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REGISTRATION NO. 333-70311
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PREMIER BANCORP, INC. PBI CAPITAL TRUST
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(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its trust agreement)
PENNSYLVANIA DELAWARE
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(State or other jurisdiction of (State or other jurisdiction
incorporation or organization) of incorporation or organization)
6022 6022
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(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
23-2921058 23-2971704
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(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
379 NORTH MAIN STREET
DOYLESTOWN, PENNSYLVANIA 18901
(215) 345-5100
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(Address, including zip code, and telephone number, including area code,
of Registrants' principal executive offices)
JOHN C. SOFFRONOFF
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PREMIER BANCORP, INC.
379 NORTH MAIN STREET
DOYLESTOWN, PENNSYLVANIA 18901
(215) 345-5100
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
H. Anderson Ellsworth
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Jay W. Waldman
Ellsworth, Carlton & Waldman, P.C.
1105 Berkshire Boulevard, Suite 320
Wyomissing, PA 19610
(610) 374-1135
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[_]________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]________
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
PBI CAPITAL TRUST
Exchange Offer for
$10,000,000
8.57% Original Capital Securities
(liquidation amount $1,000 per original capital
security)
Guaranteed by Premier Bancorp, Inc.
Terms of Exchange Offer
* Expires 5:00 p.m., New York City time, April 2, 1999, unless extended
* Not subject to any condition other than that the exchange offer not
violate applicable law or any applicable interpretation of the Staff of
the Securities and Exchange Commission
* We will exchange all outstanding original capital securities that are
validly tendered to us and not validly withdrawn
* You may withdraw your tender of outstanding original capital securities at
any time prior to the expiration of the exchange offer
* The exchange of original capital securities will not be a taxable exchange
for United States federal income tax purposes
* We will not receive any proceeds from the exchange offer
* The terms of the capital securities to be issued are substantially the
same as the terms of the original capital securities except for certain
transfer restrictions, registration rights and rights relating to an
increase in the distribution rate relating to the original securities
You should carefully consider the "Risk Factors" beginning on page 14
before deciding whether to exchange your original capital securities.
These securities are not deposits or other obligations of a bank and are
not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February 8, 1999.
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TABLE OF CONTENTS
Summary..................................................................... 1
Risk Factors................................................................ 14
Summary of Selected Consolidated Financial Data............................. 27
Ratios of Earnings to Combined Fixed Charges................................ 29
Information Concerning PBI Capital Trust.................................... 30
Information Concerning Premier Bancorp, Inc................................. 31
Capitalization.............................................................. 37
Accounting Treatment........................................................ 38
The Exchange Offer.......................................................... 38
Description of Exchange Securities.......................................... 51
Description of Original Securities.......................................... 84
Relationship Among the Exchange Capital Securities
The Exchange Junior Subordinated Debentures and
the Exchange Guarantee................................................... 85
Certain Federal Income Tax Consequences..................................... 87
ERISA Considerations........................................................ 93
Plan of Distribution........................................................ 94
Validity of Exchange Securities............................................. 95
Experts..................................................................... 96
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SUMMARY
The following summary highlights selected information from this prospectus.
It may not contain all of the information that is important to you. This
prospectus includes specific terms of the securities we are offering, as well as
information regarding PBI Capital Trust, Premier Bancorp, Inc. and detailed
financial data. We encourage you to read this prospectus in its entirety.
The Exchange Offer
On August 11, 1998, PBI Capital Trust completed the private offering of
$10,000,000 of its 8.57% capital securities. The capital securities are
guaranteed by Premier Bancorp, Inc.
PBI Capital Trust and Premier Bancorp, Inc. entered into a registration
rights agreement with the initial purchaser in the private offering in which we
agreed, among other things, to use our best efforts to cause a registration
statement relating to this exchange offer to be declared "effective" under the
Securities Act of 1933 by February 7, 1999. You are entitled to exchange in the
exchange offer your capital securities for registered capital securities with
substantially identical terms. If a registration statement relating to this
exchange offer is not declared "effective" by February 7, 1999, then the
distribution rate on your capital securities will increase to 8.82% per year
until the date that a registration statement relating to this exchange offer
is declared "effective". On and after that date, the distribution rate on the
capital securities will be 8.57%.
At the end of the exchange offer, you will not be entitled to any increase
in the distribution rate on your capital securities or any further registration
rights under the registration rights agreement, except for certain limited
circumstances. You should read the discussion under the headings "Summary of
Terms of the Exchange Capital Securities" and "Description of Exchange
Securities" for more information regarding the registered securities.
We believe that the securities issued in the exchange offer may be resold
by you without compliance with the registration and prospectus delivery
provisions of the Securities Act of 1933, subject to certain conditions. You
should read the discussion under the headings "Summary of the Exchange Offer"
and "The Exchange Offer" for more information regarding the Exchange Offer and
resale of the securities.
PBI Capital Trust
PBI Capital Trust is a statutory business trust formed under Delaware law
by
* a trust agreement executed by our company, as sponsor; First Union
Trust Company, National Association, as property trustee and as
Delaware trustee; and the two individual administrative trustees named
in the trust agreement; and
* the filing of a certificate of trust with the Delaware Secretary of
State on July 28,
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1998.
PBI Capital Trust's business and affairs are conducted by the "issuer trustees":
First Union Trust Company, National Association, as property trustee and as
Delaware trustee, and the two individual administrative trustees who are
employees or officers of, or affiliated with, our company. PBI Capital Trust
exists solely to
* issue and sell its securities;
* use the proceeds from the sale of its securities to acquire our junior
subordinated debentures; and
* engage in only those other activities necessary or incidental to such
activities (such as registering the transfer of its securities).
The junior subordinated debentures will be PBI Capital Trust's only assets,
and payments under the junior subordinated debentures will be PBI Capital
Trust's only revenue. We will own all of PBI Capital Trust's common securities.
Premier Bancorp, Inc.
Our Company
We are a Pennsylvania business corporation and a registered bank holding
company headquartered in Doylestown, Bucks County, Pennsylvania. We are the
holding company for Premier Bank. Premier Bank was organized in 1990 as a
Pennsylvania state-chartered banking institution and began operations on April
24, 1992. Our consolidated financial condition and results of operations consist
almost entirely of Premier Bank's financial condition and results of operations.
At September 30, 1998, we had total consolidated assets of $232.6 million, total
deposits of $174.4 million and total shareholders' equity of $11.1 million.
Premier Bank
Premier Bank conducts business from its main office and two other retail
offices located in Southampton, Bucks County and Easton, Northampton County,
Pennsylvania. Premier Bank also has a loan origination office in Yardley, Bucks
County. Premier Bank plans to open a fourth branch office in Lower Makefield
Township, Bucks County, Pennsylvania, shortly.
Premier Bank is a community-oriented financial services provider whose
business primarily consists of attracting retail deposits from the general
public and small businesses and originating commercial and consumer loans in its
market area.
Premier Bank provides a wide variety of products and services which
include checking,
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savings and money market accounts, as well as certificates of deposit. Credit
products include residential mortgage loans, home equity loans and lines of
credit, personal lines of credit, working capital lines and other consumer and
commercial loans. Premier Bank also offers other services such as electronic
banking, cash management services, safe deposit boxes, telephone banking and
automated teller services.
Premier Bank places an emphasis on serving customer needs by providing
personal attention and service.
Premier Bank is a member of the Federal Reserve System and its deposits are
insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation
to the fullest extent provided by law.
Recent Developments
On December 22, 1998, we commenced an offering of 500,000 shares of our
common stock at $11.00 per share. We intend to use the net proceeds of that
offering to further our general corporate purposes, including investments in or
advances to Premier Bank in order to increase its capital position. We
anticipate that this will permit Premier Bank to provide for higher per borrower
lending limits which, in turn, will permit it to make larger loans and increase
its lending activity. In addition, we may use the net proceeds of that offering
to support the continuing development of Premier Bank's franchise through
possible expansion into related businesses. We cannot assure you that any of the
500,000 offered shares will be sold.
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Summary of the Exchange Offer
The terms of the exchange offer, which are specified in greater detail in
the main body of this prospectus and the accompanying "letter of transmittal",
include the following:
Registration Rights Agreement You are entitled to exchange your capital
securities for registered capital securities
with substantially the same terms. The exchange
offer is intended to satisfy these rights. You
will no longer be entitled to any exchange or
registration rights with respect to your capital
securities at the end of the exchange offer.
The Exchange Offer We are offering to exchange up to $10,000,000
aggregate liquidation amount of PBI Capital
Trust's 8.57% exchange capital securities of
which have been registered under the Securities
Act of 1933, for an equal aggregate liquidation
amount of outstanding 8.57% original capital
securities which were issued on August 11, 1998
in a private offering. Outstanding capital
securities must be properly tendered and
accepted in order to be exchanged. We will
exchange all outstanding capital securities that
are validly tendered and not validly withdrawn.
We will issue registered capital securities on
or promptly after the expiration of the exchange
offer.
Expiration Date The exchange offer will expire at 5:00
p.m., New York City time, on April 2, 1999,
unless we decide to extend the expiration date.
Conditions to the
Exchange Offer The exchange offer is not subject to any
condition other than that the exchange offer not
violate applicable law or any applicable
interpretation of the Staff of the Securities
and Exchange Commission. The exchange offer is
not conditioned upon the tender of any minimum
liquidation amount of capital securities.
Procedures for Tendering
Your Capital Securities You must properly complete and sign a "letter
of transmittal", which accompanies this
prospectus, and mail, fax or hand deliver it,
together with any other documents required by
the letter of transmittal, to the exchange
agent,
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either with your capital securities or in
compliance with the guaranteed delivery
procedures for guaranteed delivery of capital
securities.
Certain brokers, dealers, commercial banks,
trust companies and other nominees may also
effect tenders by book-entry transfer. If your
capital securities are registered in the name of
a broker, dealer, commercial bank, trust company
or other nominee, you should contact such person
promptly if you wish to tender your capital
securities pursuant to the exchange offer.
Please do not send your "letter of transmittal"
and certificates representing your capital
securities to us. You should only send such
documents to the exchange agent.
Withdrawal Rights You may withdraw the tender of your capital
securities at any time before 5:00 p.m.,
New York City time, on April 2, 1999 by
delivering written notice of your withdrawal to
the exchange agent as provided in the procedures
described in this prospectus under the heading
"The Exchange Offer--Withdrawal Rights."
Resales We believe that the securities issued in the
exchange offer may be offered for resale, resold
and otherwise transferred by you without
compliance with the registration and prospectus
delivery provisions of the Securities Act of
1933, provided that:
* the securities issued in the exchange
offer are being acquired in the ordinary
course of your business;
* you are not participating, do not intend
to participate, and have no arrangement
or understanding with any person to
participate, in the distribution of the
securities issued to you in the exchange
offer; and
* you are not our "affiliate or an
"affiliate" of PBI Capital Trust.
If our belief is inaccurate and you transfer any
securities issued to you in the exchange offer
without delivering a
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prospectus meeting the requirements of the
Securities Act of 1933, or without an exemption
from registration of your securities from such
requirements, you may incur liability under the
Securities Act of 1933. We do not assume or
indemnify you against such liability.
Each broker-dealer that is issued securities in
the exchange offer for its own account in
exchange for securities which were acquired by
such broker-dealer as a result of market making
or other trading activities, must acknowledge
that it will deliver a prospectus meeting the
requirements of the Securities Act of 1933 in
connection with any resale of the securities
issued in the exchange offer. A broker-dealer
may use this prospectus for an offer to resell,
resale or other retransfer of the securities
issued to it in the exchange offer.
Exchange Agent First Union Trust Company, National Association,
is serving as exchange agent in connection with
the exchange offer. The exchange agent's
address, telephone and facsimile numbers are
listed under the heading "The Exchange
Offer--Exchange Agent" and in the letter of
transmittal.
Use of Proceeds Neither PBI Capital Trust nor our company will
receive any cash proceeds from the issuance of
the securities pursuant to the exchange offer.
We will pay all expenses incident to the
exchange offer.
Certain United States
Federal Income Tax
Consequences; ERISA
Considerations The exchange of securities should not be a
taxable exchange for United States federal
income tax purposes. You should not recognize
any taxable gain or loss or any interest income
as a result of such exchange. You should review
carefully the information contained under the
headings "Certain United States Federal Income
Tax Consequences" and "ERISA Considerations"
before tendering your original capital
securities in the exchange offer.
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Summary of Terms of the Exchange Capital Securities
The form and terms of the capital securities to be issued in the
exchange offer are the same as the form and terms of the outstanding capital
securities, except that the capital securities to be issued in the exchange
offer will be registered under the Securities Act of 1933, and, therefore, will
not bear legends restricting their transfer and will not be entitled to
registration under the Securities Act of 1933. The capital securities issued in
the exchange offer will evidence the same obligations as the outstanding capital
securities and both the outstanding capital securities and the capital
securities to be issued are governed by the same amended and restated
declaration of trust and indenture. The terms of the capital securities to be
issued in the exchange offer, which are specified in greater detail in the main
body of this prospectus, include the following:
Securities Offered We have registered $10,000,000
aggregate liquidation amount of PBI
Capital Trust's 8.57% Exchange
Capital Securities (liquidation
amount $1,000) under the Securities
Act of 1933.
Distribution Dates February 15 and August 15 of each
year, beginning August 15, 1999.
Extension Periods If there is no continuing default,
we have the right, at any time, to
defer payments of interest on the
junior subordinated debentures for a
period of not more than 10
consecutive semi-annual periods.
Distributions on your capital
securities will be deferred during
any extension period. No extension
period will extend beyond August 15,
2028.
Interest will continue to accrue on
the junior subordinated debentures
during an extension period. As a
holder of exchanged capital
securities, you would be required to
accrue income for United States
federal income tax purposes. This
means that you would have income
from your exchanged capital
securities for United States federal
income tax purposes but that you
would not receive any cash with
which to pay any tax that might be
due on that income. You should
review carefully the information
contained under the headings
"Certain United States Federal
Income Tax Consequences--Interest
Income and Original Issue Discount"
and "Risk Factors--Option to Extend
Interest Payment Period; Tax
Considerations."
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We do not currently intend to
exercise our right to defer interest
payments by extending the interest
payment period of the junior
subordinated debentures.
Ranking Capital securities issued in the
exchange offer will rank equally
with, and payments on capital
securities issued in the exchange
offer will be made proportionally
with, PBI Capital Trust's capital
securities and the common securities
issued in the private placement,
except as described under the
heading "Description of Exchange
Securities--Description of Exchange
Capital Securities--Subordination of
Common Securities."
The junior subordinated debentures
issued in the exchange offer will
rank equally with the junior
subordinated debentures issued in
the private offering and all other
junior subordinated debt securities
which may be issued by us pursuant
to the indenture with substantially
similar subordination terms, and
which may be issued and sold to
other trusts to be established by us
which are similar to PBI Capital
Trust. The junior subordinated
debentures issued in the exchange
offer will be unsecured and
subordinate and junior in right of
payment as described in the
indenture to all of our senior
indebtedness.
Our guarantee issued in the exchange
offer will rank equally with our
guarantee issued in the private
offering and with all other
guarantees to be issued by us with
respect to capital securities which
may be issued by other trusts to be
established by us and which are
similar to PBI Capital Trust. The
guarantee will constitute our
unsecured obligation and will rank
subordinate and junior in right of
payment as described under the
heading "Description of Exchange
Securities--Description of Exchange
Guarantee."
In addition, because we are a
holding company, the junior
subordinated debentures and our
guarantee are effectively
subordinated to all existing and
future liabilities of our
subsidiaries, including Premier
Bank's deposits.
Redemption You may be required to sell your
capital securities issued in the
exchange offer to PBI Capital Trust
if the junior subordinated
debentures are prepaid. In this
case, PBI
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Capital Trust will buy your capital
securities at a redemption price
equal to the applicable "optional
prepayment price" described in the
indenture. Subject to Federal
Reserve Board approval, if then
required under the Federal Reserve
Board's applicable capital
guidelines or policies, we may
redeem the junior subordinated
debentures prior to maturity:
* on or after August 15, 2008, in
whole at any time or in part
from time to time; or
* at any time, in whole (but
not in part) upon the
occurrence and during the
continuance of a "special
event" as described under
the heading "Description of
Exchange Securities--Description
of Exchange Capital Securities--
Redemption."
Reserve Account On August 11, 1998, we established a
"Reserve Account" into which we
deposited $857,000 from the net
proceeds of the sale of the junior
subordinated debentures issued in
the private offering. The amount
deposited in the "Reserve Account"
is invested in highly marketable
securities. If we do not have
enough funds available to make any
interest payment on the junior
subordinated debentures and if we do
not elect to defer such interest
payment, then funds in the "Reserve
Account", as needed, will be used to
make the interest payment then due
on the junior subordinated debentures.
We are required to maintain the
balance in the "Reserve Account" at
the levels set forth in the
indenture at all times except when:
* the ratio of our total unsecured
debt (on a consolidated basis)
to shareholders' equity is not
more than 70%; and
* Premier Bank can pay us
dividends of at least two
times the amount of
interest payable on the
junior subordinated
debentures for one year
without obtaining prior
regulatory approval.
Although we are required to maintain
the balance in the
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"Reserve Account" at certain levels,
under certain circumstances, we will
have up to 24 months to restore the
balance in the "Reserve Account" to
the required levels.
If you are a holder of junior
subordinated debentures, you will
have no rights to any amounts in the
"Reserve Account" until those
amounts are used to make an interest
payment, and any rights in funds
used from the "Reserve Account" to
make an interest payment will be
subordinated and junior to the
rights of holders of senior
indebtedness, as described under the
heading "Description of Exchange
Securities--Description of Exchange
Junior Subordinated Debentures--
Reserve Account."
Transfer Restrictions Capital securities issued in the exchange
offer will be issued, and may be
transferred, only in blocks having a
liquidation amount of not less than
$100,000 (100 Capital Securities) and
multiples of $1,000 in excess of
$100,000.
ERISA Considerations You should consider carefully the
restrictions on purchase described
under the heading "ERISA Considerations."
Absence of Market for
the Exchange Capital
Securities Capital securities issued in the
exchange offer will be a new issue
of securities for which there
currently is no market. Accordingly,
we cannot assure you that any market
will develop for the capital
securities issued in the exchange
offer. We do not intend to apply
for listing of the capital securities
issued in the exchange offer on any
securities exchange or for quotation
through the National Association of
Securities Dealers Automated Quotation
System ("NASDAQ"). You should read
the discussion under the
heading "Plan of Distribution."
Risk Factors See "Risk Factors" immediately following
this summary for a discussion of certain
factors that you should consider in
connection with your investment in the
securities to be issued in the exchange
offer.
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Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission in compliance with the
information reporting requirements of the Securities Exchange Act of 1934. You
may read and copy any document we file at the Securities and Exchange
Commission's following locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, DC 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 at prescribed rates. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our filings are also available to the public from
commercial document retrieval services and at the web site maintained by the
Securities and Exchange Commission at "http://www/sec/gov."
Separate financial statements of PBI Capital Trust are not included in this
prospectus. We do not believe that such financial statements are helpful because
PBI Capital Trust is a newly formed special purpose entity and it has no
operating history or independent operations. PBI Capital Trust is not engaged
in, and does not propose to engage in, any activity other than holding as trust
assets the junior subordinated debentures, issuing its securities and engaging
in incidental activities. You should read the discussion under the headings
"Information Concerning PBI Capital Trust" and "Description of Exchange
Securities". In addition, we do not expect that PBI Capital Trust will file
reports and other information under the Securities Exchange Act of 1934 with the
Securities and Exchange Commission.
This prospectus is part of a registration statement we have filed with the
Securities and Exchange Commission under the Securities Act of 1933. As allowed
by Securities and Exchange Commission rules, this prospectus does not contain
all the information you can find in the registration statement or the exhibits
filed with the registration statement. You should review the registration
statement and the exhibits filed with the registration statement for further
information regarding us and the securities being offered by this prospectus.
The registration statement and its exhibits may be inspected at the public
reference facilities of the Securities and Exchange Commission at the addresses
listed above.
Incorporation of Certain Documents by Reference
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus, which means that we can disclose
important information to you
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by referring you to another document we filed separately with the Securities and
Exchange Commission. The information incorporated by reference is considered to
be a part of this prospectus, except for any information superseded by
information in this prospectus. This prospectus incorporates by reference the
documents listed below that we have previously filed with the Securities and
Exchange Commission. These documents contain important information about us and
our financial condition.
Premier Bancorp, Inc. Filings Period
Annual report on Form 10-KSB Year ended December 31, 1997
Quarterly Reports on Form 10-QSB Quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998
We incorporate by reference additional documents that we may file with the
Securities and Exchange Commission after the date of this prospectus and before
the end of the offering of the securities to be issued in the exchange offer.
These documents include periodic reports, such as Annual Reports on Form 10-KSB,
Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K, as well as
proxy statements.
You can obtain any of the documents incorporated by reference in this
prospectus from us, or from the Securities and Exchange Commission through its
web site address listed above. Documents incorporated by reference are available
from us at no cost by writing or telephoning us at:
PREMIER BANCORP, INC.
Bruce E. Sickel
Chief Financial Officer
379 North Main Street
Doylestown, Pennsylvania 18901
(215) 345-5100
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
As used in this prospectus, the term "prospectus" means this prospectus,
including the documents incorporated or deemed incorporated in this prospectus
by reference, as such documents may be amended, supplemented or otherwise
modified from time to time. Any statement made in this prospectus concerning the
contents of any contract, agreement or other document does not claim to be
complete, and where reference is made to the particular provisions of such
contract, agreement or other document, such provisions are qualified in all
respects by reference to all of the provisions of such contract or other
document.
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We have not authorized anyone to give any information or make any
representation that is different from, or in addition to, that contained in this
prospectus or in any of the documents that we have incorporated by reference
into this prospectus in connection with this exchange offer. Therefore, if
anyone does give you information of this sort, you should not rely on it.
We are not making an offer to exchange securities in any jurisdiction where
the offer is not permitted or to any person to whom such offer is not permitted.
The information in this prospectus is accurate as of the date on the front
cover. You should not assume that the information contained in this prospectus
is accurate as of any other date.
Forward-Looking Statements
Information contained in this prospectus, or information incorporated by
reference in this prospectus, may constitute "forward-looking statements." These
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "projected," "contemplates" or
"anticipates," the negative of such terms, other variations or comparable
terminology. These forward-looking statements involve certain risks and
uncertainties and we cannot give you assurance that the future results covered
by the forward-looking statements will be achieved. Factors that may cause
actual results to differ materially from those contemplated by such
forward-looking statements include, among other things, the following
possibilities:
* general economic conditions, including their impact on capital
expenditures;
* business conditions in the banking industry;
* the regulatory environment;
* rapidly changing technology and evolving banking industry standards;
* competitive factors, including increased competition with community,
regional and national financial institutions;
* new service and product offerings by competitors and price pressures;
* our inability to accurately estimate the cost of systems preparation
for Year 2000 compliance; and
* similar items.
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RISK FACTORS
You should consider carefully the following risk factors as well as the
other information contained or incorporated by reference in this prospectus in
connection with the exchange offer and the securities offered by the exchange
offer.
To the extent that any information in this prospectus is considered to be
"forward-looking information," the risk factors described below are cautionary
statements which identify important factors that could cause our actual results
to differ materially from those results expressed in any forward-looking
statements.
The following risk factors relate to the capital securities.
Our obligations under the guarantee and the junior subordinated debentures are
unsecured and cannot be paid unless all our senior indebtedness has been paid
first.
PBI Capital Trust's ability to make the required payments on the capital
securities depends completely upon us making our required payments on the junior
subordinated debentures. Our obligations under the guarantee, the junior
subordinated debentures and the other documents described in this prospectus are
unsecured and rank lower in right of payment to all of our current and future
senior indebtedness. Neither principal, interest, nor any other payment may be
made regarding the junior subordinated debentures at any time when
* we are in continuing default regarding any payment of senior
indebtedness, or if the maturity of any senior indebtedness has been
accelerated because of a default; or
* the maturity of the junior subordinated debentures has been accelerated,
in which case payment may not be made until all senior indebtedness has
been paid in full.
At September 30, 1998, we had no outstanding senior indebtedness; however, at
that date, Premier Bank had $1.5 million of subordinated debt outstanding.
Together with our subsidiaries, we may incur an unlimited amount of
additional debt under the indenture, the guarantee and the amended and restated
declaration of trust. We may also issue additional junior subordinated
debentures in connection with future offerings of capital securities, and any
such additional debentures would rank equally with the junior subordinated
debentures issued in the exchange offer.
Because we are a holding company, our right to participate in any
distribution of assets of any subsidiary (including Premier Bank) upon such
subsidiary's liquidation or reorganization or otherwise (and thus your ability
to benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary (including depositors in the case of Premier Bank),
except
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to the extent that we may ourself be recognized as a creditor of that
subsidiary. At September 30, 1998, our subsidiaries had total liabilities, not
including liabilities owed to us, of $211.4 million. Accordingly, all existing
and future liabilities of our subsidiaries, including Premier Bank's deposit
liabilities, will rank prior to all of our obligations relating to the
securities described in this prospectus. At September 30, 1998, Premier Bank had
total deposit liabilities of $174.9 million.
As a result, you should look only to our assets, and not to the assets of
our subsidiaries, for principal and interest payments on the junior subordinated
debentures. You should read the discussion under the headings "Description of
Exchange Securities--Description of Exchange Guarantee--Status of the Guarantee"
and "Description of Exchange Securities--Description of Exchange Junior
Subordinated Debentures--Subordination."
PBI Capital Trust's ability to make payments on the capital securities
depends entirely upon our making payments on the junior subordinated debentures
when required.
As a bank holding company, our ability to meet our financial obligations
entirely depends on Premier Bank's payment of cash dividends to us.
We are a bank holding company regulated by the Board of Governors of the
Federal Reserve System (the "Federal Reserve"). We are a legal entity separate
and distinct from Premier Bank. Virtually all of our assets are owned by Premier
Bank, our only subsidiary other than PBI Capital Trust. We rely entirely on cash
dividends from Premier Bank to meet our obligations for payment of principal and
interest on our outstanding debt obligations and corporate expenses. Premier
Bank's ability to pay dividends to us depends on several factors including the
following:
* regulatory limitations imposed by the various regulatory agencies with
authority over Premier Bank, generally based on current and retained
earnings;
* regulatory restrictions if such dividends would impair the capital of
Premier Bank; and
* Premier Bank's profitability and financial condition and its capital
expenditures and other cash flow requirements.
We cannot assure you that Premier Bank will be able to pay dividends at
past levels, or at all, in the future. You should read the discussion under the
heading "Supervision and Regulation" in our Annual Report on Form 10-KSB for the
year ended December 31, 1997 (which is incorporated by reference in this
prospectus). Under applicable banking statutes at September 30, 1998, Premier
Bank could have declared additional cash dividends of approximately $3.6
million.
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In addition to the restrictions on the payment of dividends, Premier Bank
is subject to additional restrictions required by federal law on extensions of
credit to, and certain other transactions with, us (and any affiliated companies
that are existing or may be formed in the future) and on investments in stock or
other of our securities and securities of our affiliates. These restrictions
prevent us and such other affiliates from borrowing from Premier Bank, unless
the loans are secured by various types of collateral. In addition, the amount of
such secured loans, other transactions and investments by Premier Bank are
generally limited as follows:
* as to us and as to each of our other affiliates, 10% of Premier Bank's
capital and surplus; and
* as to us and all of our other affiliates, an aggregate of 20% of Premier
Bank's capital and surplus.
Under the Federal Deposit Insurance Act, Premier Bank would be prohibited
from making capital distributions, including the payment of cash dividends, if,
after making any such distribution, the institution would become
"undercapitalized" (as such term is used in the statute). Based on Premier
Bank's current financial conditions, we do not expect that this prohibition will
have any impact on its ability to obtain cash dividends from Premier Bank.
We have the right to defer interest payments on the junior subordinated
debentures for up to five years, which could adversely affect the tax attributes
and market price of your capital securities.
If no event of default under the junior subordinated debentures has
occurred and is continuing, we have the right under the indenture to defer
interest payments on the junior subordinated debentures at one or more times for
a period of not more than 10 consecutive semi-annual periods with respect to
each extension period, but not beyond August 15, 2028. If we defer interest
payments on the junior subordinated debentures, then PBI Capital Trust will also
defer semi-annual distributions on the capital securities. However, during such
extension period, you will still accumulate distributions at the rate of 8.57%
per year, compounded semi-annually, on any unpaid distributions, to the extent
permitted by law.
During any such extension period, we will not be permitted to make certain
payments or distributions with respect to our capital stock (including dividends
on or redemptions of our capital stock), we will not be permitted to make
certain payments with respect to any of our debt securities that rank equally
with or junior in interest to the junior subordinated debentures and we will not
be permitted to make any guarantee payments with respect to any guarantee of the
debt securities of any of our subsidiaries if such guarantee ranks equally with
or junior in interest to the junior subordinated debentures. However, we may:
* pay dividends or distributions in our common stock;
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* redeem rights or take certain other actions under a shareholders' rights
plan, if any;
* make payments under the guarantee;
* make a distribution of our capital stock as a result of a
reclassification of our capital stock or the exchange or conversion
of one class or series of our capital stock for another class or series
of our capital stock;
* purchase fractional shares of our capital stock as a result of the
conversion of exchange of the capital stock or other security being
converted or exchanged; and
* make purchases of common stock related to the issuance common stock or
rights under any future benefit plans for our directors, officers or
employees.
Before the termination of any extension period, we may further extend such
extension period if such extension does not cause such period to exceed 10
consecutive semi-annual periods or to extend beyond August 15, 2028. Following
the termination of any extension period and the payment of all interest then
accrued and unpaid (together with interest at the annual rate of 8.57%,
compounded semi-annually, if permitted by applicable law), we may elect to begin
a new extension period subject to the above requirements. There is no limitation
on the number of times that we may elect to begin an extension period. You
should read the discussion under the headings "Description of Exchange
Securities--Description of Exchange Capital Securities--Distributions" and
"Description of Exchange Securities--Description of Exchange Junior Subordinated
Debentures--Option to Extend Interest Payment Date."
We believe the likelihood of exercising our option to defer payments of
interest is remote. Consequently, the junior subordinated debentures will be
treated as issued without "original issue discount" ("OID") for United States
federal income tax purposes, and you will be treated as owning an undivided
beneficial interest in the junior subordinated debentures. Therefore, you will
include interest on the junior subordinated debentures in taxable income under
your own method of accounting (i.e., cash or accrual). If we were to exercise
our right to defer interest payments or if the Internal Revenue Service ("IRS")
successfully took the position that the exercise of such right was not remote at
the time of issuance of the junior subordinated debentures, OID would arise, and
you would be required to include your proportionate share of OID in gross income
as it accrues for United States federal income tax purposes before receiving
cash. In addition, you would not receive the cash related to any accrued and
unpaid interest from PBI Capital Trust if you sell or otherwise transfer your
capital securities before the record date for the payment of distributions after
the end of such extension period. You should read the discussion under the
heading "Certain Federal Income Tax Consequences--Interest Income and Original
Issue Discount" and "--Sales of Exchange Capital Securities."
We do not currently intend to exercise our right to defer interest payments
by extending
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the interest payment period on the junior subordinated debentures. However, if
we do elect to exercise this right in the future, the market price of the
capital securities is likely to be adversely affected. Therefore, if you sell
your capital securities during an extension period, you might not receive the
same return on your investment as someone else who continues to hold the capital
securities. In addition, the mere existence of our right to defer interest
payments on the junior subordinated debentures may cause the market price of the
capital securities to be more volatile than the market prices of other
securities on which OID accrues that are not subject to such deferrals.
We have the right to prepay all of the capital securities at any time if adverse
regulatory or tax events occur.
At any time a "Special Event" occurs (a regulatory capital event or a tax
event, in each case as defined under the heading "Description of Junior
Subordinated Debentures--Special Event Prepayment") and is continuing, we may
prepay the junior subordinated debentures in whole, but not in part. The
prepayment of the junior subordinated debentures will cause a mandatory
redemption of the capital securities within 90 days of such "Special Event" at a
redemption price equal to the "Special Event Prepayment Price". We may not
exercise such right without first receiving any required regulatory approval.
You should read the discussion under the heading "Description of Exchange
Securities--Description of Exchange Capital Securities--Redemption."
"Special Event Prepayment Price" is defined under the heading "Description
of Exchange Securities--Description of Exchange Junior Subordinated
Debentures--Special Event Prepayment."
There is tax litigation pending which, while not directly involving us, could
result in prepayment of all of the capital securities.
You should be aware that the IRS disallowed a deduction for interest paid
by Enron Corporation ("Enron") in 1993 and 1994 on securities issued by Enron
that are similar to the junior subordinated debentures. Enron has filed a
petition in the United States Tax Court challenging the disallowance of its
deductions. Although Enron's debt obligations differ in certain respects from
the junior subordinated debentures, the IRS' arguments that interest on those
obligations is not deductible are not focused on those different terms and, as a
result, could apply to the junior subordinated debentures.
A decision by the Tax Court in favor of the IRS in Enron's case would not
necessarily affect the tax treatment of interest paid on the junior subordinated
debentures because such a decision may be based on factors that differ from
those pertaining to the junior subordinated debentures, PBI Capital Trust or us.
However, it is possible that such a decision would result in the receipt by us
or PBI Capital Trust of an opinion of counsel that there is more than an
insubstantial risk that interest payable on the junior subordinated debentures
is not or will not be
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deductible. The receipt of such an opinion would constitute a "tax event", which
would permit us to cause a redemption of the capital securities. You should read
the discussion under the heading "Description of Exchange
Securities--Description of Exchange Capital Securities--Redemption."
There may be future changes in the tax laws which could result in prepayment of
all of the capital securities.
In recent years, Congress and the Clinton Administration have periodically
considered proposals that would generally deny an issuer a deduction for United
States income tax purposes for interest paid on instruments similar to the
junior subordinated debentures. Such proposals have been considered in
connection with recent legislation, including the Taxpayer Relief Act of 1997
(the "Relief Act"). While no such proposals have been included in the final
provisions of such recent legislation, including the Relief Act, and although no
such legislation is currently pending, we cannot assure you that similar
legislation proposed and enacted after the date of this prospectus would not
adversely affect our ability to deduct interest payable on the junior
subordinated debentures. Accordingly, we cannot assure you that a "Tax Event"
will not occur. Such a "Tax Event" would permit us to cause a redemption of the
capital securities. You should read the discussion under the heading
"Description of Exchange Securities--Description of Exchange Capital
Securities--Redemption."
We have the right to dissolve PBI Capital Trust and substitute the junior
subordinated debentures for your capital securities, which could cause either of
them to trade at a discount from the price you paid.
We may at any time dissolve PBI Capital Trust, and, after satisfaction of
liabilities to PBI Capital Trust's creditors as provided by applicable law,
cause the junior subordinated debentures to be distributed to the holders of the
capital securities in liquidation of PBI Capital Trust. Our ability to exercise
this right is subject to our receipt of:
* an opinion of counsel stating that a distribution of the junior
subordinated debentures will not be a taxable event to you, and
* any required regulatory approval.
Under current United States federal income tax law, a distribution of
junior subordinated debentures upon the dissolution of PBI Capital Trust would
not be a taxable event to you. If PBI Capital Trust is dissolved following a
"Special Event" and you receive distributions of cash, such distributions would
constitute a taxable event to you. You should read the discussion under the
heading "Certain Federal Income Tax Consequences--US Holders--Receipt of
Exchange Junior Subordinated Debentures or Cash Upon Liquidation of the Trust."
Because you may receive junior subordinated debentures upon liquidation of
PBI Capital
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Trust and because distributions are otherwise limited to payments on the junior
subordinated debentures, you are also making an investment decision with regard
to the junior subordinated debentures. Accordingly, you should carefully review
all the information regarding the junior subordinated debentures contained in
this prospectus under the headings "Description of Exchange
Securities--Description of Exchange Capital Securities--Liquidation Distribution
upon Termination" and "Description of Exchange Securities--Description of
Exchange Junior Subordinated Debentures."
We cannot predict the market prices for the capital securities or the
junior subordinated debentures that may be distributed to you if a termination
of PBI Capital Trust were to occur. Accordingly, the capital securities or the
junior subordinated debentures may trade at a discount from the price that you
paid for the capital securities.
Your rights under our guarantee are limited.
First Union Trust Company, National Association will act as guarantee
trustee and will hold our guarantee for your benefit. First Union Trust Company,
National Association will also act as debenture trustee under the indenture and
as property trustee under the amended and restated declaration of trust. First
Union Trust Company, National Association, will also act as Delaware trustee
under the amended and restated declaration of trust.
Under our guarantee, we have agreed to pay you the following amounts, to
the extent not paid to you by or on behalf of PBI Capital Trust:
(1) any accumulated and unpaid distributions required to be paid
on your capital securities, but only to the extent that PBI
Capital Trust has funds on hand legally available for the
payment of such distributions;
(2) the applicable "redemption price" with respect to your capital
securities to be redeemed, but only to the extent that PBI
Capital Trust has funds on hand legally available for the
redemption of such capital securities at such time; and
(3) upon a voluntary or involuntary termination and liquidation of
PBI Capital Trust (unless the junior subordinated debentures
are distributed to you), the lesser of (a) the aggregate
liquidation amount of your capital securities and all
accumulated and unpaid distributions on your capital
securities to the date of payment, to the extent that PBI
Capital Trust has funds on hand legally available for payment
of such amounts at such time, and (b) the amount of assets of
PBI Capital Trust remaining available for distribution to you
at such time, after the satisfaction of liabilities to
creditors of PBI Capital Trust as provided by applicable law.
The holders of at least a majority in liquidation amount of the capital
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy
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available with respect to our guarantee or to direct the exercise of any trust
power conferred under our guarantee. As a holder of capital securities, you may
institute a legal proceeding directly against us to enforce your rights under
our guarantee without first instituting a legal proceeding against PBI Capital
Trust, the guarantee trustee or any other person or entity. If we default on our
obligation to pay amounts payable under the junior subordinated debentures, PBI
Capital Trust will not have sufficient funds for the payment of distributions or
amounts payable on redemption of the capital securities, in which case, you will
not be able to rely upon our guarantee for payment of such amounts.
Instead, if an event of default shall have occurred and be continuing under
the indenture and such event is because of our failure to pay the principal of
(or premium, if any) or interest on the junior subordinated debentures on the
day on which such payment is due and payable, then you may institute a legal
proceeding directly against us for enforcement of payment. Notwithstanding any
payments made by us to you in connection with such an action, we shall remain
obligated to pay the principal of (and premium, if any) and interest on the
junior subordinated debentures, and we shall be subrogated to your rights with
respect to payments on the capital securities to the extent of any payments made
by us to you in connection with your actions taken against us.
Except as described in this prospectus, you will not be able to exercise
directly any other remedy available to the holders of the junior subordinated
debentures or to assert directly any other rights in respect of the junior
subordinated debentures. You should read the discussion under the headings
"Description of Exchange Securities--Description of Exchange Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Capital Securities,"
"Description of Exchange Securities--Description of Exchange Junior Subordinated
Debentures--Debenture Events of Default" and "Description of Exchange
Securities--Description of Exchange Guarantee." The amended and restated
declaration of trust provides that each holder of capital securities by
acceptance of such securities agrees to the provisions of the indenture.
You have limited voting rights.
As a holder of capital securities, you will have limited voting rights
relating only to changing certain terms of the capital securities, the
termination or liquidation of PBI Capital Trust, and the exercise of PBI Capital
Trust's rights as holder of junior subordinated debentures. In general, only we
can replace or remove any of the trustees. However, if an event of default under
the indenture is continuing, holders of at least a majority in aggregate
liquidation amount of capital securities may replace the property trustee and
the Delaware trustee (but not the administrative trustees who may only be
removed by us as holder of the common securities).
Together with the property trustee and the administrative trustees, we may
change the amended and restated declaration of trust without your consent in
order to ensure that PBI Capital Trust will be classified for United States
federal income tax purposes as a grantor trust, even if such action adversely
affects your interests. You will have no voting rights with respect
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to any matters submitted to a vote of our shareholders. You should read the
discussion under the headings "Description of Exchange Securities--Description
of Exchange Capital Securities--Voting Rights; Amendment of the Trust
Agreement" and "--Removal of Issuer Trustees; Appointment of Successors."
If you decline to exchange your original capital securities, your ability to
sell them could be adversely affected.
The original capital securities have not been registered under the
Securities Act of 1933 or any state securities laws. As a result, the original
capital securities may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act of 1933 and
any applicable state securities laws, or in connection with an exemption from
such requirements.
Original capital securities which are not exchanged in this exchange offer
will continue to have a legend which describes these transfer restrictions. In
addition, after the exchange offer ends, holders of original capital securities
who have not exchanged their original capital securities will no longer have the
right to have such original capital securities registered under the Securities
Act of 1933, and will no longer have any rights under the registration rights
agreement (except for certain limited exceptions). We do not intend to register
any original capital securities under the Securities Act of 1933 which have not
been exchanged after the exchange offer ends (except for such limited
exceptions, if applicable). Your ability to sell unexchanged original capital
securities could be adversely affected if there are original capital securities
which have been exchanged.
The capital securities issued in the exchange offer, together with any
unexchanged original capital securities which remain outstanding after the
exchange offer ends, will vote together as a single class for purposes of
calculating whether holders of a required percentage of capital securities have
taken certain actions or exercised certain rights under the amended and restated
declaration of trust. You should read the discussion under the heading
"Description of Exchange Securities--Description of Exchange Capital
Securities--Voting Rights; Amendment of Trust Agreement."
The original capital securities provide that, among other things, if a
registration statement relating to the capital securities to be issued in the
exchange offer has not been filed by January 8, 1999 or has not been declared
effective by February 7, 1999, then the distribution rate on the original
capital securities, beginning on the date after the registration statement was
required to be filed or become effective, will increase to 8.82% per year until
the date that the registration statement is filed or becomes effective. On and
after that date, the distribution rate on the capital securities will be 8.57%.
At the end of the exchange offer, you will not be entitled to any increase
in the distribution rate on your original capital securities or any further
registration rights under the registration rights agreement, except for certain
limited circumstances. You should read the discussion under the heading
"Description of Original Securities".
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We cannot assure you that an active public or other market will develop for your
capital securities, whether or not you exchange them.
The original capital securities were issued to, and we believe that such
securities are currently owned by, a relatively small number of beneficial
owners. The original capital securities have not been registered under the
Securities Act of 1933 and will be subject to transfer restrictions if they are
not exchanged. Although you may resell or otherwise transfer the capital
securities issued in the exchange offer (as long as you are not our affiliate or
an "affiliate" of PBI Capital Trust) without compliance with the registration
requirements of the Securities Act of 1933, they will constitute a new issue of
securities with no established trading market. Capital securities may be
transferred only in blocks having a liquidation amount of at least $100,000 (100
capital securities).
We cannot assure you that an active public or other market will develop for
the capital securities issued in the exchange offer or the original capital
securities. We also cannot give you any assurance as to the liquidity of or the
trading market for the capital securities issued in the exchange offer or the
original capital securities. If an active public market does not develop, the
market price and liquidity of the capital securities issued in the exchange
offer may be adversely affected.
If a public trading market develops for the capital securities issued in
the exchange offer, future trading prices will depend on many factors,
including, among other things, prevailing interest rates, our financial
condition and the market for similar securities. Depending on these and other
factors, the capital securities issued in the exchange offer may trade at a
discount to your purchase price.
Notwithstanding the registration of the capital securities issued in the
exchange offer, if you are an "affiliate" (as defined under Rule 405 of the
Securities Act of 1933) of ours or of PBI Capital Trust, you may publicly offer
for sale or resell the exchange capital securities only in compliance with Rule
144 under the Securities Act of 1933.
If you are a broker-dealer who receives capital securities for your own
account in exchange for original capital securities, and if such original
capital securities were acquired by you as a result of market-making or other
trading activities, you must acknowledge that you will deliver a prospectus in
connection with any resale of such exchange capital securities. You should read
the discussion under the heading "Plan of Distribution."
If you submit your capital securities for exchange late or improperly, we do not
have to accept them for exchange.
Except for holders who tender original capital securities through the
"Automated Tender Offer Program" of DTC ("ATOP"), capital securities will be
issued in exchange for original capital securities in the exchange offer only
after a timely receipt by PBI Capital Trust
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of a properly completed and executed "letter of transmittal", the original
capital securities and all other required documents. Therefore, if you want to
tender your original capital securities, you should allow sufficient time to
ensure timely delivery. Neither we nor PBI Capital Trust are under any duty to
give notification of defects or irregularities regarding the tenders of original
capital securities for exchange.
The following risk factors relate to our company.
Economic conditions, interest rates and other factors beyond our control can
adversely affect our profitability.
Our primary source of income is commercial banking. This source of income
is affected by local, regional, national and international economic and
political conditions, and by governmental monetary and fiscal policies.
Conditions such as inflation, recession, unemployment, volatile interest rates,
tight money supply, scarce natural resources, real estate values, international
conflicts and other factors beyond our and Premier Bank's control can adversely
affect our profitability and the profitability of Premier Bank.
Although increases in interest rates may increase the income yield on our
and Premier Bank's earning assets, such increases may also increase our and
Premier Bank's cost of funds and adversely affect loan demand and, consequently,
our profitability and the profitability of Premier Bank. On the other hand,
decreases in interest rates may also adversely affect our profitability and the
profitability of Premier Bank because any such decrease may reduce the return we
and Premier Bank earn on our assets to a greater extent than any resulting
decrease in cost of funds. In addition, economic downturns, particularly in
Premier Bank's primary service area, could result not only in decreased loan
demand but also in a decreased ability of some loan borrowers to repay those
loans which are outstanding.
Most of Premier Bank's loans are local real estate-based loans whose
collectibility could be adversely affected by adverse changes in the local
economic environment.
Premier Bank's loan portfolio contains loans principally made in Bucks
County and Northampton County, Pennsylvania. Most of these loans are secured by
either residential or commercial real estate. Accordingly, Premier Bank's
primary concentration of credit risk is related to the real estate market in
Bucks and Northampton Counties. The ultimate collectibility of this portion of
Premier Bank's portfolio is sensitive to changes in local market conditions, and
is, therefore, dependent upon the local economic environment. In addition, loan
concentrations are also considered to exist when there are amounts loaned or
committed to be loaned to a multiple number of borrowers engaged in similar
activities which would cause their ability to meet contractual obligations to be
similarly affected by economic or other conditions. Although Premier Bank views
many of its loans as made to individuals or secured by residential real estate,
Premier Bank's loan portfolio contains many borrowers who are employed in
various professions such as medical, dental, legal and real estate professions.
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At September 30, 1998, our investment portfolio included $38.9 million of
corporate bonds. These bonds consist of fixed and floating rate securities
issued by other United States banking companies. The ultimate collectibility of
these bonds depends on the continued success of these financial institutions. We
evaluate the credit-worthiness of each issuer prior to investing in such
securities. These financial institutions include some of the largest banking
companies in the country, as well as smaller regional and super-regional
institutions. These companies are influenced by the general economic conditions
in the United States, and may also be subject, to a much greater extent than us,
to international economic events and conditions.
Our success depends greatly on the efforts of key management personnel, and the
loss of any of them could adversely affect us.
Our success and the success of Premier Bank depends to a great extent upon
the services of John C. Soffronoff, Bruce E. Sickel and John J. Ginley as
Directors and/or officers of our company and of Premier Bank. Our company,
Premier Bank and Messrs. Soffronoff, Sickel and Ginley each entered into "Change
of Control Agreements". The Agreements provide certain severance benefits that
will be paid by us and Premier Bank to Messrs. Soffronoff, Sickel and Ginley in
the event of a change of control of our company or Premier Bank.
Premier Bank employs forty-eight (48) full-time equivalent employees. The
loss of key personnel by us or Premier Bank would have a material adverse effect
upon us and Premier Bank. We have instituted the "Premier Bank Stock Incentive
Plan" to encourage key employees and directors to maintain their relationship
with us or Premier Bank, as the case may be.
We face intense competition and we cannot predict our ability to compete
effectively and operate profitably.
The banking business in Pennsylvania is highly competitive. In
Pennsylvania, larger banks generally dominate the commercial banking industry.
In addition to commercial banks, we and Premier Bank also compete with savings
and loan associations, credit unions, finance companies, money market funds,
mutual funds, stock brokerage firms, insurance companies and other similar
institutions operating locally and elsewhere. Also, future competitors,
including large out-of-state banks as well as new commercial banks, may enter
Premier Bank's market area. Our profitability depends upon Premier Bank's
ability to compete in its primary market area.
Our strategy and Premier Bank's strategy is to attract customers by
providing personalized services and to utilize the directors' business and
personal contacts within their communities. We cannot assure you that either we
or Premier Bank can successfully continue pursuing this strategy. Neither we nor
Premier Bank can predict the effect of competition on our ability to continue to
gain market acceptance and to operate profitably.
Our business could be adversely affected by Year 2000 computer system failures
and resulting business disruptions if our Year 2000 remediation efforts, or
those of our vendors, customers and others, are unsuccessful.
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The "Year 2000 Problem" arose because many existing computer programs use
only the last two digits to refer to a year. Therefore, these computer programs
do not properly recognize a year that begins with "20" instead of the familiar
"19." If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000. This could cause entire system
failures, miscalculations, and disruptions of normal business operations,
including, among other things, a temporary inability to process transactions,
generate statements, compute payments, interest or delinquency, or engage in
similar daily business activities. The extent of the potential impact of the
Year 2000 Problem is not yet known, and if not timely corrected, it could affect
the global economy. We have followed the guidelines contained in the series of
Federal Financial Institutions Examination Council's Interagency Guidelines and
the Securities and Exchange Commission's Release No. 33-7558 and have designed
and initiated an enterprise-wide program to prepare our computer systems and
applications for the year 2000 and beyond. You should read the discussion under
the heading "Information Concerning Premier Bancorp, Inc.--Year 2000 Issues".
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SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth summary consolidated financial data of our
company. It is important that you read the summary consolidated financial data
presented below together with our historical Consolidated Financial Statements
included in our Annual Report on Form 10-KSB for the year ended December 31,
1997 and our Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998.
The summary of selected consolidated financial data includes that of our
company and our wholly-owned subsidiaries, Premier Bank and PBI Capital Trust.
All material intercompany balances and transactions have been eliminated.
Results for the periods ended September 30, 1998 and 1997 are not necessarily
representative of results of operations that may be expected for the entire
year.
<TABLE>
<CAPTION>
At or for
the nine
months ended At or for the year ended
September 30, December 31,
------------- ------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(Dollars in thousands, except per share data and percentages)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total Interest Income ............... $11,920 $ 9,764 $13,448 $10,103 $ 7,001 $ 3,926 $ 2,037
Total Interest Expense .............. 6,569 5,466 7,532 5,543 3,685 1,632 936
------- ------- ------- ------- ------- ------- -------
Net Interest Income ................. 5,351 4,298 5,916 4,560 3,316 2,294 1,101
Provision for Loan Losses ........... 355 280 400 350 150 315 190
Total Non-Interest Income ........... 233 134 150 208 137 50 88
Total Non-Interest Expense .......... 3,473 2,766 3,735 2,887 2,436 1,627 1,359
------- ------- ------- ------- ------- ------- -------
Net Income Before Income Taxes ...... 1,756 1,386 1,931 1,531 867 402 (360)
Provision for Income Taxes .......... 575 440 590 435 96 (140) --
------- ------- ------- ------- ------- ------- -------
Net income .......................... 1,181 946 1,341 1,096 771 542 (360)
PER SHARE AND SHARE DATA(1):
Earnings Per Share-Basic ............ 0.45 0.36 0.51 0.42 0.30 0.24 (0.24)
Earnings Per Share-Diluted .......... 0.40 0.35 0.49 0.40 0.30 0.24 (0.24)
Book Value Per Share at End of Period 4.23 3.82 3.97 3.43 3.01 2.65 2.52
Average Basic Shares ................ 2,630 2,604 2,606 2,604 2,544 2,230 1,529
Average Diluted Shares .............. 2,919 2,738 2,752 2,706 2,585 2,302 1,529
</TABLE>
(Footnotes on following page)
27
<PAGE>
<TABLE>
<CAPTION>
At or for
the nine
months ended At or for the year ended
September 30, December 31,
------------- ------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(Dollars in thousands, except per share data and percentages)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Loans, Net of Unearned Income ............. $129,954 $102,265 $108,533 $ 82,910 $ 60,097 $ 45,169 $ 26,922
Investment Securities Available for Sale .. 83,535 61,073 62,434 52,900 37,656 3,664 2,797
Investment Securities Held to Maturity .... 9,854 13,346 15,170 13,888 10,787 12,508 5,138
Total Assets .............................. 232,557 184,575 193,523 153,687 113,995 63,500 38,336
Deposits .................................. 174,405 140,789 143,603 118,093 92,807 50,346 33,103
Borrowings ................................ 27,655 30,817 36,343 23,641 11,026 6,275 --
Shareholders' Equity ...................... 11,135 9,946 10,434 8,943 7,831 6,144 4,255
AVERAGE BALANCE SHEET DATA
Loans, Net of Unearned Income ............. 117,936 91,764 95,146 68,594 50,227 34,909 17,195
Investment Securities ..................... 77,408 67,727 69,352 55,007 32,417 13,570 9,945
Interest Earning Assets ................... 198,953 161,072 166,293 125,545 84,751 50,334 29,486
Total Assets .............................. 205,619 166,737 172,198 129,510 87,648 51,872 30,912
Deposits .................................. 163,790 128,129 131,773 102,179 73,366 42,318 26,574
Borrowings ................................ 25,908 26,944 28,447 17,003 5,663 3,274 88
Shareholders' Equity ...................... 10,861 9,200 9,392 8,228 7,069 5,474 3,789
PERFORMANCE RATIOS
Return on Average Assets (4) .............. 0.77% 0.76% 0.78% 0.85% 0.88% 1.04% (1.16)%
Return on Average Stockholders' Equity(4) . 14.53% 13.75% 14.28% 13.32% 10.91% 9.90% (9.50)%
Net Interest Margin(2)(4) ................. 3.60% 3.57% 3.56% 3.63% 3.91% 4.56% 3.73%
Efficiency Ratio(3) ....................... 62.20% 62.27% 61.57% 60.55% 70.55% 69.41% (14.30)%
Number of Full Service Branches ........... 3 3 3 2 2 1 1
ASSET QUALITY RATIOS
Allowance for Loan Losses to Non-performing
Loans ................................ 135.16% 241.59% 209.64% 88.75% 113.71% 474.02% NM
Allowance for Loan Losses to Total Loans .. 1.27% 1.21% 1.25% 1.16% 1.22% 1.33% 1.06%
Non-performing Assets to Total Assets ..... 0.84% 0.83% 0.67% 0.96% 0.57% 0.20% --%
Net Charge-offs to Average Loans .......... 0.05% --% --% 0.19% 0.03% --% 0.02%
CAPITAL RATIOS
Shareholders' Equity to Total Assets ...... 4.79% 5.39% 5.39% 5.82% 6.87% 9.68% 11.10%
Tier I Risk-Based Capital ................. 8.77% 8.70% 8.60% 9.84% 11.32% 12.68% 14.86%
Total Risk-Based Capital .................. 14.07% 11.11% 10.97% 10.90% 12.40% 13.93% 15.92%
Tier I Leverage ........................... 7.02% 5.39% 5.51% 5.80% 6.80% 9.98% 11.13%
</TABLE>
(1) Per share information for all periods has been restated to reflect a
3-for-1 stock split effective December 31, 1997 which increased total
shares outstanding to 2,630,340.
(2) Net interest income divided by average interest-earning assets.
(3) Non-interest expense divided by the sum of net interest income and
non-interest income.
(4) Interim periods have been annualized.
NM - Not Measurable
28
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth the ratios of earnings to combined fixed
charges of the Corporation for the respective periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
------------- ------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges:
Including interest on deposits 1.26x 1.25x 1.25x 1.27x 1.23x 1.24x 0.62x
Excluding interest on deposits 2.54x 2.13x 2.14x 2.53x 3.27x 3.17x (13.80)x
</TABLE>
For purposes of computing the ratios of earnings to combined fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include gross
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including gross interest on deposits, include all
interest expense and the proportion deemed representative of the interest factor
of rent expense, net of income from subleases.
29
<PAGE>
INFORMATION CONCERNING PBI CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to:
* the Amended and Restated Declaration of Trust, executed by the
Company, as Sponsor, First Union Trust Company, National Association,
as Property Trustee and as Delaware Trustee, and the Administrative
Trustees named therein (the "Trust Agreement"), and
* the filing of a certificate of trust with the Delaware Secretary of
State on July 28, 1998.
The Trust exists for the exclusive purposes of:
* issuing and selling the Trust Securities;
* using the proceeds from the sale of Trust Securities to acquire
the Junior Subordinated Debentures; and
* engaging in only those other activities necessary or incidental
thereto (such as registering the transfer of the Capital Securities).
Accordingly, the Junior Subordinated Debentures are the sole assets of the
Trust, and payments under the Junior Subordinated Debentures are the sole
revenues of the Trust. All of the Common Securities will be owned by the
Company. The Common Securities will rank pari passu, and payments are and will
be made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from a Debenture Event of Default, the rights of the Company 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 Exchange
Securities--Description of Exchange Capital Securities--Subordination of Common
Securities." The Company has acquired Common Securities in a Liquidation Amount
equal to 3% of the total capital of the Trust.
The Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The Trust's business and affairs are conducted by its
trustees, each appointed by the Company as holder of the Common Securities. The
trustees for the Trust are First Union Trust Company, National Association as
the Property Trustee (the "Property Trustee") and as the Delaware Trustee (the
"Delaware Trustee"), and two individual trustees (the "Administrative Trustees")
who are employees or officers of or affiliated with the Company (collectively,
the "Issuer Trustees"). First Union Trust Company, National Association, as
Property Trustee, currently acts as sole indenture trustee under the Trust
Agreement. First Union also acts as indenture trustee under the Exchange
Guarantee and the Indenture. See "Description of Exchange Guarantee" and
"Description of Exchange Junior Subordinated Debentures."
The holder of the Common Securities of the Trust or, if an Event of Default
under the Trust Agreement has occurred and is continuing, the holders of a
majority in Liquidation Amount of the Capital Securities will be entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event do 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 Trust Agreement.
Pursuant to the expense provisions under the Indenture, the Company, as
issuer of the Junior Subordinated Debentures, has and will continue to pay all
fees and expenses related to the Trust and the offering of the Capital
Securities and has and will continue to pay, directly or
30
<PAGE>
indirectly, all ongoing costs, expenses and liabilities of the Trust. See
"Description of Exchange Securities--Expenses and Taxes." The principal
executive office of the Trust is c/o Premier Bancorp, Inc., 379 North Main
Street, Doylestown, Pennsylvania 18901. Telephone inquires may be directed to
Bruce E. Sickel at (215) 345-5100.
INFORMATION CONCERNING PREMIER BANCORP, INC.
General
The Company is a Pennsylvania business corporation and registered bank
holding company headquartered in Doylestown, Bucks County, Pennsylvania. The
Company's wholly owned banking subsidiary is the Bank. The Bank was organized in
1990 as a Pennsylvania state-chartered banking institution and commenced
operations on April 24, 1992. At September 30, 1998, the Company had total
consolidated assets of $232.6 million, total deposits of $174.4 million and
total shareholders' equity of $11.1 million.
The Bank conducts business from its main office and two other retail
offices located in Southampton, Bucks County and Easton, Northampton County,
Pennsylvania. The Bank also has a loan origination office in Yardley, Bucks
County. The Bank plans to open a fourth branch office in Lower Makefield
Township, Bucks County, Pennsylvania, shortly.
The Bank is a community-oriented financial services provider whose business
primarily consists of attracting retail deposits from the general public and
small businesses and originating commercial and consumer loans in the Bank's
market area. The Bank also originates residential mortgage loans through an
arrangement with a mortgage company.
The Bank endeavors to promote a sales culture in which highly motivated and
trained team members attract and retain profitable customer relationships. The
Bank's primary operating strategy is to maintain a reputation as a community
bank where consumers and small business customers can obtain a wide range of
financial products and services, usually associated with larger financial
institutions, while providing personal attention, service and responsiveness.
The Bank provides a wide variety of products and services which include
checking, savings and money market accounts, as well as certificates of deposit.
Credit products include residential mortgage loans, home equity loans and lines
of credit, personal lines of credit, working capital lines and other consumer
and commercial loans. The Bank also offers other services such as electronic
banking, cash management services, safe deposit boxes, telephone banking and
automated teller services.
The Bank uses short and long-term advances from the Federal Home Loan Bank
of Pittsburgh and overnight borrowings from Atlantic Central Bankers Bank as
sources of funds.
On December 22, 1998, the Company commenced an offering of 500,000 shares
of its common stock at $11.00 per share. The Company intends to use the net
proceeds of that offering
31
<PAGE>
to further its general corporate purposes, including investments in or advances
to the Bank in order to increase the Bank's capital position. The Company
anticipates that this will permit the Bank to provide for higher per borrower
lending limits which, in turn, will permit the Bank to make larger loans and
increase its lending activity. In addition, the Company may use the net proceeds
of that offering to support the continuing development of the Bank's franchise
through possible expansion into related businesses.
The Company as a bank holding company is subject to regulation and
examination by the Federal Reserve. The Bank is subject to regulation and
examination by the Commonwealth of Pennsylvania and the Federal Deposit
Insurance Corporation ("FDIC"). The Bank's deposits are insured by the FDIC to
the maximum extent permitted by law through the Bank Insurance Fund.
The principal executive offices of the Company and the Bank are located at
379 North Main Street. Doylestown, Pennsylvania 18901 and its telephone number
is (215) 345-5100.
The Company is a legal entity separate and distinct from its subsidiaries,
including the Bank. The ability of holders of debt and equity securities of the
Company 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 the Bank)
except to the extent that a claim of the Company as a creditor may be
recognized.
There are various statutory and regulatory limitations on the extent to
which the Bank can finance or otherwise transfer funds to the Company or its
nonbanking subsidiaries, whether in the form of loans, extensions of credit,
investments or asset purchases. In addition, there are regulatory limitations on
the payment of dividends directly or indirectly to the Company from the Bank.
Under applicable banking statutes, at September 30, 1998, the Bank could have
declared additional dividends of approximately $3.6 million. However, Federal
and state regulatory agencies also have the authority to further limit payment
of dividends by the Bank based on other factors, such as the maintenance of
adequate capital by the Bank, which could reduce the amount of dividends
otherwise payable.
Year 2000 Issues
The following section contains forward-looking statements which involve
risks and uncertainties. The actual impact on the Company of the Year 2000 issue
could materially differ from that which is anticipated in the forward-looking
statements as a result of certain factors identified below.
32
<PAGE>
General
The "Year 2000 Problem" (Y2K) arose because many existing computer programs
use only the last two digits to refer to a year. Therefore, these computer
programs do not properly recognize a year that begins with "20" instead of the
familiar "19". If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000. This could cause entire system
failures, miscalculations, and disruptions of normal business operations
including, among other things, a temporary inability to process transactions,
generate statements, compute payments, interest or delinquency, or engage in
similar daily business activities. The extent of the potential impact of the
Year 2000 Problem is not yet known, and if not timely corrected, it could affect
the global economy.
The Bank is subject to the regulation and oversight of various banking
regulators, whose oversight includes the provision of specific timetables,
programs and guidance regarding Year 2000 issues. Regulatory examination of the
Bank's Year 2000 programs are conducted on a quarterly basis and reports are
submitted by the Bank to the banking regulators on a periodic basis. In
addition, oral reports are currently provided on a monthly basis to the Board of
Directors.
The Company's State of Readiness
Management is committed to ensuring that the Company's daily operations
suffer little or no impact from the century date change. The Company has applied
due diligence throughout the Y2K process, following the guidelines contained in
the series of Federal Financial Institutions Examinations Council's Interagency
Guidelines and the SEC's Release No. 33-7558. The guidelines identify the
following phases: awareness, assessment, renovation or remediation, testing or
validation and implementation.
Based on an ongoing assessment, the Company has determined that it will be
required to modify or replace portions of its software so that its computer
systems will properly use dates beyond December 31, 1999. The Company presently
believes that as a result of modifications to existing software and hardware and
conversions to new software, the Year 2000 Problem can be mitigated. However, if
such modifications and conversions are not made, or are not completed on a
timely basis, the Year 2000 Problem could have a material adverse impact on the
operations of the Company.
Management has initiated an enterprise-wide program to prepare the
Company's computer systems and applications for the Year 2000. The Company has
developed a comprehensive inventory of all PC based applications, third-party
relationships, environmental systems, proprietary programs and non-computer
related systems (such as postage meters and fax machines). The Company
recognizes that the Bank's operating, processing and accounting operations are
computer reliant and could be affected by the Y2K issue and has developed a plan
to make the systems Y2K ready and to conduct testing on them by March 1999. As
of
33
<PAGE>
September 30, 1998, approximately 80% of the Company's systems were Year 2000
ready, with all systems expected to be ready by March 1999.
The Company has acquired its mission-critical system which supports the
Company's core business processes from a highly regarded third-party vendor.
This vendor began in 1997 and completed by October 1998 renovations to its
systems to make them Y2K ready. The remediated software was placed into daily
production in September 1998. Beginning in November 1998, the Bank, along with
other clients of this vendor, began comprehensive testing of the system's Y2K
readiness. Such testing is anticipated to be completed in January 1999. However,
because most computer systems are, by their very nature, interdependent, it is
possible that noncompliant third-party computers could impact the Company's
computer systems. The Company could be adversely affected by the Y2K problem if
it or unrelated parties fail to successfully address the problem. The Company
has taken steps to communicate with the unrelated parties with whom it deals to
coordinate Year 2000 compliance. Additionally, the Company is dependent on
external suppliers, such as, wire transfer systems, telephone systems, electric
companies, and other utility companies for continuation of service. The Company
is also assessing the impact, if any, the century date change may have on its
credit risk.
The Company has initiated communications with all of its significant
vendors, suppliers and large commercial customers to determine the extent to
which the Company is vulnerable to those third-parties' failure to remedy their
own Year 2000 Problems. The Y2K Project Manager has available each vendors' Y2K
readiness efforts which includes their remediation plan, renovation approach,
testing methodologies and target dates. In the event that any of the Company's
significant vendors, suppliers and large commercial customers do not
successfully achieve Year 2000 compliance in a timely manner, the Company's
business or operations could be adversely affected. If significant suppliers
fail to meet Year 2000 operating requirements, the Company intends to engage
alternative suppliers. For insignificant vendors, the Company will not
necessarily validate that they are Year 2000 compliant. However, for any
insignificant vendor who responds that they will not be compliant by March 1999,
the Company will seek a new vendor or system that is compliant. The Bank has
surveyed its large commercial customers as to their Y2K preparedness. At the
present time, in excess of 95% of these surveys have been returned. Respondents
have acknowledged their awareness of Y2K issues and currently believe that these
issues will not materially affect their financial condition, liquidity, or
results of operations. The extent to which customers are Y2K compliant is
considered in the Bank's decision to extend credit.
Costs of Year 2000
As of September 30, 1998, $31,000 has been expended as Year 2000 costs.
Management expects to spend a total of $150,000 for the entire project. Of the
total project's cost, approximately $75,000 is attributable to the purchase of
new software which will be capitalized. The remaining $75,000 will be expensed
as incurred over the next 15 months. The estimated Year 2000 project costs
include the costs and time associated with the impact of third-parties'
34
<PAGE>
Year 2000 issues, and are based on presently available information. The total
cost of the project is being funded through operating cash flows. The Company
continues to evaluate appropriate courses of corrective action, including
replacement of certain systems whose associated costs would be recorded as
assets and amortized. Accordingly, the Company does not expect the amounts
required to be expensed over the next 15 months to have a material effect on the
financial position or results of operations. The Company believes that the cost
of addressing the Y2K issues will not be a material event or uncertainty that
would cause reported financial information not to be necessarily indicative of
future operating results or financial conditions. However, if compliance is not
achieved in a timely manner by the Company or any of its significant related
third-parties, be it a supplier of services or customer, the Y2K issue could
possibly have a material effect on the Company's operations and financial
position. The Company believes that the costs or the consequences of incomplete
or untimely resolution of its Year 2000 issues do not represent a known material
event or uncertainty that is reasonably likely to affect its future financial
results, or cause its reported financial information not to be necessarily
indicative of future operating results or future financial condition.
The cost of the projects and the date on which the Company plans to
complete both Year 2000 modifications and systems conversions are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources,
third-party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those plans. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.
Risks of Year 2000
At present, management believes it's progress in remedying the Company's
systems, programs and applications and installing Y2K compliant upgrades is on
target. The Y2K computer problem creates risk for the Company from unforeseen
problems in its own computer systems and from third-party vendors who provide
the majority of mainframe and PC based computer applications. Failure of
third-party systems relative to the Y2K issue could have a material impact on
the Company's ability to conduct business.
Contingency Plans
The Company is in the process of obtaining back-up service providers,
working up contingency plans and assessing the potential adverse risks to the
Company. The Company's contingency plans involve the use of manual labor to
compensate for the loss of certain automated computer systems and inconveniences
caused by disruption in command systems.
A contingency plan will be developed for mission-critical and required
mainframe and PC based applications, third-party relationships, environmental
systems, proprietary programs
35
<PAGE>
and non-computer related systems. This contingency plan will identify scheduled
completion dates, test dates and trigger dates.
A business resumption contingency plan is currently under development with
a target completion date of June 1999. The resumption contingency plan will
calculate a risk factor for each core business line and/or product. Based upon
the calculated risk factor, such business resumption contingency plan will be
designed and tested.
36
<PAGE>
CAPITALIZATION
The following table sets forth the historical consolidated capitalization
of the Company as of September 30, 1998. The following data should be read in
conjunction with the financial information included in documents incorporated in
this prospectus by reference. See "Incorporation of Certain Documents by
Reference."
September 30, 1998
------------------
(In thousands)
-------
Subordinated debt ..................................... 1,500
Corporation-obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior
subordinated debentures of the Corporation (1) ..... 10,000
Shareholders' equity:
Common stock, $0.33 par; 30,000,000 shares
authorized; 2,630,340 shares issued ............... 877
Additional paid-in capital .......................... 7,120
Retained earnings ................................... 3,565
Accumulated other comprehensive income .............. (427)
Total shareholders' equity .......................... 11,135
-------
Total capitalization ................................ 22,635
=======
(1) Reflects the Capital Securities. The Trust is a subsidiary of the
Corporation and holds the Junior Subordinated Debentures as its sole asset.
37
<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust are consolidated into the Company's
consolidated financial statements, with the Capital Securities treated as
minority interest and shown in the Company's consolidated balance sheet as
"Corporation-Obligated Mandatorily Redeemable Capital Securities of Subsidiary
Trust Holding Solely Junior Subordinated Debentures of the Corporation." The
financial statement footnotes in the Quarterly Report of the Company for the
quarter ended September 30, 1998 reflect that the sole asset of the Trust is $10
million principal amount of the Junior Subordinated Debentures, bearing interest
at 8.57% and maturing on August 15, 2028. All future reports filed by the
Company under the Exchange Act will present information regarding the Trust and
other similar trusts in the manner described above.
THE EXCHANGE OFFER
Purpose of the Exchange Offer
In connection with the sale of the Original Capital Securities, the Company
and the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Company and the Trust agreed to file and to
use their reasonable efforts to cause to become effective with the SEC a
registration statement with respect to the exchange of the Original Capital
Securities for capital securities with terms identical in all material respects
to the terms of the Original Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Registration Statement of
which this prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Trust under the Registration Rights Agreement. The form and
terms of the Exchange Capital Securities are the same as the form and terms of
the Original Capital Securities except that the Exchange Capital Securities have
been registered under the Securities Act and will not be subject to certain
restrictions on transfer applicable to the Original Capital Securities, and will
not provide for any increase in the Distribution rate thereon. In that regard,
the Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
January 8, 1999 or has not been declared effective by February 7, 1999, then the
Distribution rate borne by the Original Capital Securities, commencing on the
day after the registration statement was required to be filed or become
effective as the case may be, will increase by 0.25% per annum until the date
that the registration statement is filed or becomes effective. On and after
such date, the Distribution rate borne by the Original Capital Securities will
return to its original rate. Upon consummation of the Exchange Offer, holders of
Original Capital Securities will not be entitled to any increase in the
Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Original Capital Securities" and
"Description of Original Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Original Capital Securities in any jurisdiction in
which the Exchange Offer or
38
<PAGE>
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 Original 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 Original Capital Securities are held of record by The Depository
Trust Company ("DTC") who desires to deliver such Original Capital Securities by
book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof the Original Guarantee for the Exchange
Guarantee and the Original Junior Subordinated Debentures, in an amount
corresponding to the Original Capital Securities accepted for exchange, for a
like aggregate principal amount of the Exchange Junior Subordinated Debentures.
The Exchange Guarantee and Exchange Junior Subordinated Debentures have been
registered under the Securities Act.
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying Letter of Transmittal, to
exchange up to $10,000,000 aggregate Liquidation Amount of Exchange Capital
Securities for a like aggregate Liquidation Amount of Original Capital
Securities properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Trust will
issue, promptly after the Expiration Date, an aggregate Liquidation Amount of up
to $10,000,000 of Exchange Capital Securities in exchange for a like principal
amount of outstanding Original Capital Securities tendered and accepted in
connection with the Exchange Offer. Holders may tender their Original 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 Original Capital Securities being tendered. As of the date of this
prospectus, $10,000,000 aggregate Liquidation Amount of the Original Capital
Securities is outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Capital
Securities which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to Exchange
Original Capital Securities" and "Description of Original Securities."
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If any tendered Original 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 Original Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date (as defined below).
Holders who tender Original 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 Original Capital Securities in connection with the
Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "--Fees and Expenses."
Neither the Company, the Board of Directors of the Company nor any Issuer
Trustee of the Trust makes any recommendation to holders of Original Capital
Securities as to whether to tender or refrain from tendering all or any portion
of their Original Capital Securities pursuant to the Exchange Offer.
In addition, no one has been authorized to make any such recommendation.
Holders of Original Capital Securities must make their own decisions whether to
tender pursuant to the Exchange Offer and, if so, the aggregate amount of
Original Capital Securities to tender based on such holders' own financial
positions and requirements.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on
April 2, 1999 unless the Exchange Offer is extended by the Company 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 Company and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time:
* to delay the acceptance of the Original Capital Securities for
exchange,
* to terminate the Exchange Offer (whether or not any Original
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,
* to extend the Expiration Date of the Exchange Offer and retain all
Original Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Original Capital
Securities to withdraw their tendered Original Capital Securities as
described under "--Withdrawal Rights," and
* 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 Company and the
Trust to constitute a material change, or if the Company and the Trust waive a
material condition of the Exchange Offer, the Company and the Trust will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the
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holders of the Original Capital Securities, and the Company and the Trust will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company and the Trust may choose to make any public
announcement and subject to applicable law, the Company 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 Exchange 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 (as defined below),
promptly after the Expiration Date, Exchange Capital Securities for Original
Capital Securities validly tendered and not withdrawn.
In all cases, delivery of Exchange Capital Securities in exchange for
Original 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 book-entry confirmation described below under "-- Procedures for
Tendering Original Capital Securities -- Book-Entry Transfer" or (ii)
certificates representing such Original Capital Securities, 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.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Original 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
Original 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 book-entry confirmations or certificates representing Original
Capital Securities, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving book-entry confirmations or
certificates representing Original Capital Securities, Letters of Transmittal
and related documents and transmitting Exchange 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 Original Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Trust's acceptance for exchange of Original
Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange Original 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
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Act, retain tendered Original Capital Securities and such Original 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 Original 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 Original
Capital Securities, that the Trust will acquire good, marketable and
unencumbered title to the tendered Original Capital Securities, free and clear
of all liens, restrictions, charges and encumbrances, and the Original 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 Original Capital Securities tendered pursuant to the
Exchange Offer. Tendering holders of Original Capital Securities that use ATOP
will, by so doing, acknowledge that they are bound by the terms of the Letter of
Transmittal.
Procedures for Tendering Original Capital Securities
Book-Entry Transfer. For purposes of the Exchange Offer, the Exchange Agent
will establish an account with respect to the Original Capital Securities at DTC
within two business days after the date of this prospectus. Any tendering
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Original Capital
Securities by causing DTC to transfer such Original Capital Securities into the
Exchange Agent's account at DTC in accordance with DTC's ATOP procedures for
transfers. Such holder of Original 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 Original 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 Company may enforce the Letter of
Transmittal against such holder (a "book-entry confirmation").
A beneficial owner of Original 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 Original 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
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"-- 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 Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Original Capital Securities delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Signature Guarantees. Certificates for the Original Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless
* a certificate for the Original Capital Securities is registered in a
name other than that of the person surrendering the certificate or
* such holder completes the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" in the Letter of Transmittal.
In either case, such certificates for Original 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):
* a bank;
* a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer;
* a credit union;
* a national securities exchange, registered securities association or
clearing agency; or
* 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.
Delivery. The method of delivery of the book-entry confirmation or
certificates representing tendered Original Capital Securities, 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.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Original 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 (i) a book-entry confirmation
with respect to such Original Capital Securities or (ii) certificates
representing Original 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 Exchange Capital Securities might not
be made to all tendering holders at the same time, and will depend upon when
book-entry confirmations with respect to Original Capital Securities or
certificates representing Original Capital Securities and other required
documents are received by the Exchange Agent.
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Guaranteed Delivery. If a holder desires to tender Original Capital
Securities pursuant to the Exchange Offer and the certificates for such Original
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 Original Capital Securities may nevertheless be tendered, provided
that all of the following guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) a properly completed and duly executed notice to the Exchange Agent
guaranteeing delivery to the Exchange Agent of either certificates
representing the Original Capital Securities or a book-entry
confirmation in compliance with the requirements set forth herein (the
"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;
(3) (a) a book-entry confirmation or (b) the certificates representing all
tendered Original 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, in any case, 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.
The Trust's acceptance for exchange of Original 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 Original Capital Securities will be determined by the Company and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Company and the Trust reserve the absolute right, in
their sole and absolute discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for, may,
in the opinion of counsel to the Company and the Trust, be unlawful.
The Company and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Original Capital Securities of
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any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders.
The interpretation by the Company 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 Original Capital Securities
will be deemed to have been validly made until all irregularities with respect
to such tender have been cured or waived. Neither the Company, the Trust, any
affiliates or assigns of the Company or the Trust, the Exchange Agent nor any
other person shall be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure to give any such
notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company
and the Trust, proper evidence satisfactory to the Company and the Trust, in
their sole discretion, of such person's authority to so act must be submitted.
Resales of Exchange Capital Securities
The Trust is making the Exchange Offer for the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the SEC as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Company 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 SEC 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 SEC, and subject to the two immediately following
sentences, the Company and the Trust believe that Exchange Capital Securities
issued pursuant to this Exchange Offer in exchange for Original 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 Exchange 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 Exchange Capital Securities. However, any holder of Original Capital
Securities who is an "affiliate" of the Company or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing Exchange
Capital Securities, or any broker-dealer who purchased Original 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 SEC
set forth in the above-mentioned interpretive letters, (b) will not be permitted
or entitled to tender such Original 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
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transfer of such Original Capital Securities unless such sale is made pursuant
to an exemption from such requirements. In addition, as described below, if any
broker-dealer holds Original Capital Securities acquired for its own account as
a result of market-making or other trading activities and exchanges such
Original Capital Securities for Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such Exchange Capital
Securities.
Each holder of Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange Capital Securities in the Exchange Offer will be
required to represent that:
* it is not an "affiliate" of the Company or the Trust,
* any Exchange Capital Securities to be received by it are being
acquired in the ordinary course of its business,
* it has no arrangement or understanding with any person to participate
in a distribution (within the meaning of the Securities Act) of such
Exchange Capital Securities, and
* 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 Exchange Capital Securities.
In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Capital
Securities to be exchanged in the Exchange Offer.
Each broker-dealer that receives Exchange Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it acquired the
Original 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 Exchange 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 SEC in the interpretive letters referred to above, the Company
and the Trust believe that Participating Broker-Dealers who acquired Original
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 Exchange Capital Securities received upon
exchange of such Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial sale of the
Original 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 Exchange 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 Exchange Capital Securities received in exchange for Original
Capital Securities where such Original Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading
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activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company and the Trust have agreed that this prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange 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
Exchange 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 Exchange Capital Securities received in
exchange for Original Capital Securities pursuant to the Exchange Offer must
notify the Company or the Trust, or cause the Company 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 Company or the Trust may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Original
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of
* any fact which makes any statement contained or incorporated by
reference in this prospectus untrue in any material respect or
* any fact which causes this prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by
reference herein, in light of the circumstances under which they were
made, not misleading, or
* of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of Exchange Capital Securities (or the Exchange
Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) pursuant to this prospectus until the Company or the Trust
has amended or supplemented this prospectus to correct such
misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such Participating Broker-Dealer, or the
Company or the Trust has given notice that the sale of the Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) may be resumed, as the case
may be.
If the Company or the Trust gives such notice to suspend the sale of the
Exchange Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable), it shall extend the 180-day period
referred to above during which Participating Broker-Dealers are entitled to use
this prospectus in connection with the resale of Exchange 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 Exchange Capital Securities or to and including the date
on which the Company or the Trust has given notice that the sale of Exchange
Capital
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Securities (or the Exchange Guarantee or the Exchange Junior Subordinated
Debentures, as applicable) may be resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Original Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "--Exchange Agent" on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Original Capital Securities to be withdrawn,
the aggregate principal amount of Original Capital Securities to be withdrawn,
and (if certificates for such Original Capital Securities have been tendered)
the name of the registered holder of the Original Capital Securities as set
forth on the Original Capital Securities, if different from that of the person
who tendered such Original Capital Securities.
If certificates representing Original Capital Securities have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such certificates, the tendering holder must submit the
serial numbers shown on the particular Original 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 Original Capital Securities tendered
for the account of an Eligible Institution. If Original Capital Securities have
been tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Original Capital Securities -- Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Original Capital Securities. Withdrawals
of tenders of Original Capital Securities may not be rescinded. Original 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 Original 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 Company, the Trust, any affiliates or assigns of the Company or the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Original Capital
Securities which have been tendered but which are withdrawn will be returned to
the holder thereof promptly after withdrawal.
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Distributions on Exchange Capital Securities
Holders of Original Capital Securities whose Original Capital Securities
are accepted for exchange will not receive Distributions on such Original
Capital Securities and will be deemed to have waived the right to receive any
Distributions on such Original Capital Securities accumulated from and after
February 15, 1999. Accordingly, holders of Exchange Capital Securities as of the
record date for the payment of Distributions on August 15, 1999 will be entitled
to receive Distributions accumulated from and after February 15, 1999.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company and the Trust will not be required
to accept for exchange, or to exchange, any Original Capital Securities for any
Exchange Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Original 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 SEC which permits the Exchange Capital Securities issued
pursuant to the Exchange Offer in exchange for Original Capital
Securities to be offered for resale, resold and otherwise transferred
by holders thereof (other than broker-dealers and any such holder
which is an "affiliate" of the Company or the Trust within the meaning
of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange 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 Exchange Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Company 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 SEC or any state securities
authority suspending the effectiveness of the Registration Statement,
or proceedings shall have been initiated or, to the knowledge of the
Company or the Trust, threatened for that purpose, or any governmental
approval has not been obtained, which approval the Company or the
Trust shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby, or
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(d) the Company determines in good faith that there is a reasonable
likelihood that, or a material uncertainty exists as to whether,
consummation of the Exchange Offer would result in an adverse tax
consequence to the Trust or the Company.
If the Company 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 Original Capital Securities have theretofore been accepted
for exchange) or may waive any such condition or otherwise amend the terms of
the Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Company 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 Original Capital Securities and
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Exchange Agent
First Union Trust Company, National Association 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:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Department
Confirm By Telephone:
(302) 888-7532
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(302) 888-7544
BY HAND OR OVERNIGHT DELIVERY:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Department
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Confirm By Telephone:
(302) 888-7532
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus and related documents
to the beneficial owners of Original Capital Securities, and in handling or
tendering for their customers.
Holders who tender their Original Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange 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 Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers
or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF EXCHANGE SECURITIES
Description of Exchange Capital Securities
Pursuant to the terms of the Trust Agreement, the Issuer Trustees on
behalf of the Trust will issue the Exchange Capital Securities. The Exchange
Capital Securities will represent beneficial ownership interests in the Trust
and the holders thereof will be entitled to a preference over the Common
Securities, in certain circumstances with respect to Distributions and amounts
payable on redemption of the Trust Securities or liquidation of the Trust, as
well as other benefits as described in the Trust Agreement. See "--Subordination
of Common Securities." The Trust Agreement has been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). This summary of
certain provisions of the Exchange Capital Securities, the Common Securities and
the Trust Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. The form of Trust
Agreement is available upon
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request from the Issuer Trustees and has been filed as an exhibit to the
Registration Statement, of which this prospectus is a part.
General
The Exchange Capital Securities will be limited to $10 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 Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
Exchange Guarantee executed by the Company for the benefit of the holders of the
Exchange Capital Securities (the " Exchange Guarantee") will not guarantee
payment of Distributions or amounts payable on redemption of the Exchange
Capital Securities or on liquidation of the Trust when the Trust does not have
funds on hand legally available for such payments. See "--Description of
Exchange Guarantee."
Distributions
The Exchange Capital Securities represent beneficial ownership interests in
the Trust, and Distributions on the Capital Securities will be cumulative and
will be payable semi-annually in arrears on February 15 and August 15 of each
year at the annual rate of 8.57% of the Liquidation Amount to the holders of the
Capital Securities on the relevant record dates. The record dates will be the
15th day preceding the relevant Distribution Date (as defined below).
Distributions will accumulate from August 11, 1998. The first Distribution Date
for the Exchange Capital Securities will be August 15, 1999. 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 Exchange Capital Securities is not a Business Day (as defined
below), payment of the Distribution 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 to any such delay), except that if such next succeeding
Business Day falls in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date (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, New York or Wilmington, Delaware, are
authorized or required by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Company will have the right under the Indenture to defer the
payment of interest on the Exchange Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
shall end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. Upon any such election, semi-annual Distributions on the
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Capital Securities will be deferred by the Trust during any such Extension
Period. Distributions to which holders of the Capital Securities are entitled
during any such Extension Period will accumulate additional Distributions
thereon at the rate per annum of 8.57% thereof, compounded semi-annually from
the relevant Distribution Date, but not exceeding the interest rate then
accruing on the Junior Subordinated Debentures. The term "Distributions," as
used herein, shall include any such additional Distributions.
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Company 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 Company must give the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of: (i) the
date the Distributions on the Exchange 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 securities
exchange or to holders of such Exchange Capital Securities of the record date
for 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 Company may elect to begin an Extension Period. See "Description
of Exchange Junior Subordinated Debentures--Option to Extend Interest Payment
Date" and "Certain Federal Income Tax Consequences--US Holders--Interest Income
and Original Issue Discount."
During any such Extension Period, the Company may not:
* declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of the
Company's capital stock;
* make any payment of principal of or premium, if any, or interest on or
repay, repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures; or
* make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company
(including Other Guarantees) if such guarantee ranks pari passu with
or junior in right of payment to the Junior Subordinated Debentures
(other than
* dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of
the Company,
* any declaration of a dividend in connection with the
implementation of a shareholders' 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,
* payments under the Guarantee,
* as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock,
* the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
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exchanged, and
* purchases of common stock related to the issuance of common stock
or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend
reinvestment plans).
The Company has no current intention to exercise its option to defer payments of
interest on the Exchange Junior Subordinated Debentures. The revenue of the
Trust available for distribution to holders of the Exchange Capital Securities
will be limited to payments under the Exchange Junior Subordinated Debentures.
See "Description of Exchange Junior Subordinated Debentures--General." If the
Company does not make interest payments on the Exchange Junior Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Exchange Capital Securities. The payment of Distributions
(if and to the extent the Trust has funds on hand legally available for the
payment of such Distributions) will be guaranteed by the Company on a limited
basis as set forth herein under "Description of Exchange Guarantee."
The Company has established the Reserve Account in which the Company has
deposited $857,000. The Company is generally required to maintain the balance of
the Reserve Account at such Reserve Account Required Amount. See "Description of
Exchange Junior Subordinated Debentures--Reserve Account."
Redemption
Upon the repayment on the Stated Maturity Date, or prepayment, in whole or
in part, prior to the Stated Maturity Date of the Junior Subordinated Debentures
(other than following the distribution of the Junior Subordinated Debentures to
holders of the Trust Securities), the proceeds from such repayment or prepayment
shall be applied by the Property Trustee to redeem a Like Amount (as defined
below) of the 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:
* in the case of the repayment of the Junior Subordinated Debentures
on the Stated Maturity Date, the Maturity Redemption Price (equal to
the principal of, and accrued and unpaid interest on, the Junior
Subordinated Debentures);
* in the case of the optional prepayment of the Junior Subordinated
Debentures prior to August 15, 2008 upon the occurrence and
continuation of a Special Event, the Special Event Prepayment Price
(equal to the Special Event Prepayment Price in respect of the Junior
Subordinated Debentures); and
* in the case of the optional prepayment of the Junior Subordinated
Debentures on or after August 15, 2008, the Optional Redemption Price
(equal to the Optional Prepayment Price in respect of the Junior
Subordinated Debentures).
See "Description of Exchange Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
"Like Amount" means
* with respect to a redemption of the Trust Securities, Trust Securities
having a Liquidation Amount equal to the principal amount of Junior
Subordinated Debentures to be paid in accordance with their terms and
* with respect to a distribution of Junior Subordinated Debentures upon
the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated Debentures
are distributed.
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The Company will have the option to prepay the Junior Subordinated
Debentures,
* in whole or in part, on or after August 15, 2008, at the applicable
Optional Prepayment Price and
* in whole but not in part, at any time prior to August 15, 2008, upon
the occurrence of a Special Event, at the Special Event Prepayment
Price, in each case subject to receipt of any required regulatory
approval.
See "Description of Exchange Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
Liquidation of the Trust and Distribution of Junior Subordinated Debentures
The Company, as holder of the Common Securities, has the right at any time
to dissolve the Trust, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, and to cause the Junior Subordinated
Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust. Such right is subject to:
* the Company having received an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital
Securities; and
* any required regulatory approval.
The Trust shall dissolve and automatically terminate upon the first to
occur of:
* certain events of bankruptcy, dissolution or liquidation of the
Company;
* the distribution of a Like Amount of the Junior Subordinated
Debentures to the holders of the Trust Securities, if the Company, as
holder of the Common Securities, has given written direction to the
Property Trustee to dissolve the Trust (which direction is optional
and, except as described above, wholly within the discretion of the
Company, as holder of the Common Securities);
* redemption of all of the Trust Securities as described under
"--Redemption";
* expiration of the term of the Trust; or
* the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If a termination occurs as described in the preceding paragraph, 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 the Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practicable, in which event such holders will be entitled to receive out
of the assets of the Trust legally 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 on hand legally
available to pay in fall the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis, except that if a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have priority over the Common
Securities. See "--Subordination of Common Securities."
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If the Company elects not to prepay the Junior Subordinated Debentures
prior to maturity in accordance with their terms and either elects not to or is
unable to liquidate the Trust and distribute the Junior Subordinated Debentures
to holders of the Trust Securities, the Trust Securities will remain outstanding
until the repayment of the Junior Subordinated Debentures on the Stated Maturity
Date.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities:
* the Trust Securities will no longer be deemed to be outstanding;
* DTC or its nominee will receive, in respect of each registered global
certificate, if any, representing Trust Securities and held by it, a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution; and
* any certificates representing Trust Securities not held by DTC
or its nominee will be deemed to represent Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount
of such Trust Securities, and bearing accrued and unpaid interest in
an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the
Administrative Trustees or their agent for cancellation, whereupon the
Company will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Junior Subordinated
Debentures.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the 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 Debentures 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.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Exchange Junior Subordinated Debentures. Any redemption of
Trust Securities shall be made and the applicable Redemption Price shall be
payable on the Redemption Date only to the extent that the Trust has funds
legally 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 Exchange
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are legally available, with respect to the Exchange
Capital Securities held by DTC or its nominees, the Property Trustee will
deposit or cause the Paying Agent (as defined below) to deposit irrevocably with
DTC funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the Exchange
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will irrevocably deposit with the Paying
Agent for the Exchange Capital Securities funds
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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
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 such Exchange 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 Exchange Capital Securities called for
redemption will cease, except the right of the holders of the Exchange Capital
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price, and the Exchange Capital Securities will cease to be
outstanding. In the event that any Redemption Date of Exchange Capital
Securities is not a Business Day, then the applicable Redemption Price payable
on such date will be paid on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except that
if such next succeeding Business Day falls in the next calendar year, such
payment shall 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 Company pursuant to the
Exchange Guarantee as described under "Description of Guarantee": (i)
Distributions on Exchange Capital Securities will continue to accumulate at the
then applicable rate, from the Redemption Date originally established by the
Trust to the date such applicable Redemption Price is actually paid; and (ii)
the actual payment date will be the Redemption Date for purposes of calculating
the applicable Redemption Price.
In the event that fewer than all of the outstanding Exchange Capital
Securities are to be redeemed, the Exchange Capital Securities will be redeemed
in accordance with the customary procedures of DTC.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Trust Securities at its
registered address. Unless the Company defaults in payment of the applicable
Redemption Price or in the repayment of the Junior Subordinated Debentures, on
and after the Redemption Date, Distributions will cease to accrue on the Trust
Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default 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
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redemption, liquidation or other acquisition of the 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, shall have been made
or provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Capital Securities then due and payable.
In the case of any Event of Default (as defined below), the Company as
holder of the Common Securities will be deemed to have waived any right to act
with respect to such Event of Default until the effect of such Event of Default
shall have been cured, waived or otherwise eliminated. Until any such Event of
Default has been so cured, waived or otherwise eliminated, the Property Trustee
shall act solely on behalf of the holders of the Capital Securities and not on
behalf of the Company 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
The occurrence of a Debenture Event of Default constitutes an "Event of
Default" under the Trust Agreement. See "Description of Exchange Junior
Subordinated Debentures--Debenture Events of Default."
Within five 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 Company, as Sponsor, unless such Event of
Default shall have been cured or waived. The Company, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as described under
"--Liquidation of the Trust and Distribution of Junior Subordinated Debentures"
and "--Subordination of Common Securities."
Removal of Issuer Trustees; Appointment of Successors
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
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vested exclusively in the Company as the holder of the Common Securities. Any
Delaware Trustee must, however, meet the applicable requirements of Delaware
law. Any Property Trustee must be a national or state chartered bank, and at the
time of appointment have securities rated in one of the three highest rating
categories by a nationally recognized statistical rating organization and have
capital and surplus of at least $50,000,000. No resignation or removal of an
Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity 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 entity resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any entity succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Trust Agreement, provided such entity 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 as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below. The Trust may, at the request of the Company, as
Sponsor, with the consent of the Administrative Trustees but without the consent
of the holders of the Capital Securities, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to a trust organized as
such under the laws of any State; provided, that:
* such successor entity either
* expressly assumes all of the obligations of the Trust with
respect to the Capital Securities or
* substitutes for the Capital Securities other securities having
substantially the same terms as the Capital Securities (the
"Successor Securities") so long as the Successor Securities rank
the same as the Capital Securities in priority with respect to
distributions and payments upon liquidation, redemption and
otherwise;
* the Company expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee with
respect to the Junior Subordinated Debentures;
* the Successor Securities are listed, or any Successor Securities will
be listed upon notification of issuance, on any national securities
exchange or other organization on which the Capital Securities are
then listed or quoted, if any;
* 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) or, if the Junior
Subordinated Debentures are so rated, the Junior Subordinated
Debentures to be downgraded by any such nationally recognized
statistical rating organization;
* such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of
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the Capital Securities (including any Successor Securities) in any
material respect;
* such successor entity has a purpose identical to that of the Trust;
* prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion
from independent counsel to the Trust experienced in such matters to
the effect that
* 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 (other than any dilution of such holders' interest in the
new entity), and
* 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
* the Company 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 as an entirety or 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 not
to be classified as a grantor trust for United States federal income tax
purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "--Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of Exchange
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Capital Securities will have no voting
rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities:
* to cure any ambiguity, correct or supplement any provisions in the
Trust Agreement that may be inconsistent with any other provision, or
to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement; or
* to modify, eliminate or add to any provisions of the Trust Agreement
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 the first clause, such action shall not
adversely affect in any material respect the interests of the holder of the
Trust Securities, and any amendments of the Trust Agreement shall become
effective when notice thereof is given to the holders of the Trust Securities.
The Trust Agreement may be amended by the Issuer Trustees and the Company:
* with the consent of holders representing a majority (based upon
Liquidation Amount) of the outstanding Trust
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Securities; and
* upon 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, provided that, without the
consent of each holder of Trust Securities, the Trust Agreement may
not be amended to:
* 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
* restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date. The
Exchange Capital Securities and any Original Capital Securities which
remain outstanding after consummation of the Exchange Offer will vote
together as a single class for purposes of determining whether holders
of the requisite percentage in outstanding Liquidation Amount thereof
have taken certain actions or exercised certain rights under the Trust
Agreement.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not:
* 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 such Property Trustee with respect to the Junior
Subordinated Debentures;
* waive certain past defaults under the Indenture;
* exercise any right to rescind or annul a declaration of acceleration
of the maturity of the principal of the Junior Subordinated
Debentures; or
* consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the
holders of a majority in 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 Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior approval 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
Debentures. 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 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 Trust
Agreement.
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No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with the
Trust Agreement.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company 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 Company, as issuer of the Junior Subordinated
Debentures, has agreed to pay all debts and other obligations (other than with
respect to payments of Distributions, amounts 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 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.
Form, Denomination, Book-Entry Procedures and Transfer
The Exchange Capital Securities initially will be represented by one or
more 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. See
"--Exchange of Book-Entry Capital Securities for Certificated Capital
Securities." In addition, transfer of beneficial interests in the Global Capital
Securities will be subject to the applicable rules and procedures of DTC and its
direct or indirect participants, which may change from time to time.
Depositary Procedures
DTC has advised the Trust and the Company that 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
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"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants, thereby eliminating the need for physical
movement of certificates. The Participants include securities brokers and
dealers (including the Initial Purchaser), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a 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 Company that, pursuant to procedures
established by it,
* upon deposit of the Global Capital Securities, DTC will credit the
accounts of Participants designated by the Initial Purchaser with
portions of the Liquidation Amount of the Global Capital Securities
and
* 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 such system, or indirectly
through organizations which are Participants. 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 of securities that they own. 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" and "--Exchange of Certificated Capital Securities for Book-Entry
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 Trust Agreement 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 in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will
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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
* 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
* 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 Company that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to
credit the accounts of the relevant Participants with the payment on
the payment date, in amounts proportionate to their respective
holdings in Liquidation Amount of beneficial interests in the relevant
security, as shown on the records of DTC, unless DTC has reason to
believe it will not receive payment on such payment date.
Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee, the Trust or the Company. Neither the Trust or the
Company 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 or the Company and the Property Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee for all
purposes.
Secondary market trading activity in interests in the Global Capital
Securities will 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 settle in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Exchange Capital Securities (including,
without limitation, the presentation of 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 Liquidation Amount of the Capital
Securities as to which such Participant or Participants has or have given such
direction. However, if there is an Event of Default under the Trust Agreement,
DTC reserves the right to exchange the Global Capital Securities for legended
Exchange Capital Securities in certificated form and to distribute such Exchange
Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for the
accuracy thereof.
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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 or the
Corporation nor the Property Trustee will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of its
obligations under the rules and procedures governing its operations.
Exchange of Book-Entry Capital Securities for Certificated Capital
Securities
A Global Capital Security is exchangeable for Exchange Capital Securities
in registered certificated form if
* DTC
(x) notifies the Trust that it is unwilling or unable to continue as
Depositary for the Global Capital Security and the Trust thereupon fails to
appoint a successor Depositary within 90 days, or
(y) has ceased to be a clearing agency registered under the Exchange Act;
* the Corporation in its sole discretion elects to cause the issuance of
Exchange Capital Securities in certificated form; or
* there shall have occurred and be continuing an Event of Default or any
event which after notice or lapse of time or both, would be an Event
of Default under the Trust Agreement.
In addition, beneficial interests in a Global Capital Security may be exchanged
for certificated Exchange Capital Securities upon request, but only upon at
least 20 days prior written notice given to the Property Trustee by or on behalf
of DTC in accordance with customary procedures. In all cases, certificated
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 the Depositary (in
accordance with its customary procedures).
Exchange of Certificated Capital Securities for Book-Entry Capital
Securities
Capital Securities issued in certificated form may not be exchanged for
beneficial interests in any Global Capital Security unless such exchange occurs
in connection with a transfer of such Capital Securities and the transferor
first delivers to the Property Trustee a written certificate (in the form
provided in the Trust Agreement) to the effect that such transfer will comply
with the appropriate transfer restrictions applicable to such Capital
Securities.
Payment and Paying Agency
Payments in respect of the Exchange 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 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 Company. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property Trustee shall
no longer be the Paying Agent, the Administrative Trustees
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shall appoint a successor (which shall be a bank or trust company acceptable to
the Administrative Trustees and the Company) to act as Paying Agent.
Restrictions on Transfer
The Exchange Capital Securities will be issued, and may be transferred
only, in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities). Any such transfer of Exchange 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 Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Exchange Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Exchange Capital Securities.
Registration of transfers of the Exchange 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 Exchange 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 Trust Agreement and, after such 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 Trust Agreement 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 Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Capital Securities
or the Common Securities are entitled under the Trust Agreement to vote, then
the Property Trustee shall take such action as is directed by the Company 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.
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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;
* the Trust will be classified as a grantor trust for United States
federal income tax purposes; and
* the Junior Subordinated Debentures will be treated as indebtedness of
the company for United States federal income tax purposes.
In this connection, the Company and the Administrative Trustees are authorized
to take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the Trust Agreement, that the Company 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, issue debt, execute mortgages or pledge any
of its assets.
Description of Exchange Junior Subordinated Debentures
The Junior Subordinated Debentures were issued as a separate series under
an Indenture, as supplemented from time to time (as so supplemented, the
"Indenture"), between the Company and First Union Trust Company, National
Association, 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 Debentures and the Indenture does not
purport to be complete, and where reference is made to particular provisions of
the Indenture, such provisions, including the definitions of certain terms, some
of which are not otherwise defined herein, are qualified in their entirety by
reference to all of the provisions of the Indenture and those terms made a part
of the Indenture by the Trust Indenture Act.
General
Concurrently with the issuance of the Trust Securities, the Trust invested
the proceeds thereof in the Original Junior Subordinated Debentures issued by
the Company. The Exchange Junior Subordinated Debentures, similarly to the
Original Junior Subordinated Debentures, will bear interest from August 11, 1998
at the annual rate of 8.57% of the principal amount thereof payable
semi-annually in arrears on February 15 and August 15 of each year (each, an
"Interest Payment Date"), commencing August 15, 1999, to the person in whose
name each Junior Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the 15th day preceding the relevant
payment date. It is anticipated that, until the liquidation, if any, of the
Trust, each Exchange Junior Subordinated Debenture will be held in the name of
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day
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months. In the event that any date on which interest is payable on the Exchange
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such next succeeding Business Day falls in the next
succeeding calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 8.57% thereof, compounded
semi-annually. 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 defined herein), as
applicable.
The Exchange Junior Subordinated Debentures will be issued pursuant to the
Indenture and will be issued in denominations of $1,000 and integral multiples
thereof. Unless previously redeemed or repurchased, the Junior Subordinated
Debentures will mature on August 15, 2028 (the "Stated Maturity Date").
The Exchange Junior Subordinated Debentures will rank pari passu with the
Original Junior Subordinated Debentures and all Other Debentures issued under
the Indenture and will be unsecured and subordinate and junior in right of
payment to all Senior Indebtedness to the extent and in the manner set forth in
the Indenture. See "--Subordination."
The Company is a non-operating holding company. Substantially all of the
operating assets of the Company are owned by the Bank. The Company relies
entirely on dividends from the Bank to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. The Company is a legal entity separate and distinct from its banking
and non-banking affiliates. The principal sources of the Company's income are
dividends, interest, and fees from its banking and non-banking affiliates. The
Bank is subject to certain restrictions imposed by federal law on any extensions
of credit to, and certain other transactions with, the Company and certain other
affiliates, and on investments in stock or other securities thereof. Such
restrictions prevent the Company and such other affiliates from borrowing from
the Bank unless the loans are secured by various types of collateral. Further,
such secured loans, other transactions and investments by the Bank are generally
limited in amount as to the Company and as to each of such other affiliates to
10% of the Bank's capital and surplus and as to the Company and all of such
other affiliates to an aggregate of 20% of the Bank's capital and surplus. In
addition, payment of dividends to the Company by the Bank 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.
Under applicable banking statutes, at September 30, 1998, the Bank could have
declared additional dividends of approximately $3.6 million. However, federal
and state regulatory agencies also have the authority to limit further the
Bank's payment of dividends based on other factors, such as the maintenance of
adequate capital for the Bank, which could reduce the amount of dividends
otherwise payable.
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Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of the subsidiary (including depositors, in the case of the
Bank), except to the extent that the Company may itself be recognized as a
creditor of that subsidiary. At September 30, 1998, the subsidiaries of the
Company had total liabilities (excluding liabilities owed to the Company) of
approximately $211.4 million. Accordingly, the Exchange Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and holders of Exchange Junior
Subordinated Debentures should look only to the assets of the Company for
payments on the Exchange Junior Subordinated Debentures. The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of the
Company or any subsidiary, including Senior Indebtedness. See "--Subordination."
Reserve Account
The Company has established the Reserve Account in which the Company
deposited from the net proceeds of the sale of the Junior Subordinated
Debentures an amount equal to $857,000. The amount so deposited in the Reserve
Account is invested in highly marketable securities. In the event that the
Corporation does not have sufficient funds available to make an interest payment
on the Junior Subordinated Debentures and does not elect to defer such interest
payments, the funds in the Reserve Account shall be used, to the extent
necessary, to cover the interest payment due on the Junior Subordinated
Debentures. The Company is required to maintain the Reserve Account at the
Reserve Account Required Amount at all times except during times that the ratio
of total unsecured debt of the Company (on a consolidated basis) to
shareholders' equity (each as determined under generally accepted accounting
principles) is equal to or less than 70% and the Bank has the capacity to pay
dividends in an amount equal to or greater than two times the amount of interest
payable on the Junior Subordinated Debentures for a one-year period. Although
the Company is generally required to replenish the Reserve Account when the
balance in the Reserve Account falls below the Reserve Account Required Amount,
the Company will have, under certain circumstances, up to 24 months after the
later of (i) the occurrence of such shortfall, or (ii) the termination of an
Extension Period to eliminate any shortfall. Holders of the Junior Subordinated
Debentures will have no interest in the Reserve Account unless and until funds
therein are used to make an interest payment. Any interest in the funds
withdrawn from the Reserve Account that holders of the Junior Subordinated
Debentures may obtain will be subordinated and junior to the interests of
holders of Senior Indebtedness.
Form, Registration and Transfer
If the Exchange Junior Subordinated Debentures are distributed to holders
of the Trust Securities, the Exchange Junior Subordinated Debentures may be
represented by one or more global certificates registered in the name of Cede &
Co. as nominee of DTC. The depositary arrangements for such Exchange Junior
Subordinated Debentures are expected to be substantially similar to those in
effect for the Exchange Capital Securities. For a description of DTC and the
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terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Exchange 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 Exchange
Junior Subordinated Debentures 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 Company may designate from time to time, except that at the option
of the Company payment of any interest may be made (except in the case of
Exchange Junior Subordinated Debentures in global form),
* by check mailed to the address of the Person entitled thereto as such
address shall appear in the register for Exchange Junior Subordinated
Debentures or
* 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 Exchange Junior Subordinated Debenture will be
made to the person in whose name such Exchange Junior Subordinated Debenture is
registered at the close of business on the Record Date for such interest, except
in the case of defaulted interest. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent; however
the Company will at all times be required to maintain a Paying Agent in each
Place of Payment for the Exchange Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Exchange Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of the Company, be
repaid to the Company and the holder of such Exchange Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture at any time and from time to time
during the term of the Exchange Junior Subordinated Debentures to defer the
payment of interest for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
shall end on a date other than an Interest Payment Date or extend beyond the
Stated Maturity Date. At the end of such Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.57%, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Exchange Junior Subordinated Debentures (and holders of the
Exchange Capital Securities while Exchange Capital Securities are outstanding)
will be required to accrue such deferred interest income for United States
federal
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income tax purposes prior to receipt of the cash attributable to such income.
See "Certain United States Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not:
* declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of the
Company's capital stock;
* make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or junior
in right of payment to the Exchange Junior Subordinated Debentures; or
* make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company
(including any Other Guarantees) if such guarantee ranks pari passu
with or junior in right of payment to the Exchange Junior Subordinated
Debentures (other than
* dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of
the Company,
* any declaration of a dividend in connection with the
implementation of a shareholders' 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,
* payments under the Guarantee,
* as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock,
* the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged, and
* purchases of common stock related to the issuance of common stock
or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend
reinvestment plans).
Prior to the termination of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Company 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 Company must give the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of:
* the date the Distributions on the Trust Securities would have been
payable, except for the election to begin such Extension Period; or
* the date the Administrative Trustees are required to give notice to
any securities exchange or to holders of Exchange Capital Securities
of the record date for 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 Company'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 Company may elect to begin an
Extension Period.
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Optional Prepayment
The Exchange Junior Subordinated Debentures will be prepayable, in whole or
in part, at the option of the Company on or after August 15, 2008 (the "Initial
Optional Prepayment Date"), subject to the Company having received any required
regulatory approval at a prepayment price (the "Optional Prepayment Price")
equal to the percentage of the outstanding principal amount of the Exchange
Junior Subordinated Debentures specified below, plus, in each case, accrued
interest thereon to the date of prepayment if redeemed during the 12-month
period beginning August 15 of the years indicated below:
Year Percentage
---- ----------
2008 .............. 104.285%
2009 .............. 103.857
2010 .............. 103.428
2011 .............. 103.000
2012 .............. 102.571
2013 .............. 102.143
2014 .............. 101.714
2015 .............. 101.286
2016 .............. 100.857
2017 .............. 100.429
2018 .............. 100.000%
Special Event Prepayment
Prior to the Initial Optional Prepayment Date, if a Special Event has
occurred and is continuing, the Company may, at its option and subject to
receipt of any required regulatory approval, prepay the Exchange Junior
Subordinated Debentures, in whole, but not in part, at any time within 90 days
of the occurrence of such Special Event, at a prepayment price (the "Special
Event Prepayment Price" equal to the Make-Whole Amount. The "Make-Whole Amount"
shall mean an amount equal to the greater of
* 100% of the principal amount of the Exchange Junior Subordinated
Debentures or
* the sum, as determined by a Quotation Agent, of the present values of
the remaining scheduled payments of principal and interest on the
Exchange Junior Subordinated Debentures from the prepayment date to
the Maturity Date, 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 the case of each of these
clauses, accrued and unpaid interest thereon, to the date of
prepayment.
If, following the occurrence of a Special Event, the Company exercises its
option to prepay the Exchange Junior Subordinated Debentures, then the proceeds
of that prepayment must be applied to redeem a Like Amount of Trust Securities
at the Special event Prepayment Price. See "Description of Exchange Capital
Securities--Redemption."
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A "Special Event" means either a Tax Event or a Regulatory Capital Event,
as the case may be.
A "Tax Event" means the receipt by Company and the Trust of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after August 11, 1998, there
is more than an insubstantial risk that
* 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 Exchange Junior Subordinated Debentures;
* interest payable by the Company on the Exchange Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion, will
not be, deductible by the Company, in whole or in part, for United
States federal income tax purposes, or
* 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 the receipt by the Company of an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of
* 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 an applicable
regulatory agency or
* any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement or decision is announced on
or after the date of original issuance of the Trust Securities, the
Capital Securities do not constitute, or within 90 days of such
opinion will not constitute, Tier 1 Capital (or its then equivalent if
the Company were subject to such capital requirement), applied as if
the Company (or its successors) were a bank holding company, except as
otherwise restricted under the 25% Capital Limitation, for purposes of
the capital adequacy guidelines of the Federal Reserve (or any
successor regulatory authority with jurisdiction over bank holding
companies), or any capital adequacy guidelines as then in effect and
applicable to the Company; provided, however, that the distribution of
the Exchange Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Company 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 a prepayment date pursuant,
the rate per annum equal to
* 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 which is published weekly by the Board of Governors of the
Federal Reserve System 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, as defined below (if no maturity
is within three months
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before or three months after the maturity corresponding to 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
* 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 to 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
* 285 basis points if such prepayment occurs on or prior to August 11,
1999 and
* 245 basis points 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 Exchange Junior Subordinated Debentures that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after the Remaining
Life, the two most closely corresponding United States Treasury securities, as
selected by the Quotation Agent, shall be used as the Comparable Treasury Issue,
and the Treasury Rate shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month, using such securities.
"Comparable Treasury Price" means, with respect to any prepayment date,
* 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
* if such release (or any successor release) is not published or does
not contain such prices on such Business Day,
* the average of the Reference Treasury Dealer Quotations for such
prepayment date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or
* if the Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Reference Treasury Dealer" means a nationally recognized U.S. Government
securities dealer in New York City selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the 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.
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"Remaining Life" means the term of the Exchange Junior Subordinated
Debentures from any prepayment date to the Stated Maturity Date.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the prepayment date to each holder of Exchange Junior
Subordinated Debentures to be prepaid at its registered address. Unless the
Company defaults in payment of the prepayment price, on the prepayment date
interest shall cease to accrue on such Exchange Junior Subordinated Debentures
called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Exchange Junior Subordinated Debentures such amounts
as may be necessary on 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 or other governmental charges to which
the Trust has become subject as a result of a Tax Event ("Additional Sums").
Restrictions on Certain Payments
The Company will also covenant that it will not:
* declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of the
Company's capital stock;
* make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company
(including Other Debentures) that rank pari passu with or junior in
right of payment to the Exchange Junior Subordinated Debentures; or
* make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company
(including under Other Guarantees) if such guarantee ranks pari passu
with or junior in right of payment to the Exchange Junior Subordinated
Debentures (other than
* dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of
the Company,
* any declaration of a dividend in connection with the
implementation of a shareholders' 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,
* payments under the Guarantee,
* as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock,
* the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged, and
* purchases of common stock related to the issuance of common stock
or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend
reinvestment plans), if at such time
* there shall have occurred any event of which the Company has
actual knowledge that
* is, or with the giving of notice or lapse of time, or
both, would be a Debenture Event of Default, and
* in respect of which the Company shall not have taken
reasonable steps to cure,
* if such Exchange Junior Subordinated Debentures are held by
the Trust, the Company shall be in default with respect to
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its payment of any obligations under the Exchange Guarantee,
or
* the Company shall have given notice of its election of an
Extension Period as provided in the Indenture and shall not
have rescinded such notice, and such Extension Period, or
any extension thereof, shall have commenced and be
continuing.
For so long as the Trust Securities remain outstanding, the Company will
covenant
* to directly or indirectly maintain 100% direct or indirect ownership
of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to
the Company's ownership of such Common Securities,
* not to cause, as Sponsor of the Trust, or to permit, as holder of the
Common Securities, the dissolution, winding-up or termination of the
Trust, except in connection with a distribution of the Exchange Junior
Subordinated Debentures as provided in the Trust Agreement and in
connection with certain mergers, consolidations or amalgamations and
* to use its reasonable efforts to cause the Trust
* to remain a business trust, except in connection with the
distribution of Exchange Junior Subordinated Debentures to the
holders 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 Trust Agreement, and
* to otherwise continue to be classified as a grantor trust for
United States federal income tax purposes.
Modification of Indenture
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of Exchange Junior Subordinated Debentures, amend, waive
or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of
Exchange Junior Subordinated Debentures) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of a majority in principal amount of Exchange Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Exchange Junior Subordinated Debentures; provided, that
no such modification may, without the consent of the holder of each outstanding
Exchange Junior Subordinated Debenture so affected,
* change the Stated Maturity Date, or reduce the principal amount of the
Exchange Junior Subordinated Debentures, or reduce the rate or extend
the time of payment of interest thereon except pursuant to the
Company's right under the Indenture to defer the payment of interest
as provided therein (see "--Option to Extend Interest Payment Date")
or
* reduce the percentage of principal amount of Exchange Junior
Subordinated Debentures, the holders of which are required to consent
to any such modification of the Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Exchange Junior Subordinated Debentures constitutes a
"Debenture Event of
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Default" (whatever the reason for such Debenture 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):
* failure for 30 days to pay any interest on the Exchange Junior
Subordinated Debentures or any Other Debentures when due (subject to
the deferral of any due date in the case of an Extension Period); or
* failure to pay any principal or premium, if any, on the Exchange
Junior Subordinated Debentures or any Other Debentures when due,
whether at maturity, upon redemption, by declaration of acceleration
of maturity or otherwise; or
* failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice
to the Company from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of the Exchange Junior
Subordinated Debentures; or
* certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of the
Exchange Junior Subordinated Debentures 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 Exchange Junior Subordinated
Debentures may declare the principal due and payable immediately upon a
Debenture Event of Default. The holders of a majority in aggregate outstanding
principal amount of the Exchange Junior Subordinated Debentures may annul such
declaration and waive the default if the default (other than the non-payment of
the principal of the Exchange Junior Subordinated Debentures 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.
The holders of a majority in aggregate outstanding principal amount of the
Exchange Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Exchange Junior Subordinated Debentures, 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 premium, if any) 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
Exchange Junior Subordinated Debenture.
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Enforcement of Certain Rights by Holders of Exchange Capital Securities
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Company to pay interest (or premium,
if any) on or principal of the Exchange Junior Subordinated Debentures on the
due date, a holder of Exchange Capital Securities may institute a Direct Action.
The Company 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
Exchange Capital Securities. Notwithstanding any payments made to a holder of
Exchange Capital Securities by the Company in connection with a Direct Action,
the Company shall remain obligated to pay the principal of (or premium, if any)
or interest on the Exchange Junior Subordinated Debentures, and the Company
shall be subrogated to the rights of the holder of such Capital Securities with
respect to payments on the Exchange Capital Securities to the extent of any
payments made by the Company to such holder in any Direct Action.
The holders of the Exchange 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 Exchange Junior Subordinated Debentures, unless
there shall have been an Event of Default under the Trust Agreement. See
"--Description of Exchange Capital Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Company, unless:
* in case the Company consolidates with or merges into another Person or
conveys or transfers its properties and assets substantially as an
entirety to any Person, the successor Person is organized under the
laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Company's obligations
on the Exchange Junior Subordinated Debentures;
* 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; and
* certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Exchange Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Exchange Junior Subordinated Debentures.
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Satisfaction and Discharge
The Indenture provides that when, among other things, all Exchange Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation
* have become due and payable or
* will become due and payable at maturity within one year, and the
Company deposits or causes to be deposited with the Debenture Trustee
funds, in trust, for the purpose and in an amount sufficient to pay
and discharge the entire indebtedness on the Exchange Junior
Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and
interest to the date of the deposit or to the Stated Maturity Date, as
the case may be, then the Indenture will cease to be of further effect
(except as to the Company's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates
and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Indenture.
Subordination
In the Indenture, the Company has covenanted and agreed that any Exchange
Junior Subordinated Debentures issued thereunder shall be subordinate and junior
in right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, all Senior Indebtedness must be paid in
full before the holders of Exchange Junior Subordinated Debentures will be
entitled to receive or retain any payment or distribution in respect thereof.
In the event of the acceleration of the maturity of the Exchange Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in full
of all such Senior Indebtedness before the holders of the Exchange Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the Exchange Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Exchange Junior Subordinated Debentures may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Indebtedness, or an event of default with respect to any
Senior Indebtedness resulting in the acceleration of the maturity thereof, or if
any judicial proceeding shall be pending with respect to any such default.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, except Indebtedness Ranking on a Parity with the
Exchange Junior Subordinated Debentures or
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Indebtedness Ranking Junior to the Exchange Junior Subordinated Debentures, and
any deferrals, renewals or extensions of such Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments.
"Indebtedness Ranking on a Parity with the Exchange Junior Subordinated
Debentures" shall mean
* Indebtedness for Money Borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred,
which specifically by its terms ranks equally with and not prior to
the Exchange Junior Subordinated Debentures in the right of payment
upon the happening of the dissolution or winding up or liquidation or
reorganization of the Company,
* all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a partnership or other
entity affiliated with the Company that is a financing vehicle of the
Company (a "financing entity") in connection with the issuance by such
financing entity of equity securities or other securities guaranteed
by the Company pursuant to an instrument that ranks pari passu with or
junior in right of payment to the Guarantee.
"Indebtedness Ranking Junior to the Exchange Junior Subordinated
Debentures" shall mean any Indebtedness for Money Borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, which specifically by its terms ranks junior to and not equally with
or prior to the Exchange Junior Subordinated Debentures (and any other
Indebtedness Ranking on a Parity with the Exchange Junior Subordinated
Debentures) in right of payment upon the happening of the dissolution or winding
up or liquidation or reorganization of the Company. The securing of any
Indebtedness for Money Borrowed, otherwise constituting Indebtedness Ranking on
a Parity with the Exchange Junior Subordinated Debentures or Indebtedness
Ranking Junior to the Exchange Junior Subordinated Debentures, as the case may
be, shall not be deemed to prevent such Indebtedness for Money Borrowed from
constituting Indebtedness Ranking on a Parity with the Exchange Junior
Subordinated Debentures or Indebtedness Ranking Junior to the Exchange Junior
Subordinated Debentures, as the case may be.
The Company is a non-operating holding company and almost all of the
operating assets of the Company are owned by the Bank. The Company relies
entirely on dividends from the Bank to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. The Company is a legal entity separate and distinct from its banking
and non-banking affiliates. Accordingly, the Exchange Junior Subordinated
Dentures will be effectively subordinated to all existing and future liabilities
of the Company's subsidiaries. Holders of Exchange Junior Subordinated
Debentures should look only to the assets of the Company for payments of
interest and principal and premium, if any.
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The Indenture places no limitation on the amount of Senior Indebtedness
that may be incurred by the Company. The Company expects from time to time to
incur additional indebtedness constituting Senior Indebtedness.
Restrictions on Transfer
The Exchange Junior Subordinated Debentures will be issued, and may be
transferred only in blocks having an aggregate principal amount of not less than
$100,000 (100 Exchange Junior Subordinated Debentures). Any such transfer of
Exchange Junior Subordinated Debentures in a block having an aggregate principal
amount of less than $100,000 shall be deemed to be void and of no legal effect
whatsoever. Any such transferee shall be deemed not to be the holder of such
Exchange Junior Subordinated Debentures for any purpose, including but not
limited to the receipt of payments on such Exchange Junior Subordinated
Debentures, and such transferee shall be deemed to have no interest whatsoever
in such Exchange Junior Subordinated Debentures.
Governing Law
The Indenture and the Exchange Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the 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 Exchange Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Description of Exchange Guarantee
The Exchange Guarantee will be executed and delivered by the Company
concurrently with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders from time to time of such Exchange Capital
Securities. First Union Trust Company, National Association will act as
Guarantee Trustee under the Exchange Guarantee. The Exchange Guarantee has been
qualified under the Trust Indenture Act. This summary of certain provisions of
the Exchange 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 Exchange
Guarantee, including the
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definitions therein of certain terms, and the Trust Indenture Act. The Guarantee
Trustee will hold the Exchange Guarantee for the benefit of the holders of the
Exchange Capital Securities.
General
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Exchange 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
Exchange Capital Securities, to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Exchange Guarantee:
* any accumulated and unpaid Distributions required to be paid on the
Exchange Capital Securities, to the extent that the Trust has funds on
hand legally available therefor at such time,
* the applicable Redemption Price with respect to Exchange Capital
Securities called for redemption, to the extent that the Trust has
funds on hand legally available therefor at such time, and
* upon a voluntary or involuntary termination and liquidation of the
Trust the lesser of
* the Liquidation Distribution and
* the amount of assets of the Trust remaining available for
distribution to holders of the Exchange Capital Securities.
The Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Exchange
Capital Securities or by causing the Trust to pay such amounts to such holders.
The Exchange Guarantee will rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent provided therein. See "--Status of the
Exchange Guarantee." Because the Company is a holding company, the right of the
Company to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the Company may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Company's obligations under the Exchange Guarantee will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and claimants should look only to the assets of the Company for
payments thereunder. See "Description of the Exchange Junior Subordinated
Debentures--General." The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Company, including Senior Indebtedness,
whether under the Indenture or any other indenture that the Company may enter
into in the future or otherwise.
The Company has, through the Exchange Guarantee, the Trust Agreement, the
Exchange Junior Subordinated Debentures and the Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all of the Trust's obligations
under the Exchange 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 Exchange Capital Securities. See "Relationship
Among the Exchange Capital Securities, the Exchange Junior Subordinated
Debentures and the Exchange Guarantee."
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Status of the Exchange Guarantee
The Exchange Guarantee will constitute an unsecured obligation of the
Company and will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as Exchange Junior Subordinated Debentures
except in the case of a bankruptcy or insolvency proceeding in respect of the
Company, in which case the Exchange Guarantee will rank subordinate and junior
in right of payment to all liabilities (other than Other Guarantees) of the
Company.
The Exchange Guarantee will rank pari passu with all Other Guarantees
issued by the Company. The Exchange Guarantee will constitute a guarantee of
payment and not of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Company to enforce its rights under the Exchange
Guarantee without first instituting a legal proceeding against any other person
or entity). The Exchange Guarantee will be held for the benefit of the holders
of the Exchange Capital Securities. The Exchange 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 Exchange Capital
Securities of the Exchange Junior Subordinated Debentures. The Guarantee does
not place a limitation on the amount of additional Senior Indebtedness that may
be incurred by the Company.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Exchange Capital Securities (in which case no vote
will be required), the Exchange Guarantee may not be amended without the prior
approval of the holders of a majority of the Liquidation Amount of such
outstanding Exchange Capital Securities. The manner of obtaining any such
approval will be as set forth under "--Description of Exchange Capital
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees and
agreements contained in the Exchange Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the Exchange Capital Securities then
outstanding.
Events of Default
An event of default under the Exchange Guarantee will occur upon the
failure of the Company to perform any of its payment or other obligations
thereunder. The holders of a majority in Liquidation Amount of the Exchange
Capital Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Exchange Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under the Exchange Guarantee.
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Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against the Company to enforce its rights under the Exchange
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Exchange Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, will undertake to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee will be
under no obligation to exercise any of the powers vested in it by the Guarantee
at the request of any holder of the Capital Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Exchange Guarantee
The Exchange Guarantee will terminate and be of no further force and effect
upon full payment of the applicable Redemption Price of the Exchange Capital
Securities, upon full payment of the Liquidation Amount payable upon liquidation
of the Trust or upon distribution of Exchange Junior Subordinated Debentures to
the holders of the Exchange Capital Securities. The Exchange Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Exchange Capital Securities must restore payment of any
sums paid under the Exchange Capital Securities or the Exchange Guarantee.
Governing Law
The Exchange Guarantee will be governed by and construed in accordance with
the laws of the State of New York.
DESCRIPTION OF ORIGINAL SECURITIES
The terms of the Original Securities are identical in all materials
respects to the Exchange Securities, except that
* the Original Securities have not been registered under the Securities
Act, are subject to certain restrictions on transfer and are entitled
to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except
under limited circumstances),
* the Exchange Capital Securities will not provide for any increase in
the Distribution rate thereon and
* the Exchange Junior Subordinated Debentures will not provide for any
liquidated damages thereon.
The Original Securities provide
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that, in the event that a registration statement relating to the Exchange
Offer has not been filed by January 8, 1999 and been declared effective by
February 7, 1999, or, in certain limited circumstances, in the event a shelf
registration statement (the "Shelf Registration Statement") with respect to the
resale of the Original Capital Securities is not declared effective by February
7, 1999, then liquidated damages will accrue at the rate of 0.25% per annum on
the principal amount of the Original Junior Subordinated Debentures and
Distributions will accrue at the rate of 0.25% per annum on the Liquidation
Amount of the Original Capital Securities, for the period from the occurrence of
such event until such date that a registration statement relating to the
Exchange Offer or any required Shelf Registration Statement is effective. The
Exchange Securities are not, and upon consummation of the Exchange Offer the
Original Securities will not be, entitled to any such additional interest or
Distributions. Accordingly, holders of Original Capital Securities should review
the information set forth under "Risk Factors--Consequences of a Failure to
Exchange Original Capital Securities" and "Description of Exchange Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES,
THE EXCHANGE JUNIOR SUBORDINATED DEBENTURES
AND THE EXCHANGE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Exchange Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) are irrevocably guaranteed by the Company as and
to the extent set forth under "Description of Exchange Guarantee." Taken
together, the Company's obligations under the Exchange Junior Subordinated
Debentures, the Indenture, the Trust Agreement and the Exchange Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Exchange 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
Exchange Capital Securities. If and to the extent that the Company does not make
the required payments on the Exchange Junior Subordinated Debentures, the Trust
will not have sufficient funds to make the related payments, including
Distributions, on the Exchange Capital Securities. The Guarantee does not cover
any such payment when the Trust does not have sufficient funds on hand legally
available therefor. In such event, the remedy of a holder of Exchange Capital
Securities is to institute a Direct Action. The obligations of the Company under
the Exchange Guarantee are subordinate and junior in right of payment to all
Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Exchange Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Exchange Capital Securities,
primarily because:
* the aggregate
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principal amount or Prepayment Price of the Exchange Junior
Subordinated Debentures will be equal to the sum of the Liquidation
Amount or Redemption Price, as applicable, of the Trust Securities;
* the interest rate and interest and other payment dates on the Exchange
Junior Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities;
* the Company, as Sponsor, shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of
Trust Securities under such Trust Securities; and
* the Trust Agreement further provides that the Trust is not authorized
to engage in any activity that is not consistent with the limited
purposes thereof.
Enforcement Rights of Holders of Exchange Capital Securities
A holder of any Exchange Capital Security may institute a legal proceeding
directly against the Company to enforce its rights under the Exchange 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 Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Exchange Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Exchange Junior
Subordinated Debentures would constitute an Event of Default under the Trust
Agreement.
Limited Purpose of the Trust
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing and selling the Trust Securities,
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and engaging in only those other activities necessary,
advisable or incidental thereto. A principal difference between the rights of a
holder of an Exchange Capital Security and a holder of an Exchange Junior
Subordinated Debenture is that a holder of an Exchange Junior Subordinated
Debenture will be entitled to receive from the Company the principal amount of
(and premium, if any) and interest on Exchange Junior Subordinated Debentures
held, while a holder of Exchange Capital Securities is entitled to receive
Distributions from the Trust (or, in certain circumstances, from the Company
under the Guarantee) if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions.
Rights Upon Termination
Unless the Exchange Junior Subordinated Debentures are distributed to
holders of the Trust Securities, upon any voluntary or involuntary termination
and liquidation of the Trust, 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 Exchange Securities--Description of
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Exchange Capital Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Property Trustee, as holder of the Exchange
Junior Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Indebtedness as set forth in the
Indenture, but entitled to receive payment in full of principal (and premium, if
any) and interest, before any shareholders of the Company receive payments or
distributions. Since the Company is the guarantor under the Exchange 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 Exchange Capital Securities and a holder of Exchange
Junior Subordinated Debentures relative to other creditors and to shareholders
of the Company in the event of liquidation or bankruptcy of the Company are
expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Ellsworth, Carlton & Waldman, P.C., Wyomissing,
Pennsylvania, in its capacity as special tax counsel to the Company ("Tax
Counsel"), the following discussion summarizes the material United States
federal income tax consequences of the purchase, ownership and disposition of
the Exchange Capital Securities by a holder who purchases such Exchange Capital
Securities upon original issuance.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the IRS or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be no
assurance that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the Exchange
Capital Securities held as a capital asset by a holder who or which purchased
the Exchange Capital Securities upon original issuance (an "Initial Holder") at
their original offering price and is a US Holder (as defined below). This
summary does not address all the tax consequences that may be relevant to a US
Holder, nor does it address the tax consequences, except as stated below, to
holders that are not US Holders ("Non-US Holders") or to holders that may be
subject to special tax treatment (such as banks, thrift institutions, real
estate investment trusts, regulated investment companies, insurance companies,
brokers and dealers in securities or currencies, other financial institutions,
tax-exempt organizations, persons holding the Exchange Capital Securities as a
position in a "straddle," as part of a "synthetic security," "hedging,"
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and
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certain United States expatriates). Further, this summary does not address
* the income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of the Exchange Capital Securities,
* the United States federal alternative minimum tax consequences of the
purchase, ownership or disposition of the Exchange Capital Securities,
or
* any state, local or foreign tax consequences of the purchase,
ownership and disposition of Exchange Capital Securities.
A "US Holder" is a holder of the Exchange Capital Securities who or which
is
* a citizen or individual resident (or is treated as a citizen or
individual resident) of the United States for income tax purposes,
* a corporation or partnership created or organized (or treated as
created or organized for income tax purposes) in or under the laws of
the United States or any political subdivision thereof,
* an estate the income of which is includible in its gross income for
United States federal income tax purposes without regard to its
source, or
* a trust if
* a court within the United States is able to exercise primary
supervision over the administration of the trust and
* one or more United States trustees have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE EXCHANGE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
US Holders
Exchange of Capital Securities. The exchange of Original Securities for
Exchange Securities should not be a taxable event to holders for United States
federal income tax purposes. The exchange of Original Securities for Exchange
Securities pursuant to the Exchange Offer should not be treated as an "exchange"
for United States federal income tax purposes because the Exchange Securities
should not be considered to differ materially in kind or extent from the
Original Securities and because the exchange will occur by operation of the
terms of the Original Securities. Accordingly, the Exchange Capital Securities
should have the same issue price as the Original Capital Securities, and a
holder should have the same adjusted tax basis and holding period in the
Exchange Capital Securities as the holder had in the Original Capital Securities
immediately before the exchange. Moreover, a holder which had acquired Original
Capital Securities with either market discount or bond premium will be treated
as holding Exchange Capital Securities with the same amount of market discount
or bond premium and will be required to include such market discount in or
deduct such bond premium from their income in the same manner as on the Original
Capital Securities. Holders are urged to consult their tax advisors regarding
the applicability of the market discount and bond premium rules.
Characterization of the Trust. In connection with the issuance of the
Exchange Capital Securities, Tax Counsel will render its opinion generally to
effect that, under then current law
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and based on the representations, facts and assumptions set forth in this
prospectus, and assuming full compliance with the terms of the Trust Agreement
(and other relevant documents), and based on certain assumptions and
qualifications referenced in the opinion, the Trust will be characterized for
United States federal income tax purposes as a grantor trust and will not be
characterized as an association taxable as a corporation. Accordingly, for
United States federal income tax purposes, each holder of the Exchange Capital
Securities generally will be considered the owner of an undivided interest in
the Exchange Junior Subordinated Debentures owned by the Trust, and each US
Holder will be required to include all income or gain recognized for United
States federal income tax purposes with respect to its allocable share of the
Exchange Junior Subordinated Debentures on its own income tax return.
Characterization of the Exchange Junior Subordinated Debentures. The
Company and the Trust will agree to treat the Exchange Junior Subordinated
Debentures as indebtedness for all United States federal income tax purposes. In
connection with the issuance of the Exchange Junior Subordinated Debentures, Tax
Counsel will render its opinion generally to the effect that, under then current
law and based on the representations, facts and assumptions set forth in this
prospectus, and assuming full compliance with the terms of the Indenture (and
other relevant documents), and based on certain assumptions and qualifications
referenced in the opinion, the Exchange Junior Subordinated Debentures will be
characterized for United States federal income tax purposes as debt of the
Company.
Interest Income and Original Issue Discount. Under the terms of the
Exchange Junior Subordinated Debentures, the Company has the ability to defer
payments of interest from time to time by extending the interest payment period
for a period not exceeding 10 consecutive semi-annual periods, but not beyond
the maturity of the Exchange Junior Subordinated Debentures. Recently issued
Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Exchange Junior Subordinated Debentures will not be
considered issued with original issue discount ("OID") by reason of the
Company's ability to defer payments of interest if the likelihood of such
deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of this prospectus, the likelihood of deferring payments of interest under
the terms of the Exchange Junior Subordinated Debentures is "remote" within the
meaning of the applicable Treasury regulations, in part because exercising that
option would prevent the Company from declaring dividends on its stock and would
prevent the Company from making any payments with respect to debt securities
that rank pari passu with or junior to the Exchange Junior Subordinated
Debentures. Therefore, the Exchange Junior Subordinated Debentures should not be
treated as issued with OID by reason of the Company's deferral option. Rather,
stated interest on the Exchange Junior Subordinated Debentures will generally be
taxable to a US Holder as ordinary income when paid or accrued in accordance
with that holder's method of accounting for income tax purposes. It should be
noted, however, that these Treasury regulations have not yet been interpreted in
any rulings or any other published authorities of the IRS. Accordingly, it is
possible that the IRS could take a position contrary to the interpretation
described herein.
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In the event the Company exercises its option to defer payments of
interest, the Exchange Junior Subordinated Debentures would be treated as
redeemed and reissued for OID purposes and the sum of the remaining interest
payments (and any de minimis OID) on the Exchange Junior Subordinated Debentures
would thereafter be treated as OID, which would accrue, and be includible in a
US Holder's taxable income, on an economic accrual basis (regardless of the US
Holder's method of accounting for income tax purposes) over the remaining term
of the Exchange Junior Subordinated Debentures (including any period of interest
deferral), without regard to the timing of payments under the Exchange Junior
Subordinated Debentures. (Subsequent distributions of interest on the Exchange
Junior Subordinated Debentures generally would not be taxable.) The amount of
OID that would accrue in any period would generally equal the amount of interest
that accrued on the Exchange Junior Subordinated Debentures in that period at
the stated interest rate. Consequently, during any period of interest deferral,
US Holders will include OID in gross income in advance of the receipt of cash,
and a US Holder which disposes of a Capital Security prior to the record date
for payment of distributions on the Exchange Junior Subordinated Debentures
following that period will be subject to income tax on OID accrued through the
date of disposition (and not previously included in income), but will not
receive cash from the Trust with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not treated as remote, the Exchange Junior Subordinated
Debentures would be treated as initially issued with OID in an amount equal to
the aggregate stated interest (plus any de minimis OID) over the term of the
Exchange Junior Subordinated Debentures. That OID would generally be includible
in a US Holder's taxable income, over the term of the Exchange Junior
Subordinated Debentures, on an economic accrual basis.
Characterization of Income. Because the income underlying the Exchange
Capital Securities will not be characterized as dividends for income tax
purposes, corporate holders of the Exchange Capital Securities will not be
entitled to a dividends-received deduction for any income recognized with
respect to the Exchange Capital Securities.
Market Discount and Bond Premium. Holders of the Exchange Capital
Securities other than Initial Holders may be considered to have acquired their
undivided interests in the Exchange Junior Subordinated Debentures with market
discount or acquisition premium (as each phrase is defined for United States
federal income tax purposes).
Receipt of Exchange Junior Subordinated Debentures or Cash Upon Liquidation
of the Trust. Under certain circumstances described herein (See "Description of
Exchange Capital Securities--Liquidation of the Trust and Distribution of
Exchange Junior Subordinated Debentures"), the Trust may distribute the Exchange
Junior Subordinated Debentures to holders in exchange for the Exchange Capital
Securities and in liquidation of the Trust. Except as discussed below, such a
distribution would not be a taxable event for United States federal income tax
purposes, and each US Holder would have an aggregate adjusted basis in its
Exchange Junior Subordinated Debentures for United States federal income tax
purposes equal to
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such holder's aggregate adjusted basis in its Exchange Capital Securities. For
United States federal income tax purposes, a US Holder's holding period in the
Exchange Junior Subordinated Debentures received in such a liquidation of the
Trust would include the period during which the Exchange Capital Securities were
held by the holder. If, however, the relevant event is a Tax Event which results
in the Trust being treated as an association taxable as a corporation, the
distribution would likely constitute a taxable event to US Holders of the
Exchange Capital Securities for United States federal income tax purposes.
Under certain circumstances described herein (see "Description of Exchange
Capital Securities"), the Exchange Junior Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to holders in
redemption of their Exchange Capital Securities. Such a redemption would be
taxable for United States federal income tax purposes, and a US Holder would
recognize gain or loss as if it had sold the Exchange Capital Securities for
cash. See "--Sales of Exchange Capital Securities" below.
Sales of Exchange Capital Securities. A US Holder that sells Exchange
Capital Securities will recognize gain or loss equal to the difference between
its adjusted basis in the Exchange Capital Securities and the amount realized on
the sale of such Exchange Capital Securities. A US Holder's adjusted basis in
the Exchange Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such holder's
gross income to the date of disposition, and decreased by payments received on
the Exchange Capital Securities (other than any interest received with respect
to the period prior to the effective date of the Company's first exercise of its
option to defer payments of interest). Any such gain or loss generally will be
capital gain or loss, and generally will be a long-term capital gain or loss if
the Exchange Capital Securities have been held for more than one year prior to
the date of disposition. Tax rates on long-term capital gains received by
individual US Holders vary depending on each US Holder's income and holding
period for the Exchange Capital Securities. US Holders that are individuals
should contact their own tax advisors for more information or for the capital
gains rate applicable to a specific Capital Security.
A holder who disposes of his Exchange Capital Securities between record
dates for payments of distributions thereon will be required to include accrued
but unpaid interest (or OID) on the Exchange Junior Subordinated Debentures
through the date of disposition in its taxable income for United States federal
income tax purposes (notwithstanding that the holder may receive a separate
payment from the purchaser with respect to accrued interest), and to deduct that
amount from the sales proceeds received (including the separate payment, if any,
with respect to accrued interest) for the Exchange Capital Securities (or as to
OID only, to add such amount to such holder's adjusted tax basis in its Exchange
Capital Securities). To the extent the selling price is less than the holder's
adjusted tax basis (which will include accrued but unpaid OID, if any), a holder
will recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
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Pending Tax Litigation Affecting the Exchange Capital Securities. Recently,
a taxpayer filed a petition in the United States Tax Court contesting the IRS'
proposed disallowance of the interest deductions the taxpayer claimed in respect
of securities issued in 1993 and 1994 that are in some respects, similar to the
Exchange Capital Securities of the Trust (Enron Corp. v. Commissioner, Docket
No. 6149, filed April 1, 1998). It is possible that an adverse decision by the
Tax Court concerning the deductibility of such interest could give rise to a Tax
Event. Such a Tax Event would give the Company the right to redeem the Exchange
Junior Subordinated Debentures. See "Description of Exchange Junior Subordinated
Debentures--Special Event Prepayment" and "Description of the Exchange Capital
Securities--Redemption".
Non-US Holders
The following discussion applies to a Non-US Holder.
Payments to a holder of a Capital Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that
* the beneficial owner of the Capital Security does not (directly or
indirectly, actually or constructively) own 10% or more of the total
combined voting power of all classes of stock of the Company entitled
to vote,
* the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Company through stock
ownership, and
* either
* the beneficial owner of the Exchange Capital Securities certifies
to the Trust or its agent, under penalties of perjury, that it is
a Non-US Holder and provides its name and address, or
* a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and
holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such a
statement has been received from the beneficial owner by it or by
another Financial Institution between it and the beneficial owner
in the chain of ownership, and furnishes the Trust or its agent
with a copy thereof.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
A Non-US Holder which holds the Exchange Capital Securities in connection
with the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Exchange Junior Subordinated Debentures.
Information Reporting
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Exchange Capital Securities held by a
non-corporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Exchange Capital Securities
to or through the United States office of a broker or through certain US-related
financial intermediaries are subject to information reporting unless
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the holder thereof certifies as to its Non-United States status or otherwise
establishes an exemption from information reporting and backup withholding. See
"--Backup Withholding." Taxable income on the Exchange Capital Securities for a
calendar year should be reported to US Holders on the appropriate form by the
following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the Exchange Capital
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against the holder's income tax liability,
or refunded, provided the required information is provided to the IRS.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE EXCHANGE CAPITAL SECURITIES. POTENTIAL HOLDERS OF THE EXCHANGE CAPITAL
SECURITIES ARE URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR
PARTICULAR TAX CONSEQUENCES.
ERISA CONSIDERATIONS
Each of the Company (the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust) and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA and
certain employee benefit-related provisions of the Code. The purchase and/or
holding of Capital Securities by a Plan (including individual retirement
arrangements and other plans described in Section 4975(c)(1) of the Code) that
is subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code and with respect to which the
Company, the Property Trustee or any affiliate is a service provider (or
otherwise is a party in interest or a disqualified person) may constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Capital Securities are acquired pursuant to and in accordance with
an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving banks' collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts), PTCE 95-60 (an exemption for certain transactions involving certain
insurance company general accounts) or PTCE 96-23 (an exemption for certain
transactions determined by an in-house asset manager). Accordingly, each
purchaser of Capital Securities, by its acceptance thereof, shall be deemed to
have represented to the Company, Trust and the Initial Purchaser either (a) that
it is not a Plan, a trustee or other
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person acting on behalf of a Plan or any other person or entity using the assets
of any Plan to finance such purchase, or (b) that such purchase will not result
in a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code for which there is no applicable statutory or administrative exemption.
In addition, a Plan fiduciary considering the purchase of Capital
Securities should be aware that the assets of the Trust may be considered "plan
assets" for ERISA purposes. In such event, any persons exercising discretion
with respect to Junior Subordinated Debentures may become fiduciaries, parties
in interest or disqualified persons with respect to investing Plans.
Accordingly, each investing Plan, by purchasing the Capital Securities, will be
deemed to have directed the Trust to invest in the Junior Subordinated
Debentures and to have consented to the appointment of the Property Trustee. In
this regard, it should be noted that, in an Event of Default, the Company may
not remove the Property Trustee without the approval of a majority of the
holders of the Capital Securities. Also, a Plan fiduciary should consider
whether the purchase of Capital Securities could result in a delegation of
fiduciary authority to the Property Trustee, and, if so, whether such a
delegation of authority is consistent with the terms of the Plan's governing
instrument or any investment management agreement with the Plan. Further, prior
to an Event of Default with respect to the Junior Subordinated Debentures, the
Property Trustee will have only limited custodial and ministerial authority with
respect to trust assets.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY THE
TRUST, THE COMPANY, THE PROPERTY TRUSTEE, THE INITIAL PURCHASER OR ANY OTHER
PERSON ASSOCIATED WITH THE SALE OF THE CAPITAL SECURITIES THAT SUCH SECURITIES
MEET AL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS
GENERALLY OR ANY PARTICULAR PLAN OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE CAPITAL SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT WITH ITS
COUNSEL.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange 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 Exchange Capital
Securities received in exchange for Capital Securities where such Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Trust and the Company 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
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connection with any such resale. In addition, until May 9, 1999, all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.
The Trust and the Company will not receive any proceeds from any sale of
Exchange Capital Securities by broker-dealers. Exchange 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 Exchange 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 Exchange Capital Securities. Any
broker-dealer that resells Exchange 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 Exchange Capital Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of Exchange Capital Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Trust and the
Company 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 Company 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.
VALIDITY OF EXCHANGE SECURITIES
The validity of the Exchange Guarantee and the Exchange Junior Subordinated
Debentures will be passed upon for the Company by Ellsworth, Carlton & Waldman,
P.C., Wyomissing, Pennsylvania. Certain matters relating to United States
federal income tax consequences will be passed upon for the Company by
Ellsworth, Carlton & Waldman, P.C., Wyomissing, Pennsylvania.
Certain matters of Delaware law relating to the validity of the Exchange
Capital Securities will be passed upon on behalf of the Trust by Richards,
Layton & Finger, special Delaware counsel to the Trust.
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<PAGE>
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
as of December 31, 1997 and 1996 and for each of the years then ended, incuded
in the Company's 1997 Annual Report on Form 10-KSB, have been incorporated by
reference in this prospectus and in the Registration Statement of which this
prospectus forms a part, in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference, and upon the authority
of said firm as experts in accounting and auditing.
96
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law of
1988, as amended (15 Pa. C.S. ss.ss.1741-1750), provides that a business
corporation such as Premier Bancorp, Inc. has the power under certain
circumstances to indemnify its directors, officers, employees and agents against
certain expenses incurred by them in connection with any threatened, pending or
completed action, suit or proceeding. The bylaws of Premier Bancorp, Inc.
contain a number of provisions that require the Registrant to indemnify these
persons in accordance with Pennsylvania law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
4.1 Indenture of Premier Bancorp, Inc. relating to the Junior Subordinated
Debentures*
4.2 Form of Certificate of Exchange Junior Subordinated Debentures
4.3 Certificate of Trust of PBI Capital Trust*
4.4 Declaration of Trust of PBI Capital Trust*
4.5 Amended and Restated Declaration of Trust for PBI Capital Trust.*
4.6 Form of Exchange Capital Security Certificate for PBI Capital Trust
4.7 Form of Exchange Guarantee Agreement of Premier Bancorp, Inc. relating to
the Exchange Capital Securities
4.8 Registration Rights Agreement*
5.1 Opinion and consent of Ellsworth, Carlton & Waldman, P.C. to Premier
Bancorp, Inc. as to legality of the Exchange Junior Subordinated Debentures
and the Exchange Guarantee to be issued by Premier Bancorp, Inc.
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to
legality of the Exchange Capital Securities to be issued by PBI Capital
Trust
97
<PAGE>
8.1 Opinion of Ellsworth, Carlton & Waldman, P.C., special tax counsel, as to
certain federal income tax matters
10.1 Change of Control Agreement between Premier Bank and John C. Soffronoff.
(Incorporated by reference to Exhibit 10.1 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
10.2 Change of Control Agreement between Premier Bank and John J. Ginley.
(Incorporated by reference to Exhibit 10.2 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
10.3 Change of Control Agreement between Premier Bank and Bruce E. Sickel.
(Incorporated by reference to Exhibit 10.3 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
12.1 Computation of ratio of earnings to fixed charges (excluding interest on
deposits)
23.1 Consent of KPMG LLP.
23.2 Consent of Ellsworth, Carlton & Waldman, P.C. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24.1 Power of Attorney of certain officers and directors of Premier Bancorp,
Inc.*
25.1 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Amended and Restated Declaration
of Trust of PBI Capital Trust
25.2 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Indenture
25.3 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Exchange Guarantee for the benefit
of the holders of Exchange Capital Securities of PBI Capital Trust
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
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<PAGE>
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.
(b) Financial Statement Schedules.
Not applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement
99
<PAGE>
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of a Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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 foregoing 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.
(d) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned 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.
100
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Premier
Bancorp, 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
Pre-Effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Doylestown,
in the Commonwealth of Pennsylvania, on the 8th day of February, 1999.
PREMIER BANCORP, INC.
By: /s/ John C. Soffronoff
----------------------
John C. Soffronoff,
President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the to capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John C. Soffronoff* Director, President and CEO February 8, 1999
- ---------------------- (Principal Executive Officer)
John C. Soffronoff
/s/ Clark S. Frame* Director and Chairman of February 8, 1999
- ---------------------- the Board
Clark S. Frame
/s/ Bruce E. Sickel* Director and CFO February 8, 1999
- ---------------------- (Principal Financial and
Bruce E. Sickel Accounting Officer)
/s/ Barry J. Miles, Sr.* Director and Vice Chairman February 8, 1999
- ----------------------- of the Board
Barry J. Miles, Sr.
/s/ Daniel E. Cohen* Director February 8, 1999
- -----------------------
Daniel E. Cohen
101
<PAGE>
/s/ Peter A. Cooper* Director February 8, 1999
- ---------------------
Peter A. Cooper
/s/ Helen Beth Garofalo-Vilcek* Director February 8, 1999
- ------------------------------
Helen Beth Garofalo-Vilcek
/s/ Thomas E. Mackell* Director February 8, 1999
- -----------------------
Dr. Thomas E. Mackell
_____________________ Director
Dr. Daniel A. Nesi
/s/ Neil Norton* Director February 8, 1999
- ------------------------
Neil Norton
_____________________ Director
Thomas M. O'Mara
_____________________ Director
Michael Perrucci
/s/ Brian R. Rich* Director February 8, 1999
- -------------------------
Brian R. Rich
/s/ Richard F. Ryan* Director February 8, 1999
- -------------------------
Richard F. Ryan
/s/ Gerald Schatz* Director February 8, 1999
- -------------------------
Gerald Schatz
/s/ Irving N. Stein* Director February 8, 1999
- -------------------------
Irving N. Stein
102
<PAGE>
/s/ Thomas P. Stitt* Director February 8, 1999
- --------------------------
Thomas P. Stitt
_____________________ Director
John A. Zebrowski
/s/ Ezio U. Rossi* Director February 8, 1999
- ---------------------------
Ezio U. Rossi
_____________________ Director
George H. Wetherill
- ---------------
*By /s/ John C. Soffronoff
-------------------------
Attorney-in-Fact
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, PBI Capital
Trust 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 Pre-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Doylestown, and
Commonwealth of Pennsylvania, on February 8, 1999.
PBI CAPITAL TRUST
By: /s/ John C. Soffronoff
--------------------------
John C. Soffronoff
as Administrative Trustee
By: /s/ Bruce E. Sickel
--------------------------
Bruce E. Sickel
as Administrative Trustee
103
<PAGE>
EXHIBIT INDEX
4.1 Indenture of Premier Bancorp, Inc. relating to the Junior Subordinated
Debentures*
4.2 Form of Certificate of Exchange Junior Subordinated Debentures
4.3 Certificate of Trust of PBI Capital Trust*
4.4 Declaration of Trust of PBI Capital Trust*
4.5 Amended and Restated Declaration of Trust for PBI Capital Trust*
4.6 Form of Exchange Capital Security Certificate for PBI Capital Trust
4.7 Form of Exchange Guarantee Agreement of Premier Bancorp, Inc. relating to
the Exchange Capital Securities
4.8 Registration Rights Agreement*
5.1 Opinion and consent of Ellsworth, Carlton & Waldman, P.C. to Premier
Bancorp, Inc. as to legality of the Exchange Junior Subordinated Debentures
and the Exchange Guarantee to be issued by Premier Bancorp, Inc.
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to
legality of the Exchange Capital Securities to be issued by PBI Capital
Trust
8.1 Opinion of Ellsworth, Carlton & Waldman, P.C., special tax counsel, as to
certain federal income tax matters
10.1 Change of Control Agreement between Premier Bank and John C. Soffronoff.
(Incorporated by reference to Exhibit 10.1 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
10.2 Change of Control Agreement between Premier Bank and John J. Ginley.
(Incorporated by reference to Exhibit 10.2 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
10.3 Change of Control Agreement between Premier Bank and Bruce E. Sickel.
(Incorporated by reference to Exhibit 10.3 to Registration Statement No.
333- 64855 of Premier Bancorp, Inc. on Form SB-2 filed on September 30,
1998).
104
<PAGE>
12.1 Computation of ratio of earnings to fixed charges (excluding interest on
deposits)
23.1 Consent of KPMG LLP.
23.2 Consent of Ellsworth, Carlton & Waldman, P.C. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24.1 Power of Attorney of certain officers and directors of Premier Bancorp,
Inc.*
25.1 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Amended and Restated Declaration
of Trust of PBI Capital Trust
25.2 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Indenture
25.3 Form T-1 Statement of Eligibility of First Union Trust Company, National
Association, to act as trustee under the Exchange Guarantee for the benefit
of the holders of Exchange Capital Securities of PBI Capital Trust
99.1 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.
105
EXHIBIT 4.2
[FORM OF FACE OF SECURITY]
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
No. CUSIP No.
PREMIER BANCORP, INC.
SERIES B 8.57% EXCHANGE JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE
DUE AUGUST 15, 2028
Premier Bancorp, Inc., a Pennsylvania corporation (the "Company", which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ___________ or registered assigns,
the principal sum of __________ Dollars on August 15, 2028 (the "Maturity
Date"), unless previously prepaid, and to pay 8.57% interest on the
1
<PAGE>
outstanding principal amount hereof from February 15, 1999, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on February 15 and August 15 of each
year, commencing August 15, 1999, at the rate of 8.57% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded semi-annually. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. In the event that
any date on which the principal of (or premium, if any) or interest on this
Security is payable is not a Business Day, then the payment payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that if such next
succeeding Business Day falls in the next succeeding calendar year, then such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Pursuant to the
Indenture, in certain circumstances the Company will be required to pay
Additional Sums and Compounded Interest (each as defined in the Indenture) with
respect to this Security.
The interest installment so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be the 15th day
preceding the relevant interest payment date. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
holders on such regular record date and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on a special record date to be fixed by the Trustee for the payment
of such defaulted interest, notice whereof shall be given to the holders of
Securities not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
2
<PAGE>
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
The principal of (and premium, if any) and interest (including Additional
Sums and Compounded Interest, if any) on this Security shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that, payment
of interest may be made at the option of the Company by (i) check mailed to the
holder at such address as shall appear in the Security Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper written transfer instructions have been received by the relevant record
date. Notwithstanding the foregoing, so long as the Holder of this Security is
the Property Trustee, the payment of the principal of (and premium, if any) and
interest (including Additional Sums and Compounded Interest, if any) on this
Security will be made at such place and to such account as may be designated by
the Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
3
<PAGE>
By acceptance of this Security, the holder agrees to treat, for United
States federal income tax purposes, this Security as indebtedness.
Capitalize terms used, but not defined, in this Security shall have the
same meanings as provided in the Indenture.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
4
<PAGE>
IN WITNESS WHEREOF, the Company has executed this certificate this ____ day
of ______, ____.
PREMIER BANCORP, INC.
By:____________________________
Name:
Title:
Attest:
By:____________________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _______ __, ____
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By__________________________________
Authorized Signatory
5
<PAGE>
[FORM OF REVERSE OF SECURITY]
This Security is one of the Securities of the Company (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of August 11, 1998 (the
"Indenture"), duly executed and delivered between the Company and First Union
Trust Company, National Association, as Trustee (the "Trustee"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior to August 15,
2008 (the "Initial Optional Prepayment Date"), the Company shall have the right,
at any time within 90 days following the occurrence of such Special Event, to
prepay this Security in whole (but not in part) at the Special Event Prepayment
Price. "Special Event Prepayment Price" shall mean, with respect to any
prepayment of the Securities following a Special Event, an amount in cash equal
to the Make-Whole Amount. The "Make-Whole Amount" shall be equal to the greater
of: (a) 100% of the principal amount of the Securities; or (b) the sum, as
determined by a Quotation Agent, of the present values of the remaining
scheduled payments of principal and interest on the Securities, 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 the case of each
of clauses (a) and (b), accrued and unpaid interest thereon to the date of
prepayment.
In addition, the Company shall have the right to prepay this Security, in
whole or in part, at any time on or after the Initial Optional Prepayment Date
(an "Optional Prepayment"), at the prepayment prices set forth below (expressed
as percentages of principal to be prepaid) plus, in each case, accrued and
unpaid interest thereon (including Additional Sums and Compounded Interest, if
any) to the applicable date of prepayment (the "Optional Prepayment Price") if
prepaid during the 12-month period beginning August 15 of the years indicated
below.
6
<PAGE>
Year Percentage
---- ----------
2008 104.285%
2009 103.857
2010 103.428
2011 103.000
2012 102.571
2013 102.143
2014 101.714
2015 101.286
2016 100.857
2017 100.429
2018 and thereafter 100.000%
The Optional Prepayment Price or the Special Event Prepayment Price, as the
case requires, shall be paid prior to 12:00 noon, New York time, on the date of
such prepayment or at such earlier time as the Company determines, provided,
that the Company shall deposit with the Trustee an amount sufficient to pay the
applicable Prepayment Price by 10:00 a.m., New York City time, on the date such
Prepayment Price is to be paid. Any prepayment pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days notice. If the
Securities are only partially prepaid by the Company pursuant to an Optional
Prepayment, the Securities will be prepaid pro rata or by lot or by any other
method utilized by the Trustee; provided that if, at the time of prepayment, the
Securities are registered as a Global Security, the Depositary shall determine
the particular Securities to be prepaid in accordance with its procedures.
In the event of prepayment of this Security in part only, a new Security or
Securities for the unprepaid portion hereof will be issued in the name of the
holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by the Company
shall be subject to the Company having received any required regulatory
approval.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of a majority in aggregate principal amount of
7
<PAGE>
the Securities at the time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of
modifying in any manner the rights of the holders of the Securities; provided
however, that no such supplemental indenture shall, without the consent of each
holder of Securities then outstanding and affected thereby, (i) change the
Maturity Date of any Securities, or reduce the principal amount thereof, or
reduce any amount payable on prepayment thereof, or reduce the rate or extend
the time of payment of interest thereon (subject to Article XVI of the
Indenture), or make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for the payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in aggregate principal
amount of the Securities at the time outstanding affected thereby, on behalf of
all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Securities or
a default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future holders and owners of this Security and of
any Security issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) on this
Security at the time and place and at the rate and in the money herein
prescribed.
8
<PAGE>
So long as no Event of Default shall have occurred and be continuing, the
Company shall have the right, at any time and from time to time during the term
of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period, and not extending beyond the Maturity Date of the Securities
(an "Extended Interest Payment Period") or ending on a date other than an
Interest Payment Date, at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further defer payments of interest by
further extending such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Company may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any dividends or
distributions on, or prepay, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or prepay any
debt securities of the Company that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities or any Subsidiary of the
Company (including any Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a shareholder's rights plan,
or the issuance of stock under any such plan in the future, or the prepayment or
repurchase of any such rights pursuant thereto, (c) payments under the Capital
9
<PAGE>
Securities Guarantee, (d) as a result of a reclassification of the Company's
capital stock or the exchange or the conversion of one class or series of the
Company's capital stock, for another class or series of the Company's capital
stock, (e) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the exchange or conversion of such capital stock or
the security being exchanged or converted, and (f) purchases of Common Stock
related to the issuance of Common Stock or rights under any of the Company's
benefit plans for its directors, officers or employees or any of the Company's
dividend reinvestment plans) if at such time (i) there shall have occurred any
event of which the Company has actual knowledge that (a) is or, with the giving
of notice or the lapse of time, or both, would be, an Event of Default and (b)
in respect of which the Company shall not have taken reasonable steps to cure,
(ii) if the Securities are held by PBI Capital Trust, the Company shall be in
default with respect to its payment obligations under the Capital Securities
Guarantee or (iii) the Company shall have given notice of its election of the
exercise of its right to extend the interest payment period and any such
extension shall be continuing.
Subject to (i) the receipt by the Company of any required regulatory
approval and (ii) the receipt by the Company of an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities, the Company will have the right at any time to liquidate PBI Capital
Trust and cause the Securities to be distributed to the holders of the Trust
Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in the
Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the
Company in the City and State of New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
10
<PAGE>
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Security, the
Company, the Trustee, any authenticating agent, any paying agent, any transfer
agent and the registrar may deem and treat the holder hereof as the absolute
owner hereof (whether or not this Security shall be overdue and notwithstanding
any notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and (subject to the Indenture) interest
due hereon and for all other purposes, and neither the Company nor the Trustee
nor any authenticating agent nor any paying agent nor any transfer agent nor any
registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or premium, if
any, or interest on this Security, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS THEREOF.
11
EXHIBIT 4.6
[FORM OF EXCHANGE CAPITAL SECURITY CERTIFICATE]
[IF THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL EXCHANGE CAPITAL SECURITY,
INSERT: THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL EXCHANGE CAPITAL SECURITY
WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY")
OR A NOMINEE OF THE CLEARING AGENCY. THIS EXCHANGE CAPITAL SECURITY IS
EXCHANGEABLE FOR EXCHANGE CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THIS EXCHANGE CAPITAL
SECURITY (OTHER THAN A TRANSFER OF THIS EXCHANGE CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
[IF THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL EXCHANGE CAPITAL SECURITY,
INSERT: UNLESS THIS EXCHANGE CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY EXCHANGE CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE EXCHANGE CAPITAL SECURITIES ARE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 EXCHANGE
CAPITAL SECURITIES). ANY SUCH TRANSFER OF EXCHANGE 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 EXCHANGE CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS OF SUCH EXCHANGE CAPITAL SECURITIES, AND
SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH EXCHANGE
CAPITAL SECURITIES.
THE HOLDER OF THIS EXCHANGE CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
1
<PAGE>
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS EXCHANGE CAPITAL SECURITY
BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
2
<PAGE>
Certificate Number Aggregate Liquidation Amount
CUSIP NO.
Certificate Evidencing Exchange Capital Securities
of
PBI Capital Trust
8.57% Exchange Capital Securities
(liquidation amount $1,000 per Exchange Capital Security)
PBI Capital Trust, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that ____________________ (the
"Holder") is the registered owner of $___________ in aggregate liquidation
amount of Exchange Capital Securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the 8.57% Series B
Capital Securities (liquidation amount $1,000 per Exchange Capital Security)
(the "Exchange Capital Securities"). The Exchange Capital Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Exchange Capital Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of August 11, 1998, as the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of the Exchange Capital
Securities as set forth in Annex I to the Trust Agreement. Capitalized terms
used but not defined herein shall have the meaning given them in the Trust
Agreement. The Sponsor will provide a copy of the Trust Agreement, the Exchange
Capital Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the Trust
3
<PAGE>
Agreement and is entitled to the benefits thereunder and to the benefits of the
Exchange Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Exchange Capital Securities
as evidence of indirect beneficial ownership in the Trust.
4
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of _______, ____.
PBI CAPITAL TRUST
By:
-------------------------------
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Exchange Capital Securities referred to in the
within-mentioned Trust Agreement.
Dated: _______ __, ____
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION,
as Property Trustee
By:
-------------------------------
Authorized Signatory
5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Exchange Capital Security will be fixed at a
rate per annum of 8.57% (the "Coupon Rate") of the liquidation amount of $1,000
per Exchange Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears for
more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
The term "Distributions", as used herein, includes such cash distributions and
any such interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Exchange Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from February 15, 1999 and will be payable
semi-annually in arrears, on February 15 and August 15 of each year, commencing
on August 15, 1999, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension Period
shall end on a date other than an Interest Payment Date for the Debentures or
extend beyond the Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral,
semi-annual Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such
<PAGE>
Extension Period, end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to receipt by the Sponsor of any required regulatory approval and
to certain other conditions set forth in the Trust Agreement and the Indenture,
the Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption of
the Debentures, cause a Like Amount of the Securities to be redeemed by the
Trust.
The Exchange Capital Securities shall be redeemable as provided in the
Trust Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Exchange Capital
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------agent
to transfer this Exchange Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
-----------------------------------------
Signature:
------------------------------------
(Sign exactly as your name appears on the other side of this Exchange Capital
Security Certificate)
Signature Guarantee***:
--------------------------------------------------------
- ----------
*** Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
EXHIBIT 4.7
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
PREMIER BANCORP, INC.
Dated as of _________, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions and Interpretation...................................2
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.................................6
Section 2.2 Lists of Holders of Securities...................................6
Section 2.3 Reports by the Capital Securities Guarantee Trustee..............6
Section 2.4 Periodic Reports to Capital Securities Guarantee Trustee.........7
Section 2.5 Evidence of Compliance with Conditions Precedent.................7
Section 2.6 Events of Default; Waiver........................................7
Section 2.7 Event of Default; Notice.........................................7
Section 2.8 Conflicting Interests............................................8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES
GUARANTEE TRUSTEE
Section 3.1 Powers and Duties of the Capital Securities Guarantee
Trustee........................................................9
Section 3.2 Certain Rights of Capital Securities Guarantee Trustee..........11
Section 3.3 Not Responsible for Recitals or Issuance of
Series B Capital Securities Guarantee.........................13
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
Section 4.1 Capital Securities Guarantee Trustee; Eligibility...............13
Section 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee..................................14
<PAGE>
ARTICLE V
GUARANTEE
Section 5.1 Guarantee.......................................................15
Section 5.2 Waiver of Notice and Demand.....................................15
Section 5.3 Obligations Not Affected........................................15
Section 5.4 Rights of Holders...............................................17
Section 5.5 Guarantee of Payment............................................17
Section 5.6 Subrogation.....................................................17
Section 5.7 Independent Obligations.........................................17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1 Limitation of Transactions......................................18
Section 6.2 Ranking.........................................................18
ARTICLE VII
TERMINATION
Section 7.1 Termination.....................................................19
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Exculpation.....................................................20
Section 8.2 Indemnification.................................................20
ARTICLE IX
MISCELLANEOUS
Section 9.1 Successors and Assigns..........................................20
Section 9.2 Amendments......................................................21
Section 9.3 Notices.........................................................21
Section 9.4 Benefit.........................................................22
Section 9.5 Governing Law...................................................22
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Capital Securities Guarantee"),
dated as of _________, 1999, is executed and delivered by Premier Bancorp, Inc.,
a Pennsylvania corporation (the "Guarantor"), and First Union Trust Company,
National Association, a national banking association, as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series B Capital Securities (as defined herein)
of PBI Capital Trust, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Trust Agreement"), dated as of August 11, 1998, among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 10,000 capital securities, having an aggregate
liquidation amount of $10,000,000, such capital securities being designated the
Series B 8.57% Capital Securities (collectively the "Series B Capital
Securities").
WHEREAS, as incentive for the Holders to exchange the Series A Capital
Securities (as defined herein) for the Series B Capital Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Series B Capital Securities Guarantee, to pay to the Holders the
Guarantee Payments (as defined below). The Guarantor agrees to make certain
other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor executed and delivered a guarantee agreement dated
August 11, 1998 (the "Common Securities Guarantee"), with substantially
identical terms to this Series B Capital Securities Guarantee, for the benefit
of the holders of the Common Securities (as defined herein), except that if an
Event of Default (as defined in the Trust Agreement) has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated, to the extent
and in the manner set forth in the Common Securities Guarantee, to the rights of
holders of Series B Capital Securities and Series A Capital Securities to
receive Guarantee Payments under this Series B Capital Securities Guarantee and
the Series A Capital Securities Guarantee, as the case may be.
NOW THEREFORE, in consideration of the exchange by each Holder of Series A
Capital Securities for Series B Capital Securities, which exchange the Guarantor
hereby acknowledges shall benefit the Guarantor, the Guarantor executes and
delivers this Series B Capital Securities Guarantee for the benefit of the
Holders.
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<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Series B Capital Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) Terms defined in the Trust Agreement as of the date of execution of
this Series B Capital Securities Guarantee have the same meaning when used in
this Series B Capital Securities Guarantee unless otherwise defined in this
Series B Capital Securities Guarantee;
(c) a term defined anywhere in this Series B Capital Securities Guarantee
has the same meaning throughout;
(d) all references to "the Series B Capital Securities Guarantee" or "this
Series B Capital Securities Guarantee" are to this Series B Capital Securities
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Series B Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series B Capital
Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Series B Capital Securities Guarantee, unless otherwise defined in
this Series B Capital Securities Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday or a day on
which banking institutions in The City of New York are authorized or required by
law or executive order to close.
"Capital Securities Guarantee Trustee" means First Union Trust Company,
National Association, a national banking association, until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to
-2-
<PAGE>
the terms of this Series B Capital Securities Guarantee and thereafter means
each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at One Rodney Square, 920 King Street, First Floor, Wilmington, Delaware 19801.
"Covered Person" means any Holder or beneficial owner of Series B Capital
Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the Series B 8.57% Junior Subordinated Deferrable Interest
Debentures due August 15, 2028 held by the Property Trustee (as defined in the
Trust Agreement) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Series B Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Series B Capital Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) that are required to be paid
on such Series B Capital Securities to the extent the Trust has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Series B Capital Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary
termination and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Series B Capital
Securities as provided in the Trust Agreement), the lesser of (a) the aggregate
of the liquidation amount and all accumulated and unpaid Distributions on the
Series B Capital Securities to the date of payment, to the extent the Issuer has
funds on hand legally available therefor, and (b) the amount of assets of the
Issuer remaining available for distribution to Holders in liquidation of the
Issuer. If an Event of Default has occurred and is continuing, no Guarantee
Payments under the Common Securities Guarantee with respect to the Common
Securities or any guarantee payment under any Other Common Securities Guarantees
shall be made until the Holders shall be paid in full the Guarantee Payments to
which they are entitled under this Series B Capital Securities Guarantee.
-3-
<PAGE>
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Series B Capital Securities; provided, however, that, in
determining whether holders of the requisite percentage of Series B Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Capital Securities Guarantee Trustee or any
Affiliate of the Guarantor or the Capital Securities Guarantee Trustee.
"Indemnified Person" means the Capital Securities Guarantee Trustee, any
Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of August 11, 1998, among the
Guarantor (the "Debenture Issuer"), and First Union Trust Company, National
Association, as trustee, pursuant to which the Debentures are to be issued to
the Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in Section 5.01
of the Indenture.
"Majority in liquidation amount of the Series B Capital Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of more than
50% of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all Series B Capital Securities then outstanding.
"Officers' Certificate" means, with respect to any person, a certificate
signed by the Chairman, a Vice Chairman, the Chief Executive Officer, the
President, a Vice President and the Comptroller, the Chief Financial Officer,
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Guarantor. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Series B Capital Securities
Guarantee (other than pursuant to Section 314(a)(4) of the Trust Indenture Act)
shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
-4-
<PAGE>
(c) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as "Other
Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by the
Guarantor from time to time and sold to any other trust, partnership or other
entity affiliated with the Guarantor that is a financing vehicle of the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor with
respect to capital securities (if any) similar to the Series B Capital
Securities issued by any other trust, partnership or other entity affiliated
with the Guarantor that is a financing vehicle of the Guarantor (if any), in
each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 6, 1998, by and among the Guarantor, the Issuer and the
Initial Purchaser named therein as such agreement may be amended, modified or
supplemented from time to time.
"Responsible Officer" means any officer within the Corporate Trust Office
of the Capital Securities Guarantee Trustee, including any vice president, any
assistant vice president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Capital
Securities Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Series A Capital Securities" means the Series A 8.57% Capital Securities,
having an aggregate liquidation amount of $10,000,000, of the Issuer issued
under the Trust Agreement.
"Successor Capital Securities Guarantee Trustee" means a successor Capital
Securities Guarantee Trustee possessing the qualifications to act as Capital
Securities Guarantee Trustee under Section 4.1.
-5-
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939, or any
successor legislation, in each case, as amended.
"Trust Securities" means the Common Securities and the Series A Capital
Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Series B Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Series B Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
Section 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities Guarantee Trustee
(unless the Capital Securities Guarantee Trustee is otherwise the registrar of
the Capital Securities) with a list, in such form as the Capital Securities
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders ("List of Holders") as of such date, (i) within one Business Day after
June 15 and December 15 of each year, and (ii) at any other time within 30 days
of receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the Capital
Securities Guarantee Trustee, provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
Section 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after January 15 of each year, commencing January 15, 1999,
the Capital Securities Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner
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provided by Section 313 of the Trust Indenture Act. The Capital Securities
Guarantee Trustee shall also comply with the other requirements of Section 313
of the Trust Indenture Act.
Section 2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act provided that such compliance certificate shall be delivered on or
before 120 days after the end of each fiscal year of the Guarantor. Delivery of
such reports, information and documents to the Capital Securities Guarantee
Trustee is for informational purposes only and the Capital Securities Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Capital Securities Guarantee Trustee is entitled to
rely exclusively on Officers' Certificates).
Section 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Series B Capital Securities Guarantee that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be
given in the form of an Officers' Certificate.
Section 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series B Capital
Securities may, by vote, on behalf of all Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Series B Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereto.
Section 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90 days after
the occurrence of a default with respect to this Capital Securities Guarantee,
mail by first class postage prepaid, to all Holders, notices of all defaults
actually known to a Responsible Officer, unless such defaults have been cured
before the giving of such notice,
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provided, that except in the case of default in the payment of any Guarantee
Payment, the Capital Securities Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or a Responsible Officer in
good faith determine that the withholding of such notice is in the interests of
the Holders.
(b) The Capital Securities Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice from the Guarantor, or a Responsible
Officer charged with the administration of the Trust Agreement shall have
obtained actual knowledge, of such Event of Default.
Section 2.8 Conflicting Interests
The Trust Agreement shall be deemed to be specifically described in
this Series B Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE CAPITAL
SECURITIES GUARANTEE TRUSTEE
Section 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders, and the Capital
Securities Guarantee Trustee shall not transfer this Series B Capital Securities
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee on
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The right,
title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer has
occurred and is continuing, the Capital Securities Guarantee Trustee shall
enforce this Series B Capital Securities Guarantee for the benefit of the
Holders.
(c) The Capital Securities Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Series B Capital Securities Guarantee, and no implied covenants
shall be read into this Series B Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
that has not been cured or waived pursuant to Section 2.6 and is actually known
to a Responsible Officer, the Capital Securities Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Series B Capital
Securities Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Series B Capital Securities Guarantee shall be
construed to relieve the Capital Securities Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
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(A) the duties and obligations of the Capital Securities
Guarantee Trustee shall be determined solely by the express provisions
of this Series B Capital Securities Guarantee, and the Capital
Securities Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Series B Capital Securities Guarantee, and no implied
covenants or obligations shall be read into this Series B Capital
Securities Guarantee against the Capital Securities Guarantee Trustee;
and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Capital Securities Guarantee Trustee and
conforming to the requirements of this Series B Capital Securities
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Series B Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Capital Securities Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Capital Securities Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a Majority in
liquidation amount of the Series B Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Capital Securities Guarantee Trustee, or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Series B
Capital Securities Guarantee; and
(iv) no provision of this Series B Capital Securities Guarantee shall
require the Capital Securities Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if the
Capital Securities Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not reasonably
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assured to it under the terms of this Series B Capital Securities Guarantee
or indemnity, reasonably satisfactory to the Capital Securities Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
Section 3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Series
B Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Series B Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall deem
it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Capital Securities Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Series B Capital Securities Guarantee from any court of competent
jurisdiction.
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(vi) The Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Series B Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital Securities
Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Securities Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Capital
Securities Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Capital Securities Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Capital Securities
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Series B
Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Capital Securities
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the Capital
Securities Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Capital Securities Guarantee Trustee or
its agents hereunder shall bind the Holders, and the signature of the
Capital Securities Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall
be required to inquire as to the authority of the Capital Securities
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Series B Capital Securities Guarantee, both of which
shall be conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Series B Capital Securities
Guarantee the Capital Securities Guarantee Trustee shall deem it
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desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Capital Securities
Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Series B Capital Securities, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Series
B Capital Securities Guarantee.
(b) No provision of this Series B Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
Section 3.3 Not Responsible for Recitals or Issuance of Series B Capital
Securities Guarantee
The recitals contained in this Series B Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Series B Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
Section 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
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of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus or at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1 (a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Capital Securities Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trustee
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
Section 4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor except during
an Event of Default. Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be removed by the holders of a Majority in liquidation amount of the
Series B Capital Securities during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed or
until its removal or resignation. The Capital Securities Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by
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such Successor Capital Securities Guarantee Trustee and delivered to the
Guarantor and the resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument or removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Series B Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
Section 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis, as set forth in Section 6.2 hereof, to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
Section 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series B Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
Section 5.3 Obligations Not Affected
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The obligations, covenants, agreements and duties of the Guarantor under
this Series B Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Series B
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), it being the intent of this Section 5.3 that the
obligations of the Guarantor with respect to the Guarantee Payments shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
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Section 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Series B Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Capital Securities Guarantee Trustee
in respect of this Series B Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Securities Guarantee Trustee under this
Series B Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce such
Series B Capital Securities Guarantee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Capital Securities
Guarantee Trustee's rights under this Series B Capital Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Capital
Securities Guarantee Trustee or any other person or entity. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
Section 5.5 Guarantee of Payment
This Series B Capital Securities Guarantee creates a guarantee of payment
and not of collection.
Section 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Series B Capital Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series B Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series B Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
Section 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Series B Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Series B
Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g),
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inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor shall
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 Guarantor's
capital stock or (ii) make any payment of principal or of premium, if any, or
interest on or repay, repurchase or redeem any debt securities of the Guarantor
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor (including Other Guarantees) if such guarantee ranks pari passu with
or junior in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration or 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 this Series B
Capital Securities Guarantee or the Series A Capital Securities Guarantee, (d)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the Guarantor's benefit
plans for its directors, officers or employees or any of the Guarantor's
dividend reinvestment plans) if at such time (i) there shall have occurred any
event of which the Guarantor has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would be an Indenture Event of
Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series B Capital Securities Guarantee or (iii) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing.
Section 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior Indebtedness (as defined in the Indenture), to the same extent
and in the same manner
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that the Debentures are subordinated to Senior Indebtedness pursuant to the
Indenture (except as indicated below), it being understood that the terms of
Article XV of the Indenture shall apply to the obligations of the Guarantor
under this Series B Capital Securities Guarantee as if (x) such Article XV were
set forth herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XV, except that with respect to Section
15.03 of the Indenture only, the term "Senior Indebtedness" shall mean all
liabilities of the Guarantor, whether or not for money borrowed (other than
obligations in respect of Other Guarantees), (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor,
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, any Other
Guarantee and any Other Common Securities Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE VII
TERMINATION
Section 7.1 Termination
This Series B Capital Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price (as defined in the Trust Agreement) of all
Series B Capital Securities, or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Trust Agreement or the
distribution of the Debentures to the Holders. Notwithstanding the foregoing,
this Series B Capital Securities Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder must restore
payment of any sums paid under the Series B Capital Securities or under this
Series B Capital Securities Guarantee.
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ARTICLE VIII
INDEMNIFICATION
Section 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Series B Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Series B Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports, or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
Section 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
claim or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The obligation to indemnify as set forth in this Section 8.2
shall survive the termination of this Series B Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Successors and Assigns
All guarantees and agreements contained in this Series B Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
-20-
<PAGE>
Section 9.2 Amendments
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Series B Capital Securities Guarantee may only be amended with the prior
approval of the Holders of a majority in liquidation amount of the Securities
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined). The provisions of the Trust Agreement with
respect to consents to amendments thereof (whether at a meeting or otherwise)
shall apply to the giving of such approval.
Section 9.3 Notices
All notices provided for in this Series B Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustee at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Holders and the Capital Securities Guarantee Trustee):
PBI Capital Trust
c/o Premier Bancorp, Inc.
379 North Main Street
Doylestown, Pennsylvania 18901-0818
Attention: Administrative Trustee
Telecopy: (215) 345-7286
(b) If given to the Capital Securities Guarantee Trustee, at the Capital
Securities Guarantee Trustee's mailing address set forth below (or such other
address as the Capital Securities Guarantee Trustee may give notice of to the
Holders and the Issuer):
First Union Trust Company, National Association
One Rodney Square
920 King Street, First Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Administration Department
Telecopy: (302) 888-7544
-21-
<PAGE>
(c) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
and the Capital Securities Guarantee Trustee):
Premier Bancorp, Inc.
379 North Main Street
Doylestown, Pennsylvania 18901-0818
Attention: John C. Soffronoff
Telecopy: (215) 345-7286
(d) If given to any Holder, at the address set forth on the books and
records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 9.4 Benefit
This Series B Capital Securities Guarantee is solely for the benefit of the
Holders and, subject to Section 3.1(a), is not separately transferable from the
Series B Capital Securities.
Section 9.5 Governing Law
THIS SERIES B CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-22-
<PAGE>
THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of the day and
year first above written.
PREMIER BANCORP, INC., as Guarantor
By:_____________________________________
Name:
Title:
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Capital Securities
Guarantee Trustee
By:_____________________________________
Name:
Title:
-23-
EXHIBIT 5.1
[LETTERHEAD OF ELLSWORTH, CARLTON & WALDMAN, P.C.]
February 8, 1999
Premier Bancorp, Inc. PBI Capital Trust
379 N. Main Street 379 N. Main Street
Doylestown, PA 18901 Doylestown, PA 18901
Re: Premier Bancorp, Inc.
PBI Capital Trust
Registration Statement on Form S-4
(Registration No. 333-70311)
Ladies and Gentlemen:
We have acted as special counsel to Premier Bancorp, Inc. (the
"Company") in connection with the preparation and filing by the Company and PBI
Capital Trust (the "Trust") of a registration statement, as amended (the
"Registration Statement") on Form S-4 under the Securities Act of 1933, as
amended (the "Act"), with respect to the registration under the Act of (i) the
guarantee by the Company of 10,000 of the Trust's 8.57% exchange capital
securities, liquidation amount of $1,000 per capital security (the "Exchange
Capital Securities") with respect to distributions and payments upon
liquidation, redemption and otherwise (the "Exchange Guarantee"), (ii)
$10,000,000 principal amount of 8.57% Exchange Junior Subordinated Deferrable
Interest Debentures due August 15, 2028 (the "Exchange Junior Subordinated
Debentures") to be issued by the Company, and (iii) the Exchange Capital
Securities. This opinion is being furnished pursuant to the requirements of Item
601(b)(5) of Regulation S-K.
In connection with the opinions set forth below, we have reviewed
original or certified copies of the following documents:
(1) the Registration Statement;
(2) the Certificate of Trust of the Trust filed with the Delaware
Secretary of State on July 28, 1998;
(3) an executed copy of the Amended and Restated Declaration of Trust,
dated as of August 11, 1998, among John C. Soffronoff and Bruce E. Sickel, as
administrative trustees, First Union Trust Company, National Association, as
property trustee and as Delaware trustee, and the Company, as sponsor;
<PAGE>
Premier Bancorp, Inc.
PBI Capital Trust
February 8, 1999
Page 2
(4) the form of Exchange Capital Securities and a specimen certificate
thereof;
(5) an executed copy of the Registration Rights Agreement dated as of
August 6, 1998, among the Company, the Trust and Sandler O'Neill & Partners,
L.P.;
(6) an executed copy of the Indenture, dated as of August 11, 1998,
between First Union Trust Company, National Association, as Indenture trustee,
and the Company;
(7) the form of the Exchange Junior Subordinated Debentures and a
specimen certificate thereof;
(8) the form of Exchange Guarantee;
(9) the Articles of Incorporation of the Company;
(10) the Bylaws of the Company, as certified by the Secretary of the
Company;
(11) the resolutions, adopted June 11, 1998, by the Board of Directors
of the Company; and
(12) such other documents, papers and matters of law as we have deemed
necessary under the circumstances.
In such review, we have assumed the genuineness of all signatures on
original documents and the authenticity of all documents submitted to us as
conformed or photostatic copies, and the authenticity of the originals of such
latter documents. We are attorneys admitted to practice before the Courts of the
United States and the Courts of the Commonwealth of Pennsylvania and,
accordingly, we express no opinion with respect to matters governed by the laws
of any jurisdiction other than the federal laws of the United States or the
internal laws of the Commonwealth of Pennsylvania.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation which has been duly formed and
in good standing under the laws of the Commonwealth of Pennsylvania.
The Company has full power and authority to issue the Exchange Junior
Subordinated Debentures and enter into the Exchange Guarantee.
<PAGE>
Premier Bancorp, Inc.
PBI Capital Trust
February 8, 1999
Page 3
2. When issued (with respect to the Exchange Junior
Subordinated Debentures), or executed and delivered (with respect to
the Exchange Guarantee), as set forth in the Registration Statement,
the Exchange Junior Subordinated Debentures and the Exchange Guarantee
will be valid and binding obligations of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus which forms
a part of the Registration Statement under the caption "Validity of Exchange
Securities". In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
ELLSWORTH, CARLTON & WALDMAN, P.C.
By: /s/ Jay W. Waldman
------------------------
Authorized Officer
JWW/tbm
EXHIBIT 5.2
February 8, 1999
PBI Capital Trust
c/o Premier Bancorp, Inc.
379 North Main Street
Doylestown, PA 18901
Re: PBI Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for Premier Bancorp,
Inc., a Pennsylvania corporation (the "Company"), and PBI Capital Trust, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated July 28, 1998
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on July 28, 1998;
(b) The Declaration of Trust of the Trust, dated as of July
28, 1998, by and among the Company, as Sponsor, the trustees of the Trust named
therein and the holders, from time to time, of undivided beneficial interests in
the assets of the Trust (including Exhibits A and B thereto), as amended and
restated by the Amended and Restated Declaration of Trust, dated as of August
11, 1998, among the Company, John C. Soffronoff and Bruce E. Sickel, as
Administrative Trustees, and First Union Trust Company, National Association, as
Property Trustee and Delaware Trustee thereunder (as so amended and restated,
the "Declaration");
<PAGE>
PBI Capital Trust
February 8, 1999
Page 2
(c) The Amendment No. 1 to the Registration Statement (the
"Registration Statement") on Form S-4, including a prospectus (the
"Prospectus"), relating to the 8.57% Capital Securities of the Trust
representing preferred undivided beneficial interests in the assets of the Trust
(each, a "Capital Security" and collectively, the "Capital Securities"), as
filed by the Company and the Trust with the Securities and Exchange Commission
on February 8, 1999; and
(d) A Certificate of Good Standing for the Trust, dated
February 8, 1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (d) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (d) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Capital Security is to be issued by the Trust
(collectively, the "Capital Security Holders") of an interest in the Capital
Securities Certificate for such Capital Security and the payment for the
interest in the Capital Security acquired by it, in accordance with the
Declaration and the Registration Statement, and (vii) that the Capital
Securities are issued and sold in accordance with the Declaration and the
Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
<PAGE>
PBI Capital Trust
February 8, 1999
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Capital Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Capital Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the use of our name under the heading "Validity
of Exchange Securities" in the Prospectus. In giving the foregoing consents, we
do not thereby admit that we come within the category of Persons
<PAGE>
PBI Capital Trust
February 8, 1999
Page 4
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Richards, Layton & Finger
EAM/DKD/jmb
EXHIBIT 8.1
[LETTERHEAD OF ELLSWORTH, CARLTON & WALDMAN, P.C.]
February 8, 1999
Premier Bancorp, Inc. PBI Capital Trust
379 North Main Street 379 North Main Street
Doylestown, PA 18901 Doylestown, PA 18901
Re: Premier Bancorp, Inc.
PBI Capital Trust
Registration Statement on Form S-4
(Registration No. 333-70311)
Ladies and Gentlemen:
We have acted as special counsel to Premier Bancorp, Inc. (the
"Company"), a Pennsylvania corporation, in connection with the registration
statement of the Company and PBI Capital Trust (the "Trust") on Form S-4
(Registration No. 333-70311), as amended (the "Registration Statement"), of
which a prospectus (the "Prospectus") is a part, filed by the Company and
the Trust with the United States Securities and Exchange Commission under the
Securities Act of 1933, as amended. This opinion is furnished pursuant to the
requirements of Item 601(b)(8) of Regulation S-K.
In connection with the opinion set forth below, we have examined the
Registration Statement and the discussion of certain federal income tax
consequence set forth in the Prospectus under the caption "Certain Federal
Income Tax Consequences." In rendering our opinion, we have examined and relied
upon the accuracy and completeness of the facts, information, covenants and
representations contained in the Registration Statement, the Prospectus and
certain other documents that we have deemed necessary or appropriate to examine
in order to issue the opinion set forth below. We express no opinion as to tax
matters that may arise if, for example, the facts are not as set forth in the
documents referenced above. In addition, we have assumed that each of the
documents referenced above (a) has been duly authorized, executed, and
delivered; (b) is authentic, if an original, or accurate, if a copy; and (c) has
not been amended after execution thereof subsequent to our review.
Our opinion is also based on the current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury Regulations promulgated
thereunder, pertinent judicial authorities,
<PAGE>
Premier Bancorp, Inc.
PBI Capital Trust
February 8, 1999
Page 2
rulings, procedures and other pronouncements published by the United States
Internal Revenue Service and such other authorities as we have deemed relevant,
in each case as in effect on the date hereof. Such laws, regulations, rulings
and pronouncements, and judicial and administrative interpretations thereof, are
subject to change at any time, and any such change may adversely affect the
continuing validity of the opinion set forth below.
Based solely on the foregoing, we hereby adopt and incorporate by
reference the opinion set forth in the Prospectus under the caption "Certain
Federal Income Tax Consequences."
The foregoing opinion is limited to the federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax matters or to any issues arising under the tax laws of any state,
locality, or foreign country. This opinion is rendered as of the date hereof and
we undertake no obligation to update, supplement, modify or revise the opinion
expressed herein after the date of this letter to reflect any facts or
circumstances which may hereafter come to our attention or which may result from
any changes in laws or regulations which may hereafter occur.
This opinion is rendered solely to the addressees hereof and is not
intended to be relied upon, nor may it be relied upon, used, quoted, circulated
or otherwise referred to by any person, firm or entity other than such addressee
without our prior written consent. Notwithstanding the preceding sentence, we
hereby consent to the use of our name in the Prospectus forming a part of the
Registration Statement under the captions "Certain Federal Income Tax
Consequences" and "Validity of Exchange Securities". We also consent to the
filing of this opinion as an exhibit to the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
ELLSWORTH, CARLTON & WALDMAN, P.C.
By: /s/ Jay W. Waldman
---------------------
Authorized Officer
JWW/tbm
Exhibit 12.1
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
----------------- ------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net income 1,180,569 945,937 1,340,957 1,095,635 771,144 541,880 (359,607)
Taxes 575,500 440,000 590,000 435,462 96,248 (140,000) --
--------- --------- --------- --------- --------- ------- --------
Profit before taxes 1,756,069 1,385,937 1,930,957 1,531,097 867,392 401,880 (359,607)
Interest on deposits 5,490,416 4,294,753 5,896,500 4,587,766 3,347,246 1,469,504 933,382
Other interest 1,078,113 1,171,000 1,635,971 955,706 337,880 161,817 2,969
--------- --------- --------- --------- --------- ------- --------
Total interest 6,568,529 5,465,753 7,532,471 5,543,472 3,685,126 1,631,321 936,351
Rent expense 183,448 180,797 180,797 143,175 134,138 69,175 63,996
Portion of rent expense that can be
demonstrated as interest
(leases immaterial) 61,149 60,266 60,266 47,725 44,713 23,058 21,332
Total fixed charges 6,629,678 5,526,019 7,592,737 5,591,197 3,729,839 1,654,379 957,683
Earnings including interest on deposits 8,385,747 6,911,956 9,523,694 7,122,294 4,597,231 2,056,259 598,076
Earnings excluding interest on deposits 2,895,331 2,617,203 3,627,194 2,534,528 1,249,985 586,755 (335,306)
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
----------------- ------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
combined fixed charges:
Including interest on deposits 1.26x 1.25x 1.25x 1.27x 1.23x 1.24x 0.62x
Excluding interest on deposits 2.54x 2.13x 2.14x 2.53x 3.27x 3.17x (13.80)x
</TABLE>
EXHIBIT 23.1
------------
KPMG
1600 Market Street
Philadelphia, PA 19103-7212
The Board of Directors
Premier Bancorp, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
February 8, 1999
Philadelphia, Pennsylvania
Registration No. 333-70311
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
PBI Capital Trust
(Exact name of obligor as specified in its charter)
The State of Delaware
(State or other jurisdiction of incorporation or organization)
23-2971704
(I.R.S. employer identification no.)
c/o
Edward L. Truitt, Jr., Vice President
First Union Trust Company, National Association
One Rodney Square
920 King Street, Suite 102
Wilmington, DE 19801
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
CAPITAL SECURITIES
(Title of the Amended and Restated Declaration of Trust securities)
------------------------------------------------
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject
-----------------------------------------------------------------
Name Address
------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any underwriter
for the obligor is an affiliate of the trustee, describe each such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
2
<PAGE>
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust Company,
National Association, as now in effect, which contain the authority to
commence business and a grant of powers to exercise corporate trust powers.
2. A copy of the certificate of authority of the trustee to commence business,
if not contained in the Articles of Association.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified
in exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union Trust Company, National
Association, or instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published pursuant
to law or to the requirements of its supervising or examining authority is
attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 8th day
of February, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by PBI Capital Trust, Capital
Securities, First Union Trust Company, National Association, as the trustee
herein named, hereby consents that reports of examinations of said Trustee by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: February 8, 1999
4
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
--------------------------------------------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1)........................ 0081 10,212,563 1.a.
b. Interest-bearing balances (2)................................................. 0071 1,529,435 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A).................... 1754 1,994,665 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................. 1773 37,427,525 2.b.
3. Federal funds sold and securities purchased under agreements to resell............ 1350 7,551,730 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)..RCFD 2122 133,841,290 4.a.
b. LESS: Allowance for loan and lease losses......................RCFD 3123 1,856,548 4.b.
c. LESS: Allocated transfer risk reserve..........................RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c).......................... 2125 131,984,742 4.d.
5. Trading assets (from Schedule RC-D).............................................. 3545 8,349,640 5.
6. Premises and fixed assets (including capitalized leases)......................... 2145 3,208,660 6.
7. Other real estate owned (from Schedule RC-M)..................................... 2150 127,757 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)............................................... 2180 351,648 8.
9. Customers' liability to this bank on acceptances outstanding..................... 2155 1,026,154 9.
10. Intangible assets (from Schedule RC-M)........................................... 2143 5,215,196 10.
11. Other assets (from Schedule RC-F)................................................ 2160 9,099,122 11.
12. Total assets (sum of items 1 through 11)......................................... 2170 218,078,837 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
-------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I)..................................................................... RCON 2200 131,541,691 13.a.
(1) Noninterest-bearing (1).......................RCON 6631 23,997,063 13.a.(1)
(2) Interest-bearing..............................RCON 6636 107,544,628 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II)..................................................... RCFN 2200 8,708,735 13.b.
(1) Noninterest-bearing...........................RCFN 6631 400,989 13.b.(1)
(2) Interest-bearing..............................RCFN 6636 8,307,746 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase...... RCFD 2800 24,903,299 14.
15. a. Demand notes issued to the U.S. Treasury.................................... RCON 2840 772,252 15.a.
b. Trading liabilities (from Schedule RC-D).................................... RCFD 3548 6,496,578 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):............................................................
a. With a remaining maturity of one year or less............................... RCFD 2332 11,928,951 16.a.
b. With a remaining maturity of more than one year through three years......... RCFD A547 1,260,353 16.b.
c. With a remaining maturity of more than three years.......................... RCFD A548 775,219 16.c.
17. Not applicable..................................................................
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 1,036,587 18.
19. Subordinated notes and debentures (2)........................................... RCFD 3200 3,501,546 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 9,211,139 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 200,136,350 21.
22. Not applicable..................................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................................... RCFD 3838 160,540 23.
24. Common stock.................................................................... RCFD 3230 454,543 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 13,206,354 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,553,449 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 572,731 26.b.
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 (5,130) 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 17,942,487 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................... RCFD 3300 218,078,837 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1996............................................ RCFD 6724 N/A M.1.
</TABLE>
<PAGE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
6
<PAGE>
EXHIBIT 1
Charter No. _________
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
-----------------------
For the purpose of organizing an association to carry on the business of
banking under the laws of the United States, the undersigned do enter into the
following Articles of Association:
FIRST. The title of this association shall be FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
SECOND. The main office of this association shall be in Wilmington,
Delaware. The business of this association will be limited to that of a national
trust bank. This association must obtain the prior written approval of the
Office of the Comptroller of the Currency ("OCC") before amending its Articles
of Association to expand the scope of its activities and services. Transfers of
this association's stock are subject to prior approval of a federal depository
institution regulatory agency. If no other agency approval is required, the
OCC's approval must be obtained before the transfers. In such cases where OCC
approval is required, the OCC will apply the definitions and standards of the
Change in Bank Control Act and the OCC's implementing regulation to ownership
changes in this association.
THIRD. The Board of Directors of this association shall consist of not less
than five nor more than twenty-five shareholders, the exact number to be fixed
and determined from time to time by resolution of a majority of the full Board
of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each director, during the full term of his directorship, shall
own a minimum of $1,000 aggregate par value of stock of this association or a
minimum par market value or equity interest of $1,000 of stock in the bank
holding company controlling this association. Any vacancy in the Board of
Directors may be filled by action of the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
Board of Directors may designate, on the day of each year specified thereby in
the bylaws, but if no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be prescribed by the Board
of Directors.
Nominations for election to the Board of Directors may be made by the Board
of Directors or by any shareholder of any outstanding class of capital stock of
this association entitled to vote for election of directors. Nominations other
than those made by or on behalf of the existing bank management shall be made in
writing and be delivered or mailed to the
<PAGE>
president of this association and to the OCC, Washington, D.C., not less
than 14 days nor more than 50 days prior to any meeting of shareholders called
for the election of directors, provided, however, that if less than 21 days
notice of the meeting is given to shareholders, such nomination shall be mailed
or delivered to the president of this association and to the Comptroller of the
Currency not later than the close of business on the seventh day following the
day on which the notice of meeting was mailed.
Such notification shall contain the following information to the extent
known to the notifying shareholder:
o The name and address of each proposed nominee.
o The principal occupation of each proposed nominee.
o The total number of shares of capital stock of this association
that will be voted for each proposed nominee.
o The name and residence address of the notifying shareholder.
o The number of shares of capital stock of this association owned
by the notifying shareholder. Nominations not made in accordance
herewith may, in his discretion, be disregarded by the
chairperson of the meeting, and upon his instructions, the vote
tellers may disregard all votes cast for each such nominee.
FIFTH. The authorized amount of capital stock of this association shall be
2,000 shares of common stock of the par value of one hundred dollars ($100.00)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares thereof,
each shareholder shall be entitled to subscribe for such additional shares in
proportion to the number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholders' meeting is specified in a resolution
by the shareholders at the time the increase is authorized. The Board of
Directors will have the power to prescribe a reasonable period of time within
which the preemptive rights to subscribe to the new shares of capital stock must
be exercised.
This association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members president of
this association, who shall be chairperson of the Board of Directors, unless the
Board of Directors appoints another director to be the chairperson. The Board of
Directors shall have the power to
2
<PAGE>
appoint one or more vice presidents and to appoint a cashier and such other
officers and employees as may be required to transact the business of this
association.
The Board of Directors shall have the power to:
o Define the duties of the officers and employees of this
association.
o Fix the salaries to be paid to the officers and employees.
o Dismiss officers and employees.
o Require bonds from officers and employees and to fix the penalty
thereof.
o Regulate the manner in which any increase of the capital of this
association shall be made.
o Manage and administer the business and affairs of this
association.
o Make all bylaws that it may be lawful for the Board of Directors
to make.
o Generally to perform all acts that are legal for a Board of
Directors to perform.
SEVENTH. The Board of Directors shall have the power to change the location
of the main office to any other place within the limits of Wilmington, Delaware,
without the approval of the shareholders, and shall have the power to establish
or change the location of any branch or branches of the association to any other
location, without the approval of the shareholders.
EIGHTH. The corporate existence of this association shall continue until
terminated according to the laws of the United States.
NINTH. The Board of Directors of this association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time, place
and purpose of every annual and special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed at least 10 days prior to the
date of the meeting to each shareholder of record at his address as shown upon
the books of this association.
TENTH. Each director and executive officer of this association shall be
indemnified by the association against liability in any proceeding (including
without limitation a proceeding brought by or on behalf of this association
itself) arising out of his status as such or his activities
3
<PAGE>
in either of the foregoing capacities, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of this association.
Liabilities incurred by a director or executive officer of this association in
defending a proceeding shall be paid by this association in advance of the final
disposition of such proceeding upon receipt of an undertaking by the director or
executive officer to repay such amount if it shall be determined, as provided in
the last paragraph of this Article Tenth, that he is not entitled to be
indemnified by this association against such liabilities.
The indemnity against liability in the preceding paragraph of this Article
Tenth, including liabilities incurred in defending a proceeding, shall be
automatic and self-operative.
Any director, officer or employee of this association who serves at the
request of this association as a director, officer, employee or agent of a
charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade association,
or as a trustee or administrator under an employee benefit plan, or who serves
at the request of this association as a director, officer or employee of a
business corporation in connection with the administration of an estate or trust
by this association, shall have the right to be indemnified by this association,
subject to the provisions set forth in the following paragraph of this Article
Tenth, against liabilities in any manner arising out of or attributable to such
status or activities in any such capacity, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of this association, or
of the corporation, partnership, joint venture, trust, enterprise, association
or plan being served by such person.
In the case of all persons except the directors and executive officers of
this association, the determination of whether a person is entitled to
indemnification under the preceding paragraph of this Article Tenth shall be
made by and in the sole discretion of the Chief Executive Officer of this
association. In the case of the directors and executive officers of this
association, the indemnity against liability in the preceding paragraph of this
Article Tenth shall be automatic and self-operative.
For purposes of this Article Tenth of these Articles of Association only,
the following terms shall have the meanings indicated:
(a) "association" means First Union Trust Company, National Association
and its direct and indirect wholly-owned subsidiaries.
(b) "director" means an individual who is or was a director of this
association.
(c) "executive officer" means an officer of this association who by
resolution of the Board of Directors of this association has been
determined to be an executive officer of this association for purposes
of Regulation O of the Federal Reserve Board.
4
<PAGE>
(d) "liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses, including counsel fees
and expenses, incurred with respect to a proceeding.
(e) "party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal.
This association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless this association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons who
are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with this association only after the
effective date of such merger or other combination and only as to their status
and activities after such date.
The right to indemnification herein provided for shall inure to the benefit
of the heirs and legal representatives of any person entitled to such right.
No revocation of, change in, or adoption of any resolution or provision in
the Articles of Association or By-laws of this association inconsistent with,
this Article Tenth shall adversely affect the rights of any director, officer,
or employee of this association with respect to (i) any proceeding commenced or
threatened prior to such revocation, change, or adoption, or (ii) any proceeding
arising out of any act or omission occurring prior to such revocation, change,
or adoption, in either case, without the written consent of such director,
officer, or employee.
The rights hereunder shall be in addition to and not exclusive of any other
rights to which a director, officer, or employee of this association may be
entitled under any statute, agreement, insurance policy, or otherwise.
This association shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, or employee of this
association, or is or was serving at the request of this association as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, trade association, employee benefit plan, or other enterprise,
against any liability asserted against such director, officer, or employee in
any such capacity, or arising out of their status as such, whether or not this
association would have the power to indemnify such director, officer, or
employee against such liability, excluding insurance coverage for a formal order
assessing civil money penalties against a director, officer or employee of this
association.
5
<PAGE>
Notwithstanding anything to the contrary provided herein, no person shall
have a right to indemnification with respect to any liability (i) incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by an individual or individuals in the
form of payments to this association, (ii) to the extent such person is entitled
to receive payment therefor under any insurance policy or from any corporation,
partnership, joint venture, trust, trade association, employee benefit plan, or
other enterprise other than this association, or (iii) to the extent that a
court of competent jurisdiction determines that such indemnification is void or
prohibited under state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
IN WITNESS WHEREOF, we have hereunto set our hands this 25th day of
November, 1996.
ORGANIZERS:
- ------------------------- -------------------------
Kent S. Hathaway Keith D. Lembo
- ------------------------- -------------------------
Robert L. Andersen Stephen J. Antal
-------------------------
Daniel Glassberg
6
<PAGE>
EXHIBIT 2
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
CHARTER CERTIFICATE
Whereas, satisfactory evidence has been presented to the Office of the
Comptroller of the Currency that First Union Trust Company, National
Association, located in Wilmington, State of Delaware, has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature and Seal of office this fifteenth day
of January 1997.
- ---------------------------------------------
Deputy Comptroller for Multinational Banking
Charter Number 23201
<PAGE>
EXHIBIT 3
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
TRUST CERTIFICATE
Whereas, First Union Trust Company, National Association, Charter
Number 23201, located in Wilmington, State of Delaware, being a National Banking
Association, organized under the statutes of the United States, has made
application for authority to act as fiduciary;
And whereas, applicable provisions of the statutes of the United States
authorize the granting of such authority;
Now, therefore, I hereby certify that the said association is
authorized to act in all fiduciary capacities by such statutes.
In testimony whereof, witness my signature and Seal of office this fifteenth day
of January 1997.
- ---------------------------------------------
Deputy Comptroller for Multinational Banking
<PAGE>
EXHIBIT 4
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
BYLAWS
AS AMENDED AND RESTATED MAY 27, 1997
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual Meeting. The regular annual meeting of the
shareholders for the election of directors and transaction of whatever other
business may properly come before the meeting, shall be held at the Main Office
of the Association, or such other place as the Board of Directors may designate,
at 10:00 A.M., on the third Tuesday of February in each year, commencing with
the year 1997 or such other time within 90 days as may be set by the Board of
Directors. If, from any cause, an election of directors is not made on the said
day, the Board of Directors shall order the election to be held on some
subsequent day, as soon thereafter as practicable, according to the provisions
of the law; and notice thereof shall be given in the manner herein.
Section 1.2. Special Meetings. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for any
purpose at any time by the Board of Directors or by any one or more shareholders
owning, in the aggregate, not less than twenty-five percent of the stock of the
Association.
Section 1.3. Notice of Meetings. Notice of Annual and Special meetings
shall mailed, postage prepaid, at least ten days prior to the date thereof
provided for the annual meeting, addressed to each shareholder at his address
appearing on the books of the Association; but any failure to mail such notice,
or any irregularity therein, shall not affect the validity of such meeting, or
of any
<PAGE>
of the proceedings thereat. A shareholder may waive any such notice.
Section 1.4. Organization of Meetings. The Chairman shall preside at
all meetings of shareholders. In his absence, the President, or a director
designated by the Chairman shall preside at such meeting.
Section 1.5. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid only
for one meeting to be specified therein, and any adjournments of such meeting.
Proxies shall be dated and shall be filed with the records of the meeting.
Section 1.6. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1. Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
Section 2.2. Number. The Board shall consist of not less than five nor
more than twenty-five persons, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at
<PAGE>
any meeting thereof; provided, however, that a majority of the full Board may
not increase the number of directors to a number which: (a) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less; and (b) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
Section 2.3. Organization Meeting. A meeting shall be held for the
purpose of organizing the new Board and electing and appointing officers of the
Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not be
a quorum present, the directors present may adjourn the meeting, from time to
time, until a quorum is obtained.
Section 2.4. Regular Meetings. The regular meetings of the Board shall
be held on such days and time as the directors may, by resolution, designate;
and written notice of any change thereof shall be sent to each member. When any
regular meeting of the Board falls upon a legal holiday, the meeting shall be
held on such other day as the Board may designate.
Section 2.5. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board, or President, or at the request of three or
more directors. Each director shall be given notice of each special meeting,
except the organization meeting, at least one day before it is to be held by
facsimile, telephone, telegram, letter or in person. Any director may waive any
such notice.
Section 2.6. Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting, from time to time, and the meeting may be held, as
adjourned without further notice.
Section 2.7. Term of Office and Vacancy. Directors shall hold office
for one year and
<PAGE>
until their successors are elected and have qualified. No person shall stand for
election as a director of this Association if at the date of his election he
will have passed his seventieth birthday; provided, however, this prohibition
shall not apply to persons who are active officers of this Association, an
affiliate bank, or its parent corporation, or a former chief executive officer
of the Association. No person, who is not an officer or former officer of this
Association, an affiliate bank, or its parent corporation and who has
discontinued the principal position or activity the person held when initially
elected, shall be recommended to the shareholders for reelection; provided,
however, that exceptions may be made because of a change in principal position
or activity which would be compatible with continued service to this
Association. No person elected as a director may exercise any of the powers of
his office until he has taken the oath of office as prescribed by law. When any
vacancy occurs among the directors, the remaining members of the Board, in
accordance with the laws of the United States, may appoint a director to fill
such vacancy at any regular meeting of the Board, or at a special meeting called
for that purpose.
Section 2.8. Nominations. Nominations for election to the Board may be
made by the Executive Committee or by any stockholder of any outstanding class
of capital stock of the Association entitled to vote for the election of
directors.
Section 2.9. Communications Equipment. Any or all directors may
participate in a meeting of the Board by means of conference telephone or any
means of communication by which all persons participating in the meeting are
able to hear each other.
Section 2.10. Action Without Meeting. Any action required or permitted
to be taken by the Board or committee thereof by law, the Association's Articles
of Association, or these Bylaws may be taken without a meeting, if, prior or
subsequent to the action, all members of the Board or
4
<PAGE>
committee shall individually or collectively consent in writing to the action.
Each written consent or consents shall be filed with the minutes of the
proceedings of the Board or committee. Action by written consent shall have the
same force and effect as a unanimous vote of the directors, for all purposes.
Any certificate or other documents which relates to action so taken shall state
that the action was taken by unanimous written consent of the Board or committee
without a meeting.
ARTICLE III
Committees of the Board
Section 3.1. Executive Committee. The Board may by resolution adopted
by a majority of the entire Board designate an Executive Committee consisting of
the Chairman of the Board, the President, and not less than two other directors.
Subject to the national banking laws and the Association's Articles of
Association, the Executive Committee may exercise all the powers of the Board of
Directors with respect to the affairs of the Association, except that the
Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of Directors is
actually convened for the conduct of business,
(b) exercise any power specifically required to be exercised by at
least a majority of all the directors,
(c) act on matters committed by the Bylaws or resolution
of the Board of Directors to another committee of the
board, or
(d) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is
amendable or repealable only by the Board;
5
<PAGE>
2. amend the Articles of Association or make, alter or repeal any Bylaw
of the Association;
3. elect or appoint any director, create or fill any vacancies in
the Board of Directors or remove any director, or authorize or
approve any change in the compensation of any officer of the
Association who is also a director of the Association;
4. authorize or approve issuance or sale or contract for sale of
shares of stock of the Association, or determine the
designation and relative rights, preferences and limitations
of a class or series of shares;
5. adopt an agreement of merger or consolidation, or submit to
shareholders any action that requires shareholder approval,
including any recommendation to the shareholders concerning
the sale, lease or exchange of all or substantially all the
Association's property and assets, a dissolution of the
Association or a revocation of a previously approved
dissolution; or
6. authorize an expenditure by the Association in excess of $10 million
for any one item or group of related items.
The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall report these
proceedings to the Board at the regular meetings thereof. The committee shall
serve as the nominating committee for nominations to the Board.
Section 3.2. Chairman of the Executive Committee. The Board may
designate one of its members to be Chairman of the Executive Committee who shall
preside at the meetings thereof and
6
<PAGE>
shall perform such duties as the Board shall assign to him from time to time.
Section 3.3. Audit Committee. The Board shall appoint a committee of
three or more persons exclusive of the officers of this Association which
committee shall be known as the Audit Committee. It shall be the duty of this
committee at least once in every twelve months to examine the affairs of the
Association, and determine whether it is in a sound and solvent condition and to
recommend to the Board such changes in the manner of doing business, etc., as
may seem to be desirable. The committee may cause such examination to be made in
its behalf and under its supervision by outside accountants and may also use the
services of any other persons either inside or outside the Association to assist
in its work. The results of each examination shall be reported in writing to the
Board.
Section 3.4. Audit of Trust Department. The Audit Committee shall, at
least once during each calendar year and within fifteen months of the last such
audit make suitable audits of the Trust Department or cause suitable audits to
be made by auditors responsible only to the Board, and at such time shall
ascertain whether the department has been administered in accordance with law,
Part 9 of the Regulations of the Comptroller of the Currency, and sound
fiduciary principles. In lieu of such periodic audit the Audit Committee, at the
election of the Board, may conduct or cause to be conducted by auditors
responsible only to the Board an adequate continuous audit system adopted by the
Board. A written report of such periodic or continuous audit shall be made to
the Board.
Section 3.5. Other Committees. The Board may appoint from time to time
other committees composed of one or more persons each, for such purposes and
with such powers as the Board may determine. The Chairman of the Board shall
have the power to designate another person to serve on any committee during the
absence or inability of any member thereof so to serve.
7
<PAGE>
Section 3.6. Directors' Emeritus. The Board may designate one or more
persons to serve as Director Emeritus. Such Director Emeritus shall have the
right to attend any and all meetings of the Board, but shall have no vote at
such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. Alternate Committee Members. The Board may, from time to
time, appoint one or more, but no more than three persons to serve as alternate
members of a committee, each of whom shall be empowered to serve on that
committee in place of a regular committee member in the event of the absence or
disability of that committee member. An alternate committee member shall, when
serving on a committee, have all of the powers of a regular committee member.
Alternate committee members shall be notified of, and requested to serve at, a
particular meeting or meetings, or for particular periods of time, by or at the
direction of the chairman of the committee or the Chairman of the Board.
ARTICLE IV
Officers
Section 4.1. Officers. The officers of the Association may be a
Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or
Vice Chairmen (who shall not be required to be directors of the Association), a
President, one or more Vice Presidents, a Secretary, a Cashier or Treasurer, and
such other officers, including officers holding similar or equivalent titles to
the above in regions, divisions or functional units of the Association, as may
be appointed by the Board of Directors. The Chairman of the Board and the
President shall be members of the Board of Directors. Any two or more offices
may be held by one person, but no officer shall sign or execute any
8
<PAGE>
document in more than one capacity.
4.2. Term of Office. The officers who are required by the articles of
association or the bylaws to be members of the Board shall hold their respective
offices until the Organization meeting of the Board following the annual meeting
of shareholders or until their respective successors shall have been elected,
unless they shall resign, become disqualified or be removed from office. Each
other officer shall hold office at the pleasure of the Board. Any officer may be
removed at any time by the Board.
Section 4.3. Chairman of the Board. The chairman of the board shall be
designated as Chairman of the Board. He shall preside at all meetings of the
stockholders and directors and he shall be a member of all committees of the
Board except the Audit Committee. He shall have such other powers and perform
such other duties as may be prescribed from time to time by the Board. He shall
be subject only to the direction and control of the Board.
Section 4.4. President. The president shall be the chief executive
officer of the Association and he shall be designated as President and Chief
Executive Officer. In the absence of the Chairman the President shall preside at
all meetings of the Board. The President shall be a member of each committee of
the Board except the Audit Committee. He shall have the powers and perform the
duties conferred or imposed upon the President by the national banking laws, and
he shall have such other powers and perform such other duties as nay from time
to time be imposed upon or assigned to him by the Board.
Section 4.5. Chief Financial Officer. The Chief Financial officer shall
have such title as may be designated by the Board and he shall be responsible
for all monies, funds and valuables of this Association, provide for the keeping
of proper records of all transactions of the Association, report
9
<PAGE>
to the Board at each regular meeting the condition of the Association, submit to
the Board, when requested, a detailed statement of the income and expenses, be
responsible for the conduct and efficiency of all persons employed under him,
and perform such other duties as may be from time to time assigned to him by the
Board.
Section 4.6. Other Officers. All other officers shall respectively
exercise such powers and perform such duties as generally pertain to their
several offices, or as may be conferred upon or assigned to them by the Board,
the Chairman of the Board or the President.
Section 4.7. Bond. Each officer and employee, if so required by the
Board, shall give bond with surety to be approved by the Board, conditioning for
the honest discharge of his duties as such officer or employee. In the
discretion of the Board, such bonds may be individual, schedule or blanket form,
and the premiums may be paid by the Association.
Section 4.8. Officers Acting as Assistant Secretary. Notwithstanding
Section 4.la of this Article IV, any Senior Vice President, Vice President or
Assistant Vice President shall have, by virtue of his office, and by authority
of the Bylaws, the authority from time to time to act as an Assistant Secretary
of the Association, and to such extent, said officers are appointed to the
office of Assistant Secretary.
ARTICLE V
Trust Department
Section 5.1. Trust Department. There shall be a department of the
Association known as the Trust Department which shall perform the fiduciary
responsibilities of the Association. Opinions of counsel shall be retained on
file in the Trust Department in connection with all important matters
10
<PAGE>
pertaining to fiduciary activities.
Section 5.2. Trust Investment. Funds held in a fiduciary capacity shall
be invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of the investments to be made and does not vest in the Association a
discretion in the matter, funds held pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under local
law.
ARTICLE VI
Stock Certificates and Transfers
Section 6.1. Stock Certificates. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the Chairman
or President, and the Secretary, or an Assistant Secretary. Each certificate
shall state upon its face that the stock is transferable only upon the books of
the Association by the holder thereof, or by duly authorized attorney, upon the
surrender of such certificate, and shall meet the requirements of Section 5139,
United States Revised Statutes, as amended.
Section 6.2. Transfers. The stock of this Association shall be
assignable and transferable only on the books of this Association, subject to
the restrictions and provisions of the national banking laws; and a transfer
book shall be provided in which all assignments and transfers of stock shall be
made. When stock is transferred, the certificates thereof shall be returned to
the Association, canceled, preserved and new certificates issued.
Section 6.3. Dividends. Dividends shall be paid to the shareholders in
whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that the
directors may fix another date as a record date for the determination of
11
<PAGE>
the shareholders entitled to receive payment thereof.
ARTICLE VII
Increase of Stock
7.1. Capital Stock. Shares of the capital stock of the Association,
which have been authorized but not issued, may be issued from time to time for
such consideration, not less than the par value thereof, as may be determined by
the Board.
ARTICLE VIII
Corporate Seal
Section 8.1. Seal. The seal, an impression of which appears below, is
the seal of the Association adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President, Vice
President, each Assistant Vice President, the Chief Financial Officer, the
Secretary, each Assistant Secretary, each Trust Officer, each Assistant Trust
Officer or each Assistant Cashier, shall have the authority to affix the
corporate seal of this Association and to attest to the same.
12
<PAGE>
ARTICLE IX
Miscellaneous Provisions
Section 9.l. Fiscal Year. The fiscal year of the Association shall be
the calendar year.
Section 9. 2. Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies, and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
in behalf of the Association by the Chairman of the Board, the Vice Chairman of
the Board, any Chairman or Vice Chairman, the President, any Vice President or
Assistant Vice President, the Secretary or any Assistant Secretary, the Cashier
or Treasurer or any Assistant Cashier or Assistant Treasurer, or any officer
holding similar or equivalent titles to the above in any regions, divisions or
functional units of the Association, or, if in connection with the exercise of
fiduciary powers of the Association, by any of said officers or by any Trust
Officer or Assistant Trust Officer (or equivalent titles); provided, however,
that where required, any such instrument shall be attested by one of said
officers other than the officer executing such instrument. Any such instruments
may also be executed, acknowledged, verified, delivered, or accepted in behalf
of the Association in such other manner and by such other officers as the Board
of Directors may from time to time direct. The provisions of this Section 9.2
are supplementary to any other provision of these Bylaws.
Section 9.3. Records. The organization papers of this Association, the
articles of association, the bylaws and any amendments thereto, the proceedings
of all regular and special meetings of the shareholders and of the directors,
the returns of the judges of elections, and the reports of the committees of
directors shall be recorded in an appropriate minute book, and the minutes of
each
13
<PAGE>
meeting shall be signed by the Secretary or any other officer appointed to act
as secretary of the meeting.
Section 9.4. Banking Hours. This Association and its branch offices
shall be open on such days and during such hours as shall be fixed from time to
time by the Board.
Section 9. 5. Voting Shares of Other Corporations. The Chairman, any
Vice Chairman, the President, or any Vice President is authorized to vote,
represent and exercise on behalf of this Association all rights incident to any
and all shares of stock of any other corporation standing in the name of the
Association. The authority granted herein may be exercised by such officers in
person or by proxy or by power of attorney duly executed by said officer.
ARTICLE X
Bylaws
Section 10.1. Inspection. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 10-2. Amendments. These Bylaws may be changed or amended at any
regular or special meeting of the Board by the vote of a majority of the
Directors.
14
<PAGE>
Registration No. 333-70311
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
Premier Bancorp, Inc.
(Exact name of obligor as specified in its charter)
The State of Pennsylvania
(State or other jurisdiction of incorporation or organization)
23-2921058
(I.R.S. employer identification no.)
c/o
Bruce E. Sickel, Senior Vice President/CFO
Premier Bancorp, Inc.
379 N. Main St.
Doylestown, PA 18901
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
(Title of the Indenture securities)
------------------------------------------------
1. General information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject
-----------------------------------------------------------------
Name Address
------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any underwriter
for the obligor is an affiliate of the trustee, describe each such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
2
<PAGE>
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust Company,
National Association, as now in effect, which contain the authority to
commence business and a grant of powers to exercise corporate trust powers.
(Exhibit 25.1 attached to this Registration Statement No. 333-70311.)
2. A copy of the certificate of authority of the trustee to commence business,
if not contained in the Articles of Association. (Exhibit 25.1 attached to
this Registration Statement No. 333-70311.)
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified
in exhibits (1) or (2) above. (Exhibit 25.1 attached to this Registration
Statement No. 333-70311.)
4. A copy of the existing By-laws of First Union Trust Company, National
Association, or instruments corresponding thereto. (Exhibit 25.1 attached
to this Registration Statement No. 333-70311.)
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published pursuant
to law or to the requirements of its supervising or examining authority is
attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 8th day
of February, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by PBI Capital Trust, Capital
Securities, First Union Trust Company, National Association, as the trustee
herein named, hereby consents that reports of examinations of said Trustee by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: February 8, 1999
4
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
--------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1)........................ 0081 10,212,563 1.a.
b. Interest-bearing balances (2)................................................. 0071 1,529,435 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A).................... 1754 1,994,665 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................. 1773 37,427,525 2.b.
3. Federal funds sold and securities purchased under agreements to resell........... 1350 7,551,730 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)RCFD 2122 133,841,290 4.a.
b. LESS: Allowance for loan and lease losses....................RCFD 3123 1,856,548 4.b.
c. LESS: Allocated transfer risk reserve........................RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)........................... 2125 131,984,742 4.d.
5. Trading assets (from Schedule RC-D).............................................. 3545 8,349,640 5.
6. Premises and fixed assets (including capitalized leases)......................... 2145 3,208,660 6.
7. Other real estate owned (from Schedule RC-M)..................................... 2150 127,757 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)............................................................. 2180 351,648 8.
9. Customers' liability to this bank on acceptances outstanding..................... 2155 1,026,154 9.
10. Intangible assets (from Schedule RC-M)........................................... 2143 5,215,196 10.
11. Other assets (from Schedule RC-F)................................................ 2160 9,099,122 11.
12. Total assets (sum of items 1 through 11)......................................... 2170 218,078,837 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
-------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I)..................................................................... RCON 2200 131,541,691 13.a.
(1) Noninterest-bearing (1).......................RCON 6631 23,997,063 13.a.(1)
(2) Interest-bearing..............................RCON 6636 107,544,628 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II).................................................... RCFN 2200 8,708,735 13.b.
(1) Noninterest-bearing...........................RCFN 6631 400,989 13.b.(1)
(2) Interest-bearing..............................RCFN 6636 8,307,746 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase...... RCFD 2800 24,903,299 14.
15. a. Demand notes issued to the U.S. Treasury.................................... RCON 2840 772,252 15.a.
b. Trading liabilities (from Schedule RC-D).................................... RCFD 3548 6,496,578 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):............................................................
a. With a remaining maturity of one year or less............................... RCFD 2332 11,928,951 16.a.
b. With a remaining maturity of more than one year through three years......... RCFD A547 1,260,353 16.b.
c. With a remaining maturity of more than three years.......................... RCFD A548 775,219 16.c.
17. Not applicable..................................................................
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 1,036,587 18.
19. Subordinated notes and debentures (2)........................................... RCFD 3200 3,501,546 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 9,211,139 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 200,136,350 21.
22. Not applicable..................................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................................... RCFD 3838 160,540 23.
24. Common stock.................................................................... RCFD 3230 454,543 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 13,206,354 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,553,449 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 572,731 26.b.
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 (5,130) 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 17,942,487 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................... RCFD 3300 218,078,837 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1996............................................ RCFD 6724 N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
6
<PAGE>
Registration No. 333-70311
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
Premier Bancorp, Inc.
(Exact name of obligor as specified in its charter)
The State of Pennsylvania
(State or other jurisdiction of incorporation or organization)
23-2921058
(I.R.S. employer identification no.)
c/o
Bruce E. Sickel, Senior Vice President/CFO
Premier Bancorp, Inc.
379 N. Main St.
Doylestown, PA 18901
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
GUARANTEE OF CAPITAL SECURITIES OF PBI CAPITAL TRUST
(Title of the Amended and Restated Declaration of Trust securities)
------------------------------------------------
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject
-----------------------------------------------------------------
Name Address
------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any underwriter
for the obligor is an affiliate of the trustee, describe each such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
2
<PAGE>
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust Company,
National Association, as now in effect, which contain the authority to
commence business and a grant of powers to exercise corporate trust powers.
(Exhibit 25.1 attached to this Registration Statement No. 333-70311.)
2. A copy of the certificate of authority of the trustee to commence business,
if not contained in the Articles of Association. (Exhibit 25.1 attached to
this Registration Statement No. 333-70311.)
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified
in exhibits (1) or (2) above. (Exhibit 25.1 attached to this Registration
Statement No. 333-70311.)
4. A copy of the existing By-laws of First Union Trust Company, National
Association, or instruments corresponding thereto. (Exhibit 25.1 attached
to this Registration Statement No. 333-70311.)
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published pursuant
to law or to the requirements of its supervising or examining authority is
attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the United
States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 8th day
of February, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by PBI Capital Trust, Capital
Securities, First Union Trust Company, National Association, as the trustee
herein named, hereby consents that reports of examinations of said Trustee by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: February 8, 1999
4
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
--------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1)........................ 0081 10,212,563 1.a.
b. Interest-bearing balances (2)................................................. 0071 1,529,435 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A).................... 1754 1,994,665 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................. 1773 37,427,525 2.b.
3. Federal funds sold and securities purchased under agreements to resell........... 1350 7,551,730 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)RCFD 2122 133,841,290 4.a.
b. LESS: Allowance for loan and lease losses....................RCFD 3123 1,856,548 4.b.
c. LESS: Allocated transfer risk reserve........................RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)........................... 2125 131,984,742 4.d.
5. Trading assets (from Schedule RC-D).............................................. 3545 8,349,640 5.
6. Premises and fixed assets (including capitalized leases)......................... 2145 3,208,660 6.
7. Other real estate owned (from Schedule RC-M)..................................... 2150 127,757 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................................... 2180 351,648 8.
9. Customers' liability to this bank on acceptances outstanding..................... 2155 1,026,154 9.
10. Intangible assets (from Schedule RC-M)........................................... 2143 5,215,196 10.
11. Other assets (from Schedule RC-F)................................................ 2160 9,099,122 11.
12. Total assets (sum of items 1 through 11)......................................... 2170 218,078,837 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: First Union Trust Company, N.A. Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
</TABLE>
Schedule RC--Continued
<TABLE>
Dollar Amount in Thousands Bil Mil Thou
-------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I)..................................................................... RCON 2200 131,541,691 13.a.
(1) Noninterest-bearing (1).......................RCON 6631 23,997,063 13.a.(1)
(2) Interest-bearing..............................RCON 6636 107,544,628 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II)..................................................... RCFN 2200 8,708,735 13.b.
(1) Noninterest-bearing...........................RCFN 6631 400,989 13.b.(1)
(2) Interest-bearing..............................RCFN 6636 8,307,746 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase...... RCFD 2800 24,903,299 14.
15. a. Demand notes issued to the U.S. Treasury.................................... RCON 2840 772,252 15.a.
b. Trading liabilities (from Schedule RC-D).................................... RCFD 3548 6,496,578 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):............................................................
a. With a remaining maturity of one year or less............................... RCFD 2332 11,928,951 16.a.
b. With a remaining maturity of more than one year through three years......... RCFD A547 1,260,353 16.b.
c. With a remaining maturity of more than three years.......................... RCFD A548 775,219 16.c.
17. Not applicable..................................................................
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 1,036,587 18.
19. Subordinated notes and debentures (2)........................................... RCFD 3200 3,501,546 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 9,211,139 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 200,136,350 21.
22. Not applicable..................................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................................... RCFD 3838 160,540 23.
24. Common stock.................................................................... RCFD 3230 454,543 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 13,206,354 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,553,449 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 572,731 26.b.
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 (5,130) 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 17,942,487 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................... RCFD 3300 218,078,837 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1996............................................ RCFD 6724 N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
LETTER OF TRANSMITTAL
PBI CAPITAL TRUST
Offer to exchange its
8.57% Exchange Capital Securities
(Liquidation Amount $1,000 per Exchange Capital Security)
which have been registered under the Securities Act of 1933
("Exchange Capital Securities")
for any and all of its outstanding
8.57% Original Capital Securities
(Liquidation Amount $1,000 per Original Capital Security)
("Original Capital Securities")
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON APRIL 2, 1999, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE"). 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:
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By Registered or Certified Mail or By Hand or Overnight Delivery:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, Delaware, 19801
Confirm by Telephone: (302) 888-7532
Facsimile Transmissions: (302) 888-7544
(ELIGIBLE INSTITUTIONS ONLY)
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.
<PAGE>
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Original
Capital Securities (as defined below) if Original Capital Securities are to be
forwarded herewith pursuant to the procedures set forth in "The Exchange Offer -
Procedures for Tendering Original Capital Securities" in the Prospectus.
Holders of Original Capital Securities whose certificates (the
"Certificates") for such Original Capital Securities are not immediately
available or who cannot deliver their Certificates and all other required
documents to First Union Trust Company, National Association (the "Exchange
Agent") on or prior to the Expiration Date (as defined in the Prospectus) must
tender their Original Capital Securities according to the guaranteed delivery
procedures set forth in "The Exchange Offer - Procedures for Tendering Original
Capital Securities" in the Prospectus.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
DESCRIPTION OF ORIGINAL CAPITAL SECURITIES TENDERED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Principal
Amount of Beneficial
Original Holders and
Capital Names in
Original Capital Securities Which such
Please print name and Certificate Securities Tendered (If Securities
address of Registered Holder Number(s) Tendered Less than are held
All)(1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
- -------------------
(1) All Original Capital Securities held shall be deemed rendered unless a
lesser number is specified in this column.
-2-
<PAGE>
|_| CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY
IF TENDERED ORIGINAL 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:
-------------------------
|_| CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL 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 OP THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
------------------------------------------------------------------
Address:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Ladies and Gentlemen:
The undersigned hereby tenders to PBI Capital Trust, a trust formed under
the laws of Delaware (the "Trust"), and Premier Bancorp, Inc., a Pennsylvania
corporation (the "Corporation"), the above described aggregate Liquidation
Amount of the Trust's 8.57% Series A Capital Securities (the "Original Capital
Securities") in exchange for a like aggregate Liquidation Amount of the Trust's
8.57% Series B Capital Securities (the "Exchange Capital Securities") which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), upon the terms and subject to the conditions set forth in the Prospectus
dated February 8, 1999, (as the same may be amended or supplemented from time to
time, the "Prospectus"), receipt of which is 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 Original 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 Original 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 Original Capital Securities, with full power of substitution (such
power of attorney being
-3-
<PAGE>
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
Original 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 Exchange Capital Securities to be issued in exchange for such Original
Capital Securities, (ii) present Certificates for such Original Capital
Securities for transfer, and to transfer the Original 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 Original
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
ORIGINAL 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 LENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND
THAT THE ORIGINAL 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 ORIGINAL 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 Original
Capital Securities tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Certificates representing such
Original Capital Securities. The Certificate number(s) and the Original Capital
Securities that the undersigned wishes to tender should be indicated in the
appropriate boxes above.
If any tendered Original Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more
Original Capital Securities than are tendered or accepted for exchange,
Certificates for such non-exchanged or non-tendered Original Capital Securities
will be returned without expense to the tendering holder, promptly following the
expiration or termination of the Exchange offer.
The undersigned understands that tenders of Original Capital Securities
pursuant to any one of the procedures described in "The Exchange Offer -
Procedures for Tendering Original Capital Securities" in the Prospectus and in
this Letter of Transmittal and the instructions hereto will, upon the
Corporation's and the Trust's acceptance for exchange of such tendered Original
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,
-4-
<PAGE>
under certain circumstances set forth in the Prospectus, the Corporation and the
Trust may not be required to accept for exchange any of the Original Capital
Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Capital
Securities be issued in the name(s) of the undersigned. If applicable,
substitute Certificates representing Original Capital Securities not exchanged
or not accepted for exchange will be issued to the undersigned. Similarly,
unless otherwise indicated under "Special Delivery Instructions," the
undersigned hereby directs that the Exchange Capital Securities be delivered to
the undersigned at the address shown below the undersigned's signature.
BY TENDERING ORIGINAL 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 THE 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 ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER AND
EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF ORIGINAL 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
ORIGINAL CAPITAL SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A
NOMINEE, OR (b) SUCH ORIGINAL 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 ORIGINAL CAPITAL SECURITIES, WHERE SUCH ORIGINAL 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
-5-
<PAGE>
ENDING 180 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 ORIGINAL CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AND AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH ORIGINAL 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 OR THE TRUST HAS AMENDED OR
SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPES 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 180-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
COPES 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 Exchange Capital Securities received in
exchange for Original 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 Original Capital Securities whose Original Capital Securities
are accepted for exchange will not receive accrued distributions on such
Original Capital Securities for any period
-6-
<PAGE>
from and after the last Distribution Date to which distributions have been paid
or duly provided for on such Original Capital Securities prior to the original
issue date of the Exchange Capital Securities and the undersigned waives the
right to receive any distributions on such Original Capital Securities accrued
from and after such Distribution Date.
Please be advised that the Corporation is registering the Exchange Capital
Securities in reliance on the position of the Staff enunciated in Exxon Capital
Holdings Corp. (available April 13, 1989), Morgan Stanley & Co. Incorporated
(available June 5, 1991), K-m Communications Corporation (available May 14,
1993), Shearman & Sterling (available July 2, 1993) and Brown & Wood LLP
(available February 7, 1997). In addition, the Corporation has authorized us to
inform you as follows: The Corporation has not entered into any arrangement or
understanding with any person to distribute the Exchange Capital Securities to
be received in the Exchange Offer and, to the best of the Corporation's
information and belief, each person participating in the Exchange Offer is
acquiring the Exchange Capital Securities in its ordinary course of business and
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Capital Securities to be received in the Exchange
Offer. In this regard, the Corporation hereby notifies each person participating
in the Exchange Offer that if such person is participating in the Exchange Offer
for the purpose of distributing the Exchange Capital Securities to be acquired
in the Exchange, such person (a) may not rely on the Staff position enunciated
in Exxon Capital or interpretative letters to similar effect and (b) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. The Corporation acknowledges
that such a secondary resale transaction by such person participating in the
Exchange Offer for the purpose of distributing the Exchange Capital Securities
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 of Regulation S-K.
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 Original 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.
-7-
<PAGE>
HOLDER(S) SIGN HERE
(See Instructions 2, 5 and 6)
(Please Complete Substitute Form W-9 Below)
(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
Certificates(s) for the Original Capital Securities hereby tendered or on a
security position listing, or by any person(s) authorized to become the
registered holder(s) by endorsements and documents transmitted herewith
(including such opinions of counsel, certificates and other information as may
be required by the Trust or the Trustee for the Original Capital Securities to
comply with the restrictions on transfer applicable to the Original 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):
-----------------------------------------------------
Dated:
------------------------------------------------------------------------
Please Print Name(s):
----------------------------------------------------------
Area Code(s) and Telephone Number(s):
------------------------------------------
Tax Identification or Social Security Number(s):
-------------------------------
GUARANTEE OF SIGNATURE(S) (See Instructions 2 and 5)
Authorized Signature:
---------------------------------------------------------
Please Print Name:
-------------------------------------------------------------
Date __________, 1999
Capacity or Title:
-------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-----------------------------------------------
-8-
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS (Sec Instructions 1, 5 and 6)
To be completed ONLY if Exchange Capital Securities are to be issued in the
name of someone other than the registered holder of the Original Capital
Securities whose name(s) appear(s) above.
Issue:
|_| Exchange Capital Securities to:
|_| Original Capital Securities not tendered to:
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5 and 6)
To be completed ONLY if Exchange Capital Securities are to be sent to
someone other than the registered holder of the Original Capital Securities
whose name(s) appear(s) above, or to the registered holder(s) at an address
other than that shown above.
Mail:
|_| Exchange Capital Securities to:
|_| Original Capital Securities not tendered to:
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
-9-
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVER
PROCEDURES. This Letter of Transmittal is to be completed if Certificates are to
be forwarded herewith. Certificates representing the Original Capital Securities
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.
Holders of Original Capital Securities (i) who cannot deliver their
Original Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (ii) whose
Original Capital Securities are not immediately available may tender their
Original 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 Original Capital Securities"
in the Prospectus. Pursuant to such procedures: (a) such tender must be made by
or through an Eligible Institution (as defined below); (b) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Corporation, must be received by the Exchange Agent on or prior
to the Expiration Date; and (c) the Certificates representing tendered Original
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 Original 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 Original 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
Securities Exchange Act of 1934, as amended ("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.
-10-
<PAGE>
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 of
Original 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 Original 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 Original Capital Securities" is inadequate, the Certificate
number(s) and/or the principal amount of Original 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. If less than all the Original
Capital Securities evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Original Capital Securities which are to be
tendered in the box entitled "Principal Amount of Original Capital Securities
Tendered." In such case, new Certificate(s) for the remainder of the Original
Capital Securities that were evidenced by your old Certificate(s) will only be
sent to the holder of the Original Capital Security, promptly after the
Expiration Date. All Original 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 Original 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, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at its address 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 Original Capital Securities
to be withdrawn, the aggregate principal amount of Original Capital Securities
to be withdrawn, and (if Certificates for Original Capital Securities have been
tendered) the name of the registered holder of the Original Capital Securities
as set forth on the Certificate for the Original Capital Securities, if
different from that of the person who tendered such Original Capital Securities.
If Certificates for the Original Capital Securities have been delivered or
otherwise identified to the Exchange Agent, then prior to the physical release
of such Certificates for the Original Capital Securities, the tendering holder
must submit the serial numbers shown on the particular Certificates for the
Original 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
Original Capital Securities tendered for the account of an Eligible Institution.
Withdrawals of tenders of Original Capital Securities may not be rescinded.
Original Capital Securities properly withdrawn will not be
-11-
<PAGE>
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 Original 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 and 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 Original 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 Original
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 Original 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 Original 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 such
persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Original Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Capital
Securities are to be issued in the name of a person other than the registered
holder(s), in which cases 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 Original 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 Original
Capital Securities may require in accordance with the restrictions on transfer
applicable to the Original Capital Securities. Signatures on such Certificates
or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Capital
Securities are to be issued in the name of a person other than the signer of
this Letter of Transmittal, or if Exchange
-12-
<PAGE>
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 Original Capital Securities not exchanged will be returned by
mail. 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 Original Capital Securities which 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 either of them not to be in proper form or the acceptance of
which, or exchange for, 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 Original
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the rise 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 Original 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, the Trust, the Exchange Agent, or any other person shall 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 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, this Letter of Transmittal and the Notice
of Guaranteed Delivery 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 Original 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 Original
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,
-13-
<PAGE>
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 Original Capital Securities or of the last transferee appearing on the
transfers attached to, or endorsed on, the Original Capital Securities. If the
Original 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, subject to applicable law, 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 Original Capital Securities,
by execution of this Letter of Transmittal, shall waive any right to receive
notice of the acceptance of Original 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 Original 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 Original 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 Original Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, Exchange 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 Original Capital Securities tendered, or if a transfer
tax is imposed for any reason other than the exchange of Original Capital
Securities in connection with the Exchange Offer, then the amount
-14-
<PAGE>
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.
-15-
<PAGE>
TO BE COMPLETED BY ALL
TENDERING SECURITY HOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
PAYERS' NAMES: First Union Trust Company, National Association
- ------------------------------------------------------------------------------------------------------------------
Part I--PLEASE PROVIDE Social Security Number
YOUR TAXPAYER or TIN
IDENTIFICATION NUMBER
("TIN") IN THE BOX AT RIGHT
AND CERTIFY BY SIGNING __/__/__
AND DATING BELOW.
---------------------------------------------------------------------------
Part 2--Check the box if you are NOT subject to backup withholding
under the provisions of Section 3408(a)(1)(C) of the Internal
Revenue Code because (1) you have not been notified that you are
subject to backup withholding as a result of failure to report all
SUBSTITUTE interest or dividends or (2) the Internal Revenue Service has
Form W-9 notified you that you are no longer subject to backup withholding. |_|
---------------------------------------------------------------------------
CERTIFICATION--UNDER THE Part 3
Department of Treasury PENALTIES OF PERJURY, I CERTIFY THAT
Internal Revenue Service THE INFORMATION PROVIDED ON Awaiting TIN |_|
THIS FORM IS TRUE, CORRECT, AND COMPLETE.
Payer's Request for Taxpayer
Identification Number (TIN) SIGNATURE DATE
---------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or
entity whose number you enter in Part I below. See instructions if
your name has changed.)
---------------------------------------------------------------------------
Address
---------------------------------------------------------------------------
City, State and ZIP Code
---------------------------------------------------------------------------
List account number(s) here (optional)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE 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.
-16-
<PAGE>
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 Exchange 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
---------------------------- -------------------------
-17-
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
ANY AND ALL OUTSTANDING
8.57% ORIGINAL CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
PBI CAPITAL TRUST
FULLY AND UNCONDITIONALLY GUARANTEED BY
PREMIER BANCORP, INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Trust's (as defined below) 8.57% Original Capital
Securities (the "Original Capital Securities") are not immediately available,
(ii) Original Capital Securities, the Letter of Transmittal and all other
required documents cannot be delivered to First Union Trust Company, National
Association (the "Exchange Agent") on or prior to the Expiration Date (as
defined in the Prospectus referred to below) or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See "The
Exchange Offer -Procedures for Tendering Original Capital Securities" in the
Prospectus. In addition, in order to utilize the guaranteed delivery procedure
to tender Original Capital Securities pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal relating to the Original
Capital Securities (or facsimile thereof) must also be received by the Exchange
Agent on or prior to the Expiration Date. Capitalized terms not defined herein
have the meanings assigned to them in the Letter of Transmittal.
The Exchange Agent For The Exchange Offer Is:
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By Registered or Certified Mail or By Hand or Overnight Delivery:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, Delaware 19801
Confirm by Telephone: (302) 888-7532
Facsimile Transmissions: (302) 888-7544
(ELIGIBLE INSTITUTIONS ONLY)
<PAGE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to PBI Capital Trust, a Delaware business
trust (the "Trust") and to Premier Bancorp, Inc., a Pennsylvania corporation
(the "Corporation"), upon the terms and subject to the conditions set forth in
the Prospectus dated February 8, 1999 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Original Capital
Securities set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Procedures for
Tendering Original Capital Securities."
Name(s) of Registered Holder(s):
- -----------------------------------------------------------------
Aggregate Liquidation Amount of Original Capital Securities:
$
-----------------------------
Amount Tendered: $ *
-----------
If Original Capital Securities will be
tendered by forwarding a Certificate
or Certificates, provide the following
information:
Certificate No(s)
(if available):
--------------------------
--------------------------
Total Liquidation Amount
Represented by Original Capital
Securities Certificate(s):
$
------------------------
If Original Capital Securities will be
tendered by book-entry transfer, provide
the following information:
DTC Account Number:
------------------
Date:
-------------------
* Must be in denominations of a Liquidation Amount of $1,000 and any integral
multiple thereof, and not less than $100,000 aggregate Liquidation Amount.
------------------------------------------------------------
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- -----------------------------------------------------------------
PLEASE SIGN HERE
X
---------------------------- ------------------------------
X
---------------------------- ------------------------------
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
-----------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) of the
Original Capital Securities as their name(s) appear(s) on certificates for
Original Capital Securities or on a security position listing in the records of
DTC, or by person(s) authorized to become registered Holder(s) by endorsement
and documents transmitted with this Notice of Guaranteed Delivery. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
Please print name(s) and address(es):
Name(s):
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Capacity:
--------------------------------------------------
Address(es):
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker or government securities 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 recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Original
Capital Securities tendered hereby in proper form for transfer, or confirmation
of the book-entry transfer of such original Capital Securities to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within three
business days after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Original Capital Securities tendered hereby to the Exchange
Agent within the time period set forth above and that failure to do so could
result in a financial loss to the undersigned.
- ------------------------- ----------------------------------
Name of Firm Authorized Signature
- ------------------------- ----------------------------------
Address Title
- ------------------------- ----------------------------------
Zip Code (Please Type or Print)
- ------------------------- ----------------------------------
Area Code and Telephone No. Dated:
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL CAPITAL SECURITIES WITH THIS
FORM. CERTIFICATES FOR ORIGINAL CAPITAL SECURITIES SHOULD ONLY BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
EXHIBIT 99.3
EXCHANGE AGENCY AGREEMENT
February ___, 1999
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, DE 19801
Attention: Corporate Trust Administration
Re: PBI Capital Trust
-----------------
Ladies and Gentlemen:
Premier Bancorp, Inc., a Pennsylvania corporation, as Depositor (the
"Company"), and PBI Capital Trust, a Delaware business trust (the "Trust"),
hereby appoint First Union Trust Company, National Association ("First Union")
to act as exchange agent (the "Exchange Agent") in connection with an exchange
offer by the Company and the Trust to exchange up to $10,000,000 of the Trust's
Series A 8.57% Capital Securities, liquidation amount $1,000 per Capital
Security (the "Original Capital Securities"). The terms and conditions of the
exchange offer are set forth in a Prospectus, dated February 8, 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus"), and in
the related Letter of Transmittal, which together constitute the "Exchange
Offer." The registered holders of the Capital Securities are hereinafter
referred to as the "Holders." Capitalized terms used herein and not defined
shall have the respective meanings described thereto in the Prospectus.
On the basis of the representations, warranties and agreements of the
Company, the Trust and First Union contained herein and subject to the terms and
conditions hereof, the following sets forth the agreement among the Company, the
Trust and First Union as Exchange Agent for the Exchange Offer:
<PAGE>
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. The Company and the Trust hereby authorize First Union to act as
Exchange Agent in connection with the Exchange Offer and First Union agrees to
act as Exchange Agent in connection with the Exchange Offer. As Exchange Agent,
First Union will perform those services as are outlined herein, including, but
not limited to, accepting tenders of Original Capital Securities, and
communicating generally regarding the Exchange Offer with brokers, dealers,
commercial banks, trust companies and other persons, including Holders of the
Original Capital Securities.
b. The Company and the Trust acknowledge and agree that First Union has
been retained pursuant to this Agreement to act solely as Exchange Agent in
connection with the Exchange Offer, and in such capacity, First Union shall
perform such duties in good faith as are outlined herein.
c. First Union will examine each of the Letters of Transmittal and
certificates for Original Capital Securities and any other documents delivered
or mailed to First Union by or for Holders of the Original Capital Securities,
and any book entry confirmations received by First Union with respect to the
Original Capital Securities, to ascertain whether: (i) the Letters of
Transmittal and any such other documents are duly executed and properly
completed in accordance with the instructions set forth therein and that such
book entry confirmations are in due and proper form and contain the information
required to be set forth therein, (ii) the Original Capital Securities have
otherwise been properly tendered, (iii) Original Capital Securities tendered in
part are tendered in liquidation amounts of $1,000 per Capital Security and that
if any Original Capital Securities are tendered for exchange in part, the
untendered liquidation amount thereof is $1,000, and (iv) Holders have provided
their correct Tax Identification Number or required certification. Determination
of all questions as to validity, form, eligibility and acceptance for exchange
of any Original Capital Securities shall be made by the Company and the Trust,
which determination shall be final and binding. In each case where the Letters
of Transmittal or any other documents have been improperly completed or executed
of where book-entry conformations are not in due and proper form or omit certain
information, or any of the certificates for Original Capital Securities are not
in proper form for transfer or some other irregularity in connection with the
tender or acceptance of the Original Capital Securities exists, First Union will
endeavor, upon request of the Company or the Trust, to advise the tendering
Holders of the irregularity and to take any other action as the Company or the
Trust may request to cause such irregularity to be corrected. Notwithstanding
the above, First Union shall not be under any duty to give any notification of
any irregularities in tenders or incur any liability for failure to give any
such notification.
d. With the approval of the Trust and the President, any Senior Vice
President, any Executive Vice President, any Vice President or the Treasurer or
any Assistant Treasurer of the Company, (such approval, if given orally, to be
confirmed in writing) or any other party
2
<PAGE>
designated by any such officer, First Union is authorized to waive any
irregularities in connection with any tender of Original Capital Securities
pursuant to the Exchange Offer.
e. Tenders of Original Capital Securities may be made only as set forth in
the Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer" and Original Capital Securities shall be considered properly
tendered only when tendered in accordance with such procedures set forth
therein. Notwithstanding the provisions of this paragraph, Original Capital
Securities which the Trust and the President, any Senior Vice President, any
Executive Vice President, any Vice President or the Treasurer, any Assistant
Treasurer or any other designated officer of the Company, shall approve (such
approval, if given orally, to be confirmed in writing) as having been properly
tendered shall be considered to be properly tendered.
f. First Union shall advise the Company and the Trust with respect to any
Original Capital Securities received as soon as possible after 5:00 p.m., New
York City time, on the Expiration Date and accept its instructions with respect
to disposition of such Original Capital Securities.
g. First Union shall deliver certificates for Original Capital Securities
tendered in part to the transfer agent for split-up and shall return any
untendered Original Capital Securities or Original Capital Securities which have
not been accepted by the Company and the Trust to the Holders promptly after the
expiration or termination of the Exchange Offer.
h. Upon acceptance by the Company and the Trust of any Original Capital
Securities duly tendered pursuant to the Exchange Offer (such acceptance if
given orally, to be confirmed in writing), the Company and the Trust will cause
Exchange Capital Securities in exchange therefor to be issued as promptly as
practicable and First Union will deliver such Exchange Capital Securities on
behalf of the Company and the Trust at the rate of $1,000 liquidation amount of
Exchange Capital Securities for each $1,000 liquidation amount of Original
Capital Securities tendered as promptly as practicable after acceptance by the
Company and the Trust of the Original Capital Securities for exchange and notice
(such notice if given orally, to be confirmed in writing) of such acceptance by
the Company and the Trust. Unless otherwise instructed by the Company or the
Trust, First Union shall issue Exchange Capital Securities only in denominations
of $1,000 or any integral multiple of $1,000 in excess thereof.
i. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and the conditions set forth in the Prospectus and the
Letter of Transmittal, Original Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time on or prior to the Expiration Date
in accordance with the terms of the Exchange Offer.
j. Notice of any decision by the Company and the Trust not to exchange any
Original Capital Securities tendered shall be given by the Company and the Trust
either orally (if given orally, to be confirmed in writing) or in a written
notice to First Union.
k. If, pursuant to the Exchange Offer, the Company and the Trust do not
accept for exchange all or part of the Original Capital Securities tendered
because of an invalid tender, the
3
<PAGE>
occurrence of certain other events set forth in the Prospectus under the caption
"The Exchange Offer -- Conditions to the Exchange Offer" or otherwise, First
Union shall, upon notice from the Company and the Trust (such notice if given
orally, to be confirmed in writing), promptly after the expiration or
termination of the Exchange Offer return such certificates for unaccepted
Original Capital Securities (or effect appropriate book-entry transfer),
together with any related required documents and the Letters of Transmittal
relating thereto that are in First Union's possession, to the persons who
deposited such certificates.
l. Certificates for reissued Original Capital Securities, unaccepted
Original Capital Securities or Exchange Capital Securities shall be forwarded by
(a) first-class certified mail, return receipt requested under a blanket surety
bond obtained by First Union protecting First Union, the Company and the Trust
from loss or liability arising out of the non-receipt or non-delivery of such
certificates or (b) by registered mail insured by First Union separately for the
replacement value of each such certificate.
m. First Union is not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, commercial bank, trust
company or other nominee or to engage or use any person to solicit tenders.
n. As Exchange Agent, First Union:
(i) shall have no duties or obligations other than those
specifically set forth herein or in the Prospectus or in the related Letter
of Transmittal;
(ii) will make no representations and will have no responsibilities
as to the validity, value or genuineness of any of the certificates for the
Original Capital Securities deposited pursuant to the Exchange Offer, and
will not be required to and will make no representation as to the validity,
value or genuineness of the Exchange Offer;
(iii) shall not be obligated to take any legal action hereunder which
might in First Union's reasonable judgment involve any expense or
liability, unless First Union shall have been furnished with indemnity
satisfactory to it and additional fees for taking of such action;
(iv) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to First Union and
reasonably believed by First Union to be genuine and to have been signed by
the proper party or parties;
(v) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution
and validity and effectiveness of its provisions, but also as to the truth
and accuracy of any information contained therein, which First Union
believes in good faith to be genuine and to have been signed or represented
by a proper person or persons acting in a fiduciary or representative
capacity;
4
<PAGE>
(vi) may rely on and shall be protected in acting upon written or
oral instructions from the President, any Senior Vice President, any
Executive Vice President, any Vice President, the Treasurer, any Assistant
Treasurer or any other designed officer of the Company;
(vii) may consult with its own counsel with respect to any questions
relating to First Union's duties and responsibilities and the advice of
such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by First Union
hereunder in good faith and in accordance with the advice of such counsel;
and
(viii) shall not advise any person tendering Original Capital
Securities pursuant to the Exchange Offer as to whether to tender or
refrain from tendering all or any portion of its Original Capital
Securities or as to the market value, decline or appreciation in market
value of any Original Capital Securities that may or may not occur as a
result of the Exchange Offer or as to the market value of the Exchange
Capital Securities. First Union shall furnish copies of the Prospectus,
Letter of Transmittal and the Notice of Guaranteed Delivery or such other
forms as may be approved from time to time by the Company and the Trust, to
all persons requesting such documents from First Union.
o. First Union shall advise orally and promptly thereafter confirm in
writing to the Company and the Trust and such other person or persons as the
Company and the Trust may request, daily (and more frequently during the week
immediately preceding the Expiration Date and if otherwise reasonably requested)
up to and including the Expiration Date, the aggregate principal amount of
Original Capital Securities which have been tendered pursuant to the terms of
the Exchange Offer and the items received by First Union pursuant to the
Exchange Offer and this Agreement. In addition, First Union will also provide,
and cooperate in making available to the Company and the Trust, or any such
other person or persons upon request (such request if made orally, to be
confirmed in writing) made from time to time, such other information in its
possession as the Company and the Trust may reasonably request. Such cooperation
shall include, without limitation, the granting by First Union to the Company
and the Trust, and such person or persons as the Company and the Trust may
request, access to those persons on First Union's staff who are responsible for
receiving tenders, in order to ensure that immediately prior to the Expiration
Date the Company and the Trust shall have received adequate information in
sufficient detail to enable the Company and the Trust to decide whether to
extend the Exchange Offer. First Union shall prepare a final list of all persons
whose tenders were accepted, the aggregate principal amount of Original Capital
Securities tendered, the aggregate principal amount of Original Capital
Securities accepted and deliver said list to the Company and the Trust.
p. Letters of Transmittal, book-entry confirmations and Notices of
Guaranteed Delivery shall be stamped by First Union as to the date and the time
of receipt thereof and shall be preserved by First Union as to the date and the
time of receipt thereof and shall be preserved by First Union for a period of
time at least equal to the period of time First Union preserves other
5
<PAGE>
records pertaining to the transfer of securities, or one year, whichever is
longer, and thereafter shall be delivered by First Union to the Company and the
Trust. First Union shall dispose of unused Letters of Transmittal and other
surplus materials by returning them to the Company or the Trust.
2. COMPENSATION.
$____ will be payable to First Union in its capacity as Exchange Agent;
provided, that First Union reserves the right to receive reimbursement from the
Company for any reasonable out-of-pocket expenses incurred as Exchange Agent in
performing the services described herein.
3. INDEMNIFICATION.
a. The Company and the Trust hereby agree to protect, defend, indemnify and
hold harmless First Union against and from any and all costs, losses,
liabilities, taxes, expenses (including reasonable counsel fees and
disbursements) and claims imposed upon or asserted against First Union on
account of any action taken or omitted to be taken by First Union in connection
with its acceptance of or performance of its duties under this Agreement and the
documents related thereto as well as the reasonable costs and expenses of
defending itself against any claim or liability arising out of or relating to
this Agreement and the documents related thereto. This indemnification shall
survive the release, discharge, termination and/or satisfaction of this
Agreement. Anything in this Agreement to the contrary notwithstanding, neither
the Company nor the Trust shall be liable for indemnification or otherwise for
any loss, liability, cost or expense to the extent arising out of First Union's
bad faith, gross negligence or willful misconduct. In no case shall the Company
or the Trust be liable under this indemnification agreement with respect to any
claim against First Union until the Company and the Trust shall be notified by
First Union, by letter, of the written assertion of a claim against First Union
or of any other action commenced against First Union, promptly after First Union
shall have received any such written assertion or shall have been served with a
summons in connection therewith; provided, that, First Union's failure to give
such notice shall not excuse the Company or the Trust from its obligations
hereunder. The Company and the Trust shall be entitled to participate at their
own expense in the defense of any such claim or other action, and, if the
Company and the Trust so elect, the Company or the Trust may assume the defense
of any pending or threatened action against First Union in respect of which
indemnification may be sought hereunder with counsel reasonably acceptable to
First Union; provided that the Company and the Trust shall not be entitled to
assume the defense of any such action if the named parties to such action
include the Company or the Trust and First Union and representation of the
parties by the same legal counsel would, in the reasonable opinion of counsel
for First Union , be inappropriate due to actual or potential conflicting
interests between them. In the event that the Company or the Trust shall assume
the defense of any such suit with counsel reasonably acceptable to First Union,
the Company or the Trust, as applicable, shall not be liable for the fees and
expenses incurred by First Union of any counsel retained by First Union
subsequent to such assumption of defense by the Company or the Trust.
6
<PAGE>
b. The Company agrees to indemnify and hold harmless the Trust from and
against any and all losses, claims, damages and liabilities whatsoever, as due
from the Trust under this Section.
4. TAX INFORMATION.
The Company or the Trust shall arrange to comply with all requirements
under the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company and the Trust understand that they may be required,
in certain instances, to deduct 31% with respect to interest paid on the
Exchange Capital Securities and proceeds from the sale, exchange, redemption or
retirement of the Exchange Capital Securities from Holders who have not supplied
their correct Taxpayer Identification Number or required certification. Such
funds will be turned over to the Internal Revenue Service.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
6. NOTICES. Any communication or notice provided for hereunder shall be in
writing and shall be given (and shall be deemed to have been given upon receipt)
by delivery in person, telecopy, or overnight delivery or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
If to the Company:
379 North Main Street
Doylestown, Pennsylvania 18901-0818
Telecopier No.: (215) 345-7286
Confirmation: (215) 345-5100
Attention: John C. Soffronoff
President and Chief Executive Officer
If to the Trust:
379 North Main Street
Doylestown, Pennsylvania 18901-0818
Telecopier No.: (215) 345-7286
Confirmation: (215) 345-5100
Attention: John C. Soffronoff
Administrative Trustee
7
<PAGE>
If to First Union:
One Rodney Square
920 King Street
1st Floor
Wilmington, Delaware 19801
Telecopier No.: (302) 888-7544
Confirmation: (302) 888-7532
Attention: Ed Truitt, Corporate Trust Administration
With a copy to:
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telecopier No.: (302) 658-6548
Confirmation: (302) 651-7526
Attention: Doneene Keemer Damon, Esquire
or, as to each party, at such other address as shall be designated by such party
in a written notice complying as to delivery with the terms of this Section.
7. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement. Without
limitation to the foregoing, the parties hereto expressly agree that no holder
of Capital Securities shall have any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8. COUNTERPARTS; SEVERABILITY. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which when so executed shall be deemed an original, and all of such counterparts
shall together constitute one and the same agreement. If any term or other
provision of this Agreement or the application thereof is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the agreements contained herein is
not affected in any manner adverse to any party. Upon such determination that
any term or provision or the application thereof is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the agreements contained
herein may be performed as originally contemplated to the fullest extent
possible.
8
<PAGE>
9. CAPTIONS. The descriptive headings contained in this Agreement are
included for convenience or reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended or modified nor may any provision hereof be
waived except in writing signed by each party to be bound thereby.
11. TERMINATION. This Agreement shall terminate upon the earlier of (a) the
90th day following the expiration, withdrawal, or termination of the Exchange
Offer, (b) the close of business on the date of actual receipt of written notice
by First Union from the Company and the Trust stating that this Agreement is
terminated, (c) one year following the date of this Agreement, or (d) the time
and date on which this Agreement shall be terminated by mutual consent of the
parties hereto.
Kindly indicate your willingness to act as Exchange Agent and First Union's
acceptance of the foregoing provisions by signing in the space provided below
for that purpose and returning to the Company a copy of this Agreement so
signed, whereupon this Agreement and First Union's acceptance shall constitute a
binding agreement among First Union, the Company and the Trust.
Very truly yours,
PREMIER BANCORP, INC.
By: ____________________________
Name:
Title:
PBI CAPITAL TRUST
By: ____________________________
Administrative Trustee
Accepted and agreed to as of the date first
written above:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
By: _______________________________________
Name:
Title:
9
EXHIBIT 99.4
PBI CAPITAL TRUST
OFFER FOR ALL OUTSTANDING
8.57% ORIGINAL CAPITAL SECURITIES
IN EXCHANGE FOR
8.57% EXCHANGE CAPITAL SECURITIES
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
PBI Capital Trust (the "Trust") is offering, upon and subject to the terms
and conditions set forth in a prospectus dated February 8, 1999 (the
"Prospectus"), and the enclosed letter of transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 8.57% Exchange Capital
Securities for any and all of its outstanding 8.57% Original Capital Securities
(the "Original Capital Securities"). The Exchange Offer is being made in order
to satisfy certain obligations of the Trust and Premier Bancorp, Inc. (the
"Corporation") contained in the registration rights agreement dated August 6,
1998, among the Trust, the Corporation and the initial purchaser referred to
therein.
We are requesting that you contact your clients for whom you hold Original
Capital Securities regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Original Capital Securities
registered in your name or in the name of your nominee, or who hold Original
Capital Securities registered in their own names, we are enclosing the following
documents:
1. The Prospectus dated February 8, 1999;
2. The Letter of Transmittal for your use and for the information
(or the use, where relevant) of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Original Capital Securities are not
immediately available or time will not permit all required documents to reach
the Exchange Agent prior to the Expiration Date (as defined below) or if the
procedure for book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Original Capital Securities registered in your name or the name
of your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer; and
5. Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON APRIL 2, 1999, OR ON SUCH LATER DATE OR TIME TO
WHICH THE CORPORATION OR THE TRUST MAY EXTEND THE EXCHANGE OFFER (THE
"EXPIRATION DATE"). THE ORIGINAL CAPITAL SECURITIES TENDERED PURSUANT TO THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, your clients must tender by having
you execute for them a book-entry transfer of tendered Original Capital
Securities into the account of First Union Trust Company, National Association,
as Exchange Agent, at The Depository Trust Company ("DTC") using DTC's Automated
Tender Offer Program. (Your clients may also tender by having certificates
representing the Original Capital Securities, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other required documents delivered to such
Exchange Agent.) The Letter of Transmittal and the Prospectus should be
consulted for complete instructions and information about participation in the
Exchange Offer.
If holders of Original Capital Securities wish to tender, but it is
impracticable for them to forward their certificates for Original Capital
Securities prior to the expiration of the Exchange Offer or to comply with the
book-entry transfer procedures on a timely basis, a tender may be effected by
following the guaranteed delivery procedures described in the Prospectus under
"The Exchange Offer -- Procedures for Tendering Original Capital Securities --
Guaranteed Delivery."
The Trust will, upon request, reimburse brokers, dealers, commercial banks
and trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding the Prospectus and the related documents to the beneficial
owners of Original Capital Securities held by them as nominee or in a fiduciary
capacity. The Trust will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Original Capital Securities pursuant to the
Exchange Offer, except as set forth in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to First
Union Trust Company, National Association, the Exchange Agent for the Original
Capital Securities, at its address and telephone number set forth on the front
of the Letter of Transmittal.
Very truly yours,
PBI CAPITAL TRUST
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE TRUST OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
EXHIBIT 99.5
PBI CAPITAL TRUST
OFFER FOR ALL OUTSTANDING
8.57% ORIGINAL CAPITAL SECURITIES
IN EXCHANGE FOR
8.57% EXCHANGE CAPITAL SECURITIES
To Our Clients:
Enclosed for your consideration is a prospectus dated February 8, 1998 (the
"Prospectus"), and the related letter of transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of PBI Capital Trust
(the "Trust") and Premier Bancorp, Inc. (the "Corporation") to exchange the
Trust's 8.57% Exchange Capital Securities (the "Exchange Capital Securities")
for any and all of the Trust's outstanding 8.57% Original Capital Securities
(the "Original Capital Securities"), upon the terms and subject to the
conditions described in the Prospectus. The Exchange Offer is being made in
order to satisfy certain obligations of the Trust and the Corporation contained
in the registration rights agreement dated August 6, 1998, among the Trust, the
Corporation, and the initial purchaser referred to therein.
This material is being forwarded to you as the beneficial owner of the
Original Capital Securities carried by us in your account but not registered in
your name. A TENDER OF SUCH ORIGINAL CAPITAL SECURITIES MAY ONLY BE MADE BY US
AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Original Capital Securities held by us for your account,
pursuant to the terms and conditions set forth in the enclosed Prospectus and
Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Original Capital Securities on your behalf in
accordance with the provisions of the Exchange Offer. The Exchange Offer shall
expire at 5:00 p.m., New York City time, on April 2, 1999, or on such later date
or time to which the Corporation or the Trust may extend the Exchange Offer. Any
Original Capital Securities tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Original Capital Securities.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer -- Conditions to the
Exchange Offer."
3. Any transfer taxes incident to the transfer of Original Capital
Securities from the
<PAGE>
holder to the Corporation will be paid by the Corporation, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on April 2,
1999, or on such later date or time to which the Corporation or the Trust may
extend the Exchange Offer.
If you wish to have us tender your Original Capital Securities, please so
instruct us by completing, executing and returning to us the instruction form on
the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER ORIGINAL CAPITAL
SECURITIES.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by PBI Capital
Trust with respect to its Original Capital Securities.
This will instruct you to tender the Original Capital Securities held by
you for the account of the undersigned, upon and subject to the terms and
conditions set forth in the Prospectus and the related Letter of Transmittal.
Please tender the Original Capital Securities held by you for my account as
indicated below:
Aggregate Liquidation Amount at
Maturity of Original Capital
Securities Tendered
----------------------------------
8.57% Original Capital Securities
[ ] Please do not tender
any Original Capital
Securities held by
you for my account.
Dated: ___________, 1999
----------------------------------
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Signature(s)
<PAGE>
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Please print name(s) here
----------------------------------
----------------------------------
----------------------------------
Addresses
----------------------------------
Area Code and Telephone Number
----------------------------------
Tax Identification or Social
Security
None of the Original Capital Securities held by us for your account will be
tendered unless we receive written instructions from you to do so. Unless a
specific contrary instruction is given in the space provided, your signature(s)
hereon shall constitute an instruction to us to tender all the Original Capital
Securities held by us for your account.
