation of ratio of earnings to fixed charges (including
interest on deposits)
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1)*
23.3 Consent of Ashby & Geddes (included in Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of U.S.B. Holding Co.,
Inc. (included on the signature page hereto)*
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the Indenture*
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the Amended and Restated Declaration of Trust of Union State
Capital Trust I*
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act as
trustee under the New Guarantee for the benefit of the holders of New
Capital Securities of Union State Capital Trust I*
99.1 Amended Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees*
99.5 Form of Letter to Clients*
- ---------------------------------
* Previously filed as Exhibits to the Registration Statement on Form S-4 of
U.S.B. Holding Co., Inc. (No. 333-28651) filed July 14, 1997.
U.S.B. Holding Co., Inc.
Computation of Ratio of Earnings to Fixed Charges
(Excluding Interest on Deposits)
(000's except ratios)
Earnings to Fixed Charges
<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>
Pre tax earnings..... $ 3,345.00 $ 3,343.00 $ 14,188.00 $ 13,638.00 $ 10,126.00 $ 9,805.00 $ 7,449.00
Interest on
borrowings........... 1,190.00 180.00 1,827.00 880.00 588.00 216.00 142.00
1/3 rent expense..... 54.33 39.00 177.00 176.67 150.67 141.33 119.33
----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 4,589.33 $ 3,562.00 $ 16,192.00 $ 14,694.67 $ 10,864.67 $ 10,162.33 $ 7,710.33
=========== =========== =========== =========== =========== =========== ===========
Fixed charges........ $ 1,244.33 $ 219.00 $ 2,004.00 $ 1,056.67 $ 738.67 $ 357.33 $ 261.33
=========== =========== =========== =========== =========== =========== ===========
Ratio earnings to
fixed charges....... 3.69x 16.26x 8.08x 13.91x 14.71x 28.44x 29.50x
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
Earnings to Fixed Charges and Preferred Stock Dividend
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Pre tax earnings..... $ 3,345.00 $ 3,343.00 $ 14,188.00 $ 13,638.00 $ 10,126.00 $ 9,805.00 $ 7,449.00
Interest on 1,190.00 180.00 1,827.00 880.00 588.00 216.00 142.00
borrowings...........
1/3 rent expense..... 54.33 39.00 177.00 176.67 150.67 141.33 119.33
----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 4,589.33 $ 3,562.00 $ 16,192.00 $ 14,694.67 $ 10,864.67 $ 10,162.33 $ 7,710.33
=========== =========== =========== =========== =========== =========== ===========
Preferred dividend
on tax equivalent
basis................ $ 48.77 $ 117.38 $ 443.09 $ 460.60 $ 455.67 $ 518.72 $ 533.19
=========== =========== =========== =========== =========== =========== ===========
Fixed charges........ $ 1,293.10 $ 336.38 $ 2,447.09 $ 1,517.27 $ 1,194.34 $ 876.05 $ 794.52
=========== =========== =========== =========== =========== =========== ===========
Ratio earnings to
fixed charges and
preferred dividend... 3.55x 10.59x 6.62x 9.68x 9.10x 11.60x 9.70x
=========== =========== =========== =========== =========== =========== ===========
Earnings to Fixed Charges and Preferred Stock Dividend (Proforma)1
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31 Year Ended December 31
1997 1996
<S> <C> <C>
Pre tax earnings..................... $ 3,345.00 $ 14,188.00
Interest on borrowings............... 1,190.00 1,827.00
1/3 rent expense..................... 54.33 177.00
-------------- --------------
$ 4,589.33 $ 16,192.00
============== ==============
Fixed charges........................ $ 1,731.67 $ 3,953.33
============== ==============
Ratio earnings to fixed charges and
preferred stock dividend (proforma).. 2.65x 4.10x
============== ==============
</TABLE>
- --------
1 Assumes issuance of Capital Securities and repayment of existing preferred
stock at beginning of period.
U.S.B. Holding Co., Inc.
Computation of Ratio of Earnings to Fixed Charges
(Including Interest on Deposits)
(000's except ratios)
<TABLE>
<CAPTION>
Earnings to Fixed Charges
Three Months Ended March 31 Year Ended December 31
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Pre tax earnings................ $ 3,345.00 $3,343.00 $14,188.00 $13,638.00 $10,126.00 $ 9,805.00 $ 7,449.00
Interest on borrowings.......... 1,190.00 180.00 1,827.00 880.00 588.00 216.00 142.00
1/3 rent expense................ 54.33 39.00 177.00 176.67 150.67 141.33 119.33
Interest on deposits............ 6,760.00 6,065.00 25,774.00 23,438.00 15,345.00 12,922.00 15,151.00
----------- ----------- ----------- ----------- ----------- ----------- -----------
$11,349.33 $9,627.00 $41,966.00 $38,132.67 $26,209.67 $23,084.33 $22,861.33
=========== =========== =========== =========== =========== =========== ===========
Fixed charges................... $ 8,004.33 $6,284.00 $27,778.00 $24,494.67 $16,083.67 $13,279.33 $15,412.33
=========== =========== =========== =========== =========== =========== ===========
Ratio earnings to fixed charges. 1.42x 1.53x 1.51x 1.56x 1.63x 1.74x 1.48x
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Earnings to Fixed Charges and Preferred Stock Dividend
<S> <C> <C> <C> <C> <C> <C> <C>
Pre tax earnings................ $ 3,345.00 $3,343.00 $14,188.00 $13,638.00 $10,126.00 $ 9,805.00 $ 7,449.00
Interest on borrowings.......... 1,190.00 180.00 1,827.00 880.00 588.00 216.00 142.00
1/3 rent expense................ 54.33 39.00 177.00 176.67 150.67 141.33 119.33
Interest on deposits............ 6,760.00 6,065.00 25,774.00 23,438.00 15,345.00 12,922.00 15,151.00
----------- ----------- ----------- ----------- ----------- ----------- -----------
$11,349.33 $9,627.00 $41,966.00 $38,132.67 $26,209.67 $23,084.33 $22,861.33
Preferred dividend on tax =========== =========== =========== =========== =========== =========== ===========
equivalent basis............. $ 48.77 $ 117.38 $ 443.09 $ 460.60 $ 455.67 $ 518.72 $ 533.19
=========== =========== =========== =========== =========== =========== ===========
Fixed charges................... $ 8,053.10 $6,401.38 $28,221.09 $24,955.27 $16,539.34 $13,798.05 $15,945.52
Ratio earnings to fixed charges =========== =========== =========== =========== =========== =========== ===========
and preferred dividend....... 1.41x 1.50x 1.49x 1.53x 1.58x 1.67x 1.43x
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Earnings to Fixed Charges and Preferred Stock Dividend (Proforma)1
Three Months Ended March 31 Year Ended December 31
--------------------------- ----------------------
1997 1996
<S> <C> <C>
Pre tax earnings......................... $ 3,345.00 $ 14,188.00
Interest on borrowings................... 1,190.00 1,827.00
1/3 rent expense......................... 54.33 177.00
Interest on deposits..................... 6,760.00 25,774.00
$ 11,349.33 $ 41,966.00
============== ==============
Fixed charges............................ $ 8,491.67 $ 29,727.33
============== ==============
Ratio earnings to fixed charges and
Preferred stock dividend (proforma)... 1.34x 1.41x
============== ==============
- -------------------
1 Assumes issuance of Capital Securities and repayment of existing preferred
stock at beginning of period.
</TABLE>
LETTER OF TRANSMITTAL
UNION STATE CAPITAL TRUST I
OFFER TO EXCHANGE ITS
9.58% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9.58% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
U.S.B. HOLDING CO., INC.
PURSUANT TO THE PROSPECTUS DATED JULY __,1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON AUGUST ___, 1997, UNLESS THE OFFER IS EXTENDED.
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent For The Exchange Offer Is:
The Chase Manhattan Bank
By Hand Or Facsimile: By Registered Or
Overnight Delivery: Transimissions: Certified Mail:
The Chase Manhattan Bank (Eligible Institutions The Chase Manhattan Bank
450 West 33rd Street, Only) 450 West 33rd Street,
15th Floor 15th Floor
New York, New York (212) 946-3082 New York, New York
10001-2697 10001-2697
Attention: To Confirm Attention:
Global Trust Services by Telephone Global Trust Services
Shiek Wiltshire or for Information Shiek Wiltshire
Call:
(212) 946-8150
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of this Letter of Transmittal via facsimile to a
number other than as set forth above does not constitute a valid delivery.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
To participate in the Exchange Offer (as defined below), Holders must
tender by (a) book-entry transfer pursuant to the procedures set forth in the
Prospectus under "The Exchange Offer -- Procedures for Tendering Old Capital
Securities," or (b) forwarding Certificates herewith. Holders who are DTC
Participants tendering by book-entry transfer must execute such tender through
the Automated Tender Offer Program ("ATOP") of DTC. A Holder using ATOP should
transmit its acceptance to DTC on or prior to the Expiration Date. DTC will
verify such acceptance, execute a book-entry transfer of the tendered Old
Capital Securities into the Exchange Agent's account at DTC and then send to the
Exchange Agent confirmation of such book-entry transfer (a "book-entry
confirmation"), including an agent's message ("Agent's Message") confirming that
DTC has received an express acknowledgment from such Holder that such Holder has
received and agrees to be bound by this Letter of Transmittal and that the Trust
and the Corporation may enforce this Letter of Transmittal against such Holder.
The book-entry confirmation must be received by the Exchange Agent in order for
the tender relating thereto to be effective. Book-entry transfer to DTC in
accordance with DTC's procedures does not constitute delivery of the book-entry
confirmation to the Exchange Agent.
If the tender is not made through ATOP, Certificates, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date in order for
such tender to be effective.
Holders of Old Capital Securities who cannot complete the procedures for
delivery by book-entry transfer of such Old Capital Securities on a timely basis
or who cannot deliver their Certificates for such Old Capital Securities and all
other required documents to the Exchange Agent on or prior to the Expiration
Date, must, in order to participate in the Exchange Offer, tender their Old
Capital Securities according to the guaranteed delivery procedures set forth in
the Prospectus under "The Exchange Offer--Procedures for Tendering Old Capital
Securities."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
- --------------------------------------------------------------------------------
If blank, please print Old Capital Securities tendered
name and address of (Attach additional list if necessary)
registered holder.
- ------------------------ ----------------------------------------------------
Aggregate Principal
Principal Amount of Old
Amount of Old Capital
Certificate Capital Securities (if
Number(s)* Securities less than all)**
- ------------------------- --------------- ----------------- ----------------
- ------------------------- --------------- ----------------- ----------------
- ------------------------- --------------- ----------------- ----------------
- ------------------------- --------------- ----------------- ----------------
- ------------------------- --------------- ----------------- ----------------
TOTAL AMOUNT
TENDERED:
- ------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
- ------------------------------------------------------------------------------
** Old Capital Securities may be tendered in whole or in part in denominations
of $100,000 and integral multiples of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered for exchange in part, the
untendered principal amount thereof must be $100,000 or any integral
multiple of $1,000 in excess thereof. All Old Capital Securities held shall
be deemed tendered unless a lesser number is specified in this column. See
Instruction 4.
- --------------------------------------------------------------------------------
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
DTC Account Number _______________________________________________________
Transaction Code Number___________________________________________________
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s) _____________________________________________
Window Ticket Number (if any) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution____________________________________
DTC Account Number_______________________________________________
Transaction Code Number__________________________________________
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD CAPITAL
SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:________________________________________________________________________
Address:______________________________________________________________________
Ladies and Gentlemen:
The undersigned hereby tenders to Union State Capital Trust I, a trust
formed under the laws of the State of Delaware (the "Trust"), and U.S.B. Holding
Co., Inc., a Delaware corporation (the "Corporation"), the above described
aggregate Liquidation Amount of the Trust's 9.58% Series A Capital Securities
(the "Old Capital Securities") in exchange for a like aggregate Liquidation
Amount of the Trust's 9.58% Series B Capital Securities (the "New Capital
Securities") which have been registered under the Securities Act of 1933 (the
"Securities Act"), upon the terms and subject to the conditions set forth in the
Prospectus dated July __, 1997 (as the same may be amended or supplemented from
time to time, the "Prospectus"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with the Prospectus, constitute the
"Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Corporation and the Trust in connection with the Exchange Offer) with respect to
the tendered Old Capital Securities, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest)
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Corporation or the Trust
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Capital Securities to be issued in exchange for
such Old Capital Securities, (ii) present Certificates for such Old Capital
Securities for transfer, and to transfer the Old Capital Securities on the books
of the Trust, and (iii) receive for the account of the Trust all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE TRUST OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT
AND TRANSFER OF THE OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE
UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old Capital
Securities tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate number(s) and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities pursuant
to any one of the procedures described in "The Exchange Offer--Procedures for
Tendering the Old Capital Securities" in the Prospectus and in the instructions
attached hereto will, upon the Corporation's and the Trust's acceptance for
exchange of such tendered Old Capital Securities, constitute a binding agreement
between the undersigned, the Corporation and the Trust upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Corporation
and the Trust may not be required to accept for exchange any of the Old Capital
Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE CORPORATION OR THE TRUST, (II) ANY NEW
CAPITAL SECURITIES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE
ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF NEW CAPITAL SECURITIES TO BE RECEIVED IN THE
EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE
UNDERSIGNED 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. BY
TENDERING OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING
THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD CAPITAL SECURITIES WHICH IS A
BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE
LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE
SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH OLD CAPITAL
SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD
CAPITAL SECURITIES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING
THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW
CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE CORPORATION AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS
OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS
DEFINED 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 ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 90
DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW
CAPITAL SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN
THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD CAPITAL SECURITIES FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD CAPITAL SECURITIES AND
EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM
THE CORPORATION OR THE TRUST OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF
ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE
PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT
TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR
INCORPORATED BY REFERENCE THEREIN, 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 PURSUANT TO THE PROSPECTUS UNTIL
THE CORPORATION AND THE TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO
CORRECT SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES OF THE AMENDED
OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE CORPORATION
OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE
RESUMED, AS THE CASE MAY BE. IF THE CORPORATION OR THE TRUST GIVES SUCH NOTICE
TO SUSPEND THE SALE OF THE NEW CAPITAL SECURITIES, THEY SHALL EXTEND THE 90-DAY
PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED
TO USE THE PROSPECTUS IN CONNECTION WITH THE RESALE OF NEW CAPITAL SECURITIES BY
THE NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING
OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE NEW CAPITAL SECURITIES OR TO AND INCLUDING THE DATE ON
WHICH THE CORPORATION OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF NEW CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
AS A RESULT, A PARTICIPATING BROKER-DEALER WHO INTENDS TO USE THE
PROSPECTUS IN CONNECTION WITH RESALES OF NEW CAPITAL SECURITIES RECEIVED IN
EXCHANGE FOR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER MUST NOTIFY
THE CORPORATION AND THE TRUST, OR CAUSE THE CORPORATION AND THE TRUST TO BE
NOTIFIED, ON OR PRIOR TO THE EXPIRATION DATE, THAT IT IS A PARTICIPATING
BROKER-DEALER. SUCH NOTICE MAY BE GIVEN IN THE SPACE PROVIDED ABOVE OR MAY BE
DELIVERED TO THE EXCHANGE AGENT AT THE ADDRESS SET FORTH IN THE PROSPECTUS UNDER
"THE EXCHANGE OFFER--EXCHANGE AGENT."
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive Distributions on such Old Capital Securities and
the undersigned waive(s) the right to receive any Distributions on such Old
Capital Securities accumulated from and including February 5, 1997. Accordingly,
holders of New Capital Securities as of the record date for the payment of
Distributions on August 1, 1997 will be entitled to Distributions accumulated
from and including February 5, 1997.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Corporation or the Trust to be necessary or desirable to
complete the sale, assignment and transfer of the Old Capital Securities
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD CAPITAL
SECURITIES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD CAPITAL SECURITIES AS SET FORTH IN SUCH BOX.
- --------------------------------------------------------------------------------
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11) (NOTE:
SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) for the Old Capital Securities hereby tendered or on the register
of holders maintained by the Trust, or by any person(s) authorized to become the
registered holder(s) by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Trust or the Trustee for the Old Capital Securities to comply
with the restrictions on transfer applicable to the Old Capital Securities). If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instruction 5.
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Date:__________________________________________, 1997
Name(s)_________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title____________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
________________________________________________________________________________
________________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
Date:__________________________________________, 1997
Name of Firm____________________________________________________________________
Capacity (full title)___________________________________________________________
(PLEASE PRINT)
Address_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
________________________________________________________________________________
(TAX INDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
________________________________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if New Capital Securities or Old Capital Securities not
tendered are to be issued in the name of someone other than the registered
holder of the Old Capital Securities whose name(s) appear(s) above.
Mail
[ ] Old Capital Securities not tendered to:_______________________
[ ] New Capital Securities to:_____________________________
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if New Capital Securities or Old Capital Securities not
tendered are to be sent to someone other than the registered holder of the Old
Capital Securities whose name(s) appear(s) above, or such registered holder(s)
at an address other than that shown above.
Mail
[ ] Old Capital Securities not tendered to:
[ ] New Capital Securities to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
- --------------------------------------------------------------------------------
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. To tender in the Exchange Offer, Holders must tender by (a)
forwarding Certificates herewith or (b) book-entry transfer pursuant to the
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus. Holders who are DTC Participants
tendering by book-entry transfer must execute such tender through DTC's ATOP
system. A Holder using ATOP should transmit its acceptance to DTC on or prior to
the Expiration Date. DTC will verify such acceptance, execute a book-entry
transfer to the tendered Old Capital Securities into the Exchange Agent's
account at DTC and then send to the Exchange Agent a book-entry confirmation,
including an Agent's Message confirming that DTC has received an express
acknowledgment from such Holder that such Holder has received and agrees to be
bound by this Letter of Transmittal and that the Trust and the Corporation may
enforce this Letter of Transmittal against such Holder. The book-entry
confirmation must be received by the Exchange Agent in order for the tender
relating thereto to be effective. Book entry transfer to DTC in accordance with
DTC's procedure does not constitute delivery of the book-entry confirmation to
the Exchange Agent.
If the tender is not made through ATOP, Certificates, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date in order for
such tender to be effective.
Old Capital Securities may be tendered in whole or in part in the principal
amount of $100,000 (100 Capital Securities) and integral multiples of $1,000 in
excess thereof, provided that, if any Old Capital Securities are tendered for
exchange in part, the untendered principal amount thereof must be $100,000 (100
Capital Securities) or any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on a timely
basis, may tender their Old Capital Securities by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer--Procedures for Tendering the Old
Capital Securities" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Trust, must be received by the
Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates
(or a book-entry confirmation (as defined in this Prospectus)) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer--Procedures for Tendering the Old Capital Securities" in the
Prospectus.
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. For Old Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means 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.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Neither the Corporation nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof), waives any right to receive any
notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered
holder (which term, for purposes of this document, shall
include any participant in DTC whose name appears on a
security position listing as the owner of the Old Capital
Securities) of Old Capital Securities tendered herewith,
unless such holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of
a firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate number(s)
and/or the principal amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital Securities
will be accepted only in the principal amount of $100,000 (100 Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that if
any Old Capital Securities are tendered for exchange in part, the untendered
principal amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof. If less than all the Old Capital
Securities evidenced by any Certificate submitted are to be tendered, fill in
the principal amount of Old Capital Securities which are to be tendered in the
box entitled "Principal Amount of Old Capital Securities Tendered." In such
case, new Certificate(s) for the remainder of the Old Capital Securities that
were evidenced by your old Certificate(s) will only be sent to the holder of the
Old Capital Security, promptly after the Expiration Date. All Old Capital
Securities represented by Certificates delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
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 on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth above or in the Prospectus on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the 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 the Prospectus
under "The Exchange Offer-- Procedures for Tendering the Old Capital
Securities," the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of Old Capital Securities, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written or facsimile transmission. Withdrawals of tenders of Old
Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering the 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 Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Trust, any affiliates or
assigns of the Corporation or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Capital Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in different name(s)
on several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in- fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation and the Trust, in their sole discretion, of each
such person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Old Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Corporation, the Trust or the Trustee for the Old Capital
Securities may require in accordance with the restrictions on transfer
applicable to the Old Capital Securities. Signatures on such Certificates or
bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities
are to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail
or, if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Corporation and the Trust will determine, in their
sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Corporation and the Trust reserve the absolute right to
reject any and all tenders determined by either of them not to be in proper form
or the acceptance of which, or exchange for which, may, in the view of counsel
to the Corporation and the Trust be unlawful. The Corporation and the Trust also
reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer set forth in the Prospectus under "The Exchange
Offer--Conditions to the Exchange Offer" or any conditions 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 Corporation's and the Trust's interpretation of the terms and conditions of
the Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validity made until all irregularities with respect to such
tender have been cured or waived. The Corporation, the Trust, any affiliates or
assigns of the Corporation, the Trust, the Exchange Agent, or any other person
shall not be under any duty to give notification of any irregularities in
tenders or incur any liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR THE ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a holder whose tendered Old Capital Securities are accepted for
exchange is required to provide the Exchange Agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W- 9, the amounts retained during the 60-day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60-day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather,
the U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Corporation and the Trust reserve the
absolute right to waive satisfaction of any or all conditions enumerated in the
Prospectus.
11. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering holders of Old Capital Securities, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of Old Capital Securities for exchange.
Neither the Corporation, the Trust, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with respect to any
tender of Old Capital Securities nor shall any of them incur any liability for
failure to give any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
13. SECURITY TRANSFER TAXES. 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 tax (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.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF)
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: THE CHASE MANHATTAN BANK
<PAGE>
- --------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE TIN:
Form W-9 YOUR TIN ON THE LINE ________________________
AT RIGHT AND CERTIFY Social Security Number or
BY SIGNING AND DATING Employer Identification Number
BELOW
-----------------------------------------------------------
Department of
the Treasury
Internal Revenue
PART 2-TIN Applied [ ]
For Service
--------------------------------------- -------------------
Payer's Request for CERTIFICATION-UNDER THE PENALTIES OF PERJURY,
Taxpayer I CERTIFY THAT:
Identification (1) the number shown on this form is my
Number("TIN") and my correct taxpayer identification number
Certification (or I am waiting for a number and to be
issued to me).
(2) I am not subject to backup withholding
either because (i) I am exempt from backup
withholding, (ii) I have not been notified by
the Internal Revenue Service ("IRS") that I am
subject to backup withholding as a result
of a failure to report all interest or dividends,
or (iii) the IRS has notified me that I am no
longer subject to backup withholding, and
(3) any other information provided on this form is
true and correct.
Signature _________________ Date_______________, 1997
- --------------------------------------------------------------------------------
You must cross out item (iii) in Part (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
THE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments made to me on account of the New Capital Securities shall be
retained until I provide a taxpayer identification number to the Exchange Agent
and that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter will
be withheld and remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
Signature ________________________________ Date ____________________, 1997
