<PAGE>
PROSPECTUS
$200,000,000
ZIONS INSTITUTIONAL CAPITAL TRUST A
OFFER TO EXCHANGE ITS 8.536% CAPITAL SECURITIES, SERIES A, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL OF ITS
OUTSTANDING 8.536% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
ZIONS FIRST NATIONAL BANK
AND
ZIONS BANCORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MAY 1, 1997, UNLESS EXTENDED.
---------------------
Zions Institutional Capital Trust A, a business trust created under the laws
of the State of Delaware (the "Issuer Trust"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $200,000,000 aggregate Liquidation Amount of its
8.536% Capital Securities, Series A (Liquidation Amount $1,000 per Capital
Security) (the "New Capital Securities") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like Liquidation Amount of its outstanding 8.536% Capital
Securities, Series A (Liquidation Amount $1,000 per Capital Security) (the "Old
Capital Securities"), of which $200,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, Zions Bancorporation, a Utah
corporation (the "Holding Company," which together with its subsidiaries is
herein referred to as the "Corporation"), is also exchanging (i) its guarantee
with respect to the guarantee by Zions First National Bank (the "Bank") of the
payment of Distributions (as defined herein) and payments on liquidation or
redemption of the Old Capital Securities (the "Old Guarantee") for a like
guarantee with respect to the Bank's guarantee of the New Capital Securities
(the "New Guarantee"), and (ii) all of its guarantees (the "Old Debenture
Guarantees") of the outstanding 8.536% Junior Subordinated Deferrable Interest
Debentures, Series A (the "Junior Subordinated Debentures"), of which
$206,186,000 aggregate principal amount is outstanding, for identical guarantees
(the "New Debenture Guarantees") of the Junior Subordinated Debentures (the
Holding Company's guarantee of the Old Guarantee set forth in (i) above,
together with the Old Debenture Guarantee set forth in (ii) above, collectively
the "Old Parent Guarantee," and the Holding Company's guarantee of the New
Guarantee set forth in (i) above together with the New Debenture Guarantee, the
"New Parent Guarantee"), which New Parent Guarantee also has been registered
under the Securities Act. The Old Capital Securities, the Old Guarantee and the
Old Parent Guarantee are collectively referred to herein as the "Old Securities"
and the New Capital Securities, the New Guarantee and the New Parent Guarantee
are collectively referred to herein as the "New Securities."
(CONTINUED ON NEXT PAGE)
-------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE CAPITAL
SECURITIES MAY BE DEFERRED AND CERTAIN RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES.
-----------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR
ANY OTHER GOVERNMENTAL AGENCY.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is April 1, 1997.
<PAGE>
(COVER PAGE CONTINUED)
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
(other than the New Guarantee, which is exempt from the registration
requirements of the Securities Act) have been registered under the Securities
Act and therefore will not be subject to certain restrictions on transfer
applicable to the Old Securities and (ii) the New Capital Securities will not
provide for any increase in the Distribution rate thereon. See "Description of
New Securities" and "Description of Old Securities." The New Capital Securities
are being offered for exchange in order to satisfy certain obligations of the
Holding Company and the Issuer Trust under the Exchange and Registration Rights
Agreement, dated as of December 26, 1996 (the "Registration Rights Agreement"),
among the Holding Company, the Bank, the Issuer Trust and Goldman, Sachs & Co.,
Citicorp Securities, Inc. and Dean Witter Reynolds Inc. (the "Initial
Purchasers"). In the event that the Exchange Offer is consummated, any Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer and the New Capital Securities issued in the Exchange Offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement (as
defined herein).
The New Capital Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust. The Bank, a subsidiary of the
Holding Company, is the holder of all of the beneficial interests represented by
common securities of the Issuer Trust ("Common Securities" and, collectively
with the Capital Securities, the "Trust Securities"). Chase Trust Company of
California is the Property Trustee of the Issuer Trust. The Issuer Trust exists
for the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in Junior Subordinated Debentures issued by the Bank. The Junior
Subordinated Debentures mature on December 15, 2026 (the "Stated Maturity"). The
Capital Securities will have a preference under certain circumstances over the
Common Securities with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of New Securities --
Description of Capital Securities -- Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture
relating to the Junior Subordinated Debentures and the Debenture Guarantees, as
amended and supplemented from time to time, among the Holding Company, the Bank
and Chase Trust Company of California, as trustee (the "Debenture Trustee"),
(ii) the "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the Issuer Trust among the Bank, as Depositor, Chase Trust Company
of California, as Property Trustee (the "Property Trustee"), Chemical Manhattan
Bank Delaware, as Delaware Trustee (the "Delaware Trustee"), the Administrative
Trustees named therein (the Property Trustee, the Delaware Trustee and the
Administrative Trustees collectively, the "Issuer Trustees") and the holders,
from time to time, of undivided beneficial interests in the assets of the Issuer
Trust, (iii) the "Guarantee Agreement" means the Guarantee Agreement among the
Holding Company, the Bank and Chase Trust Company of California, as trustee (the
"Guarantee Trustee"), providing a guarantee, on the terms and conditions
described herein, for the benefit of holders of the Capital Securities (the
"Guarantee"), and (iv) the "Expense Agreement" means the Expense Agreement
between the Bank and the Issuer Trust. In addition, as the context may require,
unless expressly stated otherwise, (i) the "Capital Securities" includes the Old
Capital Securities and the New Capital Securities, (ii) the "Debenture
Guarantee" includes the Old Debenture Guarantee and the New Debenture Guarantee,
(iii) the "Guarantee" includes the Old Guarantee and the New Guarantee and (iv)
the "Parent Guarantee" includes the Old Parent Guarantee and the New Parent
Guarantee.
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds. The Capital
Securities will be issued, and may be transferred, only in blocks having a
Liquidation Amount of
2
<PAGE>
not less than $250,000 (250 Capital Securities). See "Description of New
Securities -- Description of Capital Securities -- Book Entry, Delivery and
Form."
Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions accumulating from the date of original issuance
and payable semi-annually in arrears on the 15th day of June and December of
each year, commencing June 15, 1997, at the annual rate of 8.536% of the
Liquidation Amount of $1,000 per Capital Security ("Distributions"). The Bank
has the right to defer payment of interest on the Junior Subordinated Debentures
at any time or from time to time for a period not exceeding 10 consecutive
semiannual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of 8.536%, compounded
semiannually, to the extent permitted by applicable law), the Bank may elect to
begin a new Extension Period subject to the requirements set forth herein. If
interest payments on the Junior Subordinated Debentures are so deferred,
Distributions on the Capital Securities will also be deferred and the Bank will
not be permitted, subject to certain exceptions described herein, to declare or
pay any cash distributions with respect to the Bank's capital stock or with
respect to debt securities of the Bank that rank PARI PASSU in all respects with
or junior to the Junior Subordinated Debentures. During an Extension Period,
interest on the Junior Subordinated Debentures will continue to accrue (and the
amount of Distributions to which holders of the Capital Securities are entitled
will accumulate) at the rate of 8.536% per annum, compounded semi-annually, and
holders of Capital Securities will be required to accrue interest income for
United States federal income tax purposes. See "Description of New Securities --
Description of Subordinated Debentures -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
The Bank has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Junior Subordinated Indenture and the Expense
Agreement (each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer Trust's obligations under the
Capital Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures, the Guarantee, the Expense Agreement and the Parent
Guarantee -- Full and Unconditional Guarantee." The Guarantee of the Bank
guarantees the payment of Distributions and payments on liquidation or
redemption of the Capital Securities, but only in each case to the extent of
funds held by the Issuer Trust, as described herein (the "Guarantee"). See
"Description of New Securities -- Description of Guarantee." If the Bank does
not make payments on the Junior Subordinated Debentures held by the Issuer
Trust, the Issuer Trust may have insufficient funds to pay Distributions on the
Capital Securities. The Guarantee does not cover payment of Distributions when
the Issuer Trust does not have sufficient funds to pay such Distributions. In
such event, a holder of Capital Securities may institute a legal proceeding
directly against the Bank to enforce payment of such Distributions to such
holder. See "Description of New Securities -- Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities."
The obligations of the Bank under the Guarantee and the Capital Securities are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of New Securities -- Description of Junior Subordinated
Debentures -- Subordination") of the Bank.
The Corporation has irrevocably and unconditionally guaranteed (the "Parent
Guarantee") all of the Bank's obligations under the Junior Subordinated
Debentures and the Guarantee. See "Description of New Securities -- Parent
Guarantee." During any Extension Period the Holding Company will not be
permitted, subject to certain exceptions, to declare or pay any cash
distributions with respect to the Holding Company's capital stock or with
respect to debt securities of the Holding Company that rank PARI PASSU in all
respects with or junior to the Parent Guarantee.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at Stated Maturity or
their earlier redemption. The Junior Subordinated Debentures are redeemable
prior to maturity at the option of the Bank (i) on or after December 15, 2006,
in whole at any time or in part from time to time, or (ii) in whole (but not in
part) at any time within 90
3
<PAGE>
days following the occurrence and continuation of a Tax Event, Investment
Company Event or Capital Treatment Event (each as defined herein), in each case
at a redemption price set forth herein, which includes the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption. The ability of the Bank to exercise its rights to redeem the Junior
Subordinated Debentures or to cause the redemption of the Capital Securities
prior to the Stated Maturity may be subject to prior regulatory approval by the
Office of the Comptroller of the Currency (the "OCC") or the Board of Governors
of the Federal Reserve System (the "Federal Reserve"), if then required under
applicable OCC or Federal Reserve capital guidelines or policies. See
"Description of New Securities -- Description of Junior Subordinated Debentures
- -- Redemption."
The holders of the outstanding Common Securities have the right at any time
to terminate the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Bank to terminate the Issuer Trust may be subject to prior regulatory
approval of the OCC or the Federal Reserve, if then required under applicable
OCC or Federal Reserve capital guidelines or policies. See "Description of New
Securities -- Description of Capital Securities -- Liquidation Distribution Upon
Termination."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Bank and the Parent Guarantee is unsecured and
subordinated to all Senior Indebtedness of the Holding Company.
In the event of the termination of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, the
holders of the Capital Securities will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, subject to certain exceptions, which may be in
the form of a distribution of such amount in Junior Subordinated Debentures. See
"Description of New Securities -- Description of Capital Securities --
Liquidation Distribution Upon Termination."
The Issuer Trust is making the Exchange Offer of the New Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Holding Company nor the Issuer Trust has sought its own
interpretive letter, and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance, and subject to the two immediately following
sentences, the Holding Company and the Issuer Trust believe that New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an "affiliate" of the Holding Company, the Bank or the Issuer Trust within
the meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends
to participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Issuer Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (i) will not
be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be entitled to tender such Old Capital
Securities in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer (a "Participating Broker-Dealer") holds Old Capital
Securities acquired for its own account as a result of market-making or other
4
<PAGE>
trading activities and exchanges such Old Capital Securities for New Capital
Securities, then such Participating Broker-Dealer must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. In addition, the Holding
Company and the Issuer Trust may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Holding Company and the Issuer Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) on behalf of whom such holder holds the Capital Securities to be
exchanged in the Exchange Offer. Each Participating Broker-Dealer that receives
New Capital Securities for its own account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital Securities for its own account as
the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Holding Company and the Issuer
Trust believe that Participating Broker-Dealers, may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Holding
Company and the Issuer Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 180 days after the Expiration Date (as defined herein) or, if
earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." Any person, including
any Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein) that, upon receipt of notice from the Holding Company or the
Issuer Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements contained or
incorporated by reference herein, in the 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 Securities pursuant to this
5
<PAGE>
Prospectus until the Holding Company or the Issuer 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 Holding Company or the Issuer Trust has given notice that
the sale of the New Capital Securities (or the Parent Guarantee, as applicable)
may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed the Holding Company and the Issuer
Trust that they each currently intend to make a market in the New Capital
Securities, they are not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the New Capital Securities.
Neither the Holding Company nor the Bank currently intends to apply for listing
of the New Capital Securities on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Holding Company nor the Issuer Trust will have
any further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk Factors
- -- Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on May 1, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Holding Company and the Issuer Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on or
prior to the Expiration Date. The Exchange Offer is not conditioned upon any
minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Holding Company or the Issuer Trust and to
the terms and provisions of the Registration Rights Agreement. Old Capital
Securities may be tendered in whole or in part having a Liquidation Amount of
not less than $250,000 (250 Capital Securities) and any integral multiple of
$1,000 Liquidation Amount (1 Capital Security) in excess thereof. The Holding
Company has agreed to pay all expenses of the Exchange Offer, except as
otherwise specified herein. See "The Exchange Offer -- Fees and Expenses." Each
New Capital Security will pay cumulative Distributions from the most recent
Distribution Date (as defined herein) on the Old Capital Securities surrendered
in exchange for such New Capital Securities or, if no Distributions have been
paid on such Old Capital Securities, from December 26, 1996. Holders of the Old
Capital Securities whose Old Capital Securities are accepted for exchange will
not receive accumulated Distributions on such Old Capital Securities for any
period from and after the last Distribution Date on such Old Capital Securities
prior to the original issue date of the New Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after such Distribution Date or, if no such interest has been paid or duly
provided for, from and after December 26, 1996. This Prospectus, together with
the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of April 1, 1997.
6
<PAGE>
None of the Holding Company, the Bank or the Issuer Trust will receive any
proceeds from the issuance of the New Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds From Sale of Old Capital Securities" and "Plan of Distribution."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS OF
THE BANK, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER INSURER OR GOVERNMENTAL AGENCY.
THE JUNIOR SUBORDINATED DEBENTURES ARE SUBORDINATE TO THE CLAIMS OF DEPOSITORS
AND GENERAL CREDITORS OF THE BANK.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH
RESPECT TO SUCH PURCHASE OR HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER
RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS
COMPLIED WITH ANY REQUEST BY THE BANK OR THE ISSUER TRUST FOR AN OPINION OF
COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE AVAILABILITY OF SUCH EXEMPTION.
ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL
BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER
(A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES
ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING.
7
<PAGE>
THE CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE HELD OR TRANSFERRED, ONLY
IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $250,000. ANY TRANSFER,
SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $250,000, OR RESULTING IN A HOLDER'S HOLDING CAPITAL
SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $250,000, SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER, ANY SUCH TRANSFEREE
SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL
SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN SUCH CAPITAL SECURITIES.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information..................................................... 9
Incorporation of Certain Documents by Reference........................... 9
Summary................................................................... 11
Risk Factors.............................................................. 18
Zions Bancorporation and Zions First National Bank........................ 24
Consolidated Ratios of Earnings to Fixed Charges of the Corporation....... 25
Zions Institutional Capital Trust A....................................... 25
Use of Proceeds From Sale of Old Capital Securities....................... 26
Capitalization............................................................ 27
Accounting Treatment...................................................... 28
The Exchange Offer........................................................ 28
Description of New Securities............................................. 38
Description of Old Securities............................................. 63
Relationship Among the Capital Securities, the Junior Subordinated
Debentures, the Guarantee, the Expense Agreement and the Parent
Guarantee............................................................... 63
Certain Federal Income Tax Consequences................................... 65
Certain ERISA Considerations.............................................. 68
Supervision, Regulation and Other Matters................................. 70
Plan of Distribution...................................................... 72
Validity of New Capital Securities........................................ 72
Experts................................................................... 72
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE HOLDING COMPANY OR THE ISSUER TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN
OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE AFFAIRS OF THE HOLDING COMPANY OR THE ISSUER TRUST SINCE THE DATE HEREOF.
8
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports (including the Incorporated Documents), proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center,
14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material (including the Incorporated Documents) can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Such material (including the
Incorporated Documents) may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. The Holding
Company's common stock is quoted on the NASDAQ Stock Market, and such reports
(including the Incorporated Documents), proxy statements and other information
concerning the Corporation can be inspected at the office of NASDAQ Operations,
1735 K Street, N.W., Washington, D.C.
The Holding Company and the Issuer Trust have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Holding Company and the Issuer Trust do
not consider that such financial statements would be material to holders of the
Capital Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and the Parent Guarantee and issuing
the Trust Securities. See "Zions Institutional Capital Trust A" and "Description
of New Securities." In addition, the Holding Company does not expect that the
Issuer Trust will be filing reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act are incorporated into
this Prospectus by reference:
1. the Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
2. the Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996, and September 30, 1996; and
3. the Corporation's Current Reports on Form 8-K dated September 27,
1996, December 26, 1996 and March 10, 1997.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
Expiration Date shall be deemed to be incorporated by reference into this
Prospectus from the date of filing of such document. Any statement contained
herein or in a document all or a portion of which is incorporated or deemed to
be incorporated by
9
<PAGE>
reference herein or therein, shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
DALE GIBBONS, ZIONS BANCORPORATION, ONE SOUTH MAIN, SUITE 1380, SALT LAKE CITY,
UTAH 84111, TELEPHONE NUMBER (801) 524-4787. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 24, 1997. IN ADDITION, THE
HOLDING COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER
THAN EXHIBITS NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE TEXTS OF SUCH
DOCUMENTS).
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<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
ZIONS BANCORPORATION AND ZIONS FIRST NATIONAL BANK
Zions First National Bank (the "Bank") is a national banking association
with its principal office in Salt Lake City, Utah. The Bank provides a wide
variety of commercial and retail banking and mortgage-lending financial
services. At December 31, 1996, the Bank had total assets of $4.86 billion,
total loans (net of unearned income) of $2.48 billion, total deposits of $3.17
billion and total equity capital of $0.37 billion. The Bank's business is
subject to examination and regulation by federal banking authorities. Its
primary federal regulatory authority is the OCC.
The Bank is a wholly owned subsidiary of the Holding Company. The Holding
Company was organized under the laws of the State of Utah in 1955 and is
registered under the Bank Holding Company Act of 1956, as amended. The
Corporation is the second largest bank holding company headquartered in Utah and
provides a full range of banking and related services, primarily in Utah, Nevada
and Arizona. Its principal subsidiaries are banking subsidiaries and include the
Bank, the second largest commercial banking organization in Utah, Nevada State
Bank, the fifth largest commercial bank in Nevada, and National Bank of Arizona,
the fifth largest commercial bank in Arizona. At December 31, 1996, the
Corporation had total assets of $6.48 billion, total loans (net of unearned
income and allowance for loan losses) of $3.38 billion, total deposits of $4.55
billion and total shareholders' equity of $0.51 billion. The Holding Company's
principal executive offices are located at One South Main, Suite 1380, Salt Lake
City, Utah 84111, and its telephone number at that address is (801) 524-4787.
ZIONS INSTITUTIONAL CAPITAL TRUST A
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on December 18, 1996, which will be governed by the Trust Agreement among
the Bank, as Depositor, Chase Trust Company of California, as Property Trustee,
Chase Manhattan Bank Delaware, as Delaware Trustee, the Administrative Trustees
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of the Issuer Trust. The Issuer Trust's business and
affairs are conducted by its trustees: initially, Chase Trust Company of
California, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and three Administrative Trustees who are employees or officers of or
affiliated with the Bank. The Issuer Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of the Trust Securities). Accordingly, the
Junior Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust. The Issuer Trust's principal executive offices are
located at One South Main, Suite 1380, Salt Lake City, Utah 84111, Attention:
Administrative Trustee and its telephone number at that address is (501)
524-4787.
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<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer............ Up to $200,000,000 aggregate Liquidation Amount of New
Capital Securities are being offered in exchange for a like
aggregate Liquidation Amount of Old Capital Securities. Old
Capital Securities may be tendered for exchange in whole or
in part in a Liquidation Amount of $250,000 (250 Capital
Securities), or any integral multiple of $1,000 in excess
thereof. The Holding Company and the Issuer Trust are making
the Exchange Offer in order to satisfy their obligations
under the Registration Rights Agreement relating to the Old
Capital Securities. For a description of the procedures for
tendering Old Capital Securities, see "The Exchange Offer --
Procedures For Tendering Old Capital Securities."
Expiration Date............... 5:00 p.m., New York City time, on May 1, 1997 (such time on
such date being hereinafter called the "Expiration Date")
unless the Exchange Offer is extended by the Holding Company
and the Issuer Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the
Exchange Offer is extended). See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Conditions to the Exchange
Offer....................... The Exchange Offer is subject to certain conditions, which
may be waived by the Holding Company and the Issuer Trust in
their sole discretion. The Exchange Offer is not conditioned
upon any minimum Liquidation Amount of Old Capital
Securities being tendered. See "The Exchange Offer --
Conditions to the Exchange Offer." The Holding Company and
the Issuer Trust reserve the right in their sole and
absolute discretion, subject to applicable law, at any time
and from time to time, (i) to delay the acceptance of the
Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions have not been
satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities
tendered pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities, or (iv) to
waive any condition or otherwise amend the terms of the
Exchange Offer in any respect. See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Withdrawal Rights............. Tenders of Old Capital Securities may be withdrawn at any
time on or prior to the Expiration Date by delivering a
written notice of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth below under
"The Exchange Offer -- Withdrawal Rights."
Procedures for Tendering Old
Capital Securities.......... Tendering holders of Old Capital Securities must complete
and sign a Letter of Transmittal in accordance
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
with the instructions contained therein and forward the same
by mail, facsimile or hand delivery, together with any other
required documents, to the Exchange Agent, either with the
Old Capital Securities to be tendered or in compliance with
the specified procedures for guaranteed delivery of Old
Capital Securities. Certain brokers, dealers, commercial
banks, trust companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old Capital
Securities registered in the name of a broker, dealer,
commercial bank, trust company or other nominee are urged to
contact such person promptly if they wish to tender Old
Capital Securities pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering Old Capital
Securities."
Letters of Transmittal and certificates representing Old
Capital Securities should not be sent to the Holding Company
or the Issuer Trust. Such documents should only be sent to
the Exchange Agent. Questions regarding how to tender and
requests for information should be directed to the Exchange
Agent. See "The Exchange Offer -- Exchange Agent."
Resales of New Capital
Securities.................. The Holding Company and the Issuer Trust are making the
Exchange Offer in reliance on the position of the staff of
the Division of Corporation Finance of the Commission as set
forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Holding
Company nor the Issuer Trust has sought its own interpretive
letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make
a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties.
Based on these interpretations by the staff of the Division
of Corporation Finance, and subject to the two immediately
following sentences, the Holding Company and the Issuer
Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities
may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has
no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an Affiliate or who
intends to participate in the Exchange Offer for the purpose
of distributing New Capital Securities, or any broker-dealer
who purchased the Old Capital Securities
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
from the Issuer Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the staff of
the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Old Capital
Securities in the Exchange Offer and (c) must comply with
the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer
of such Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old
Capital Securities acquired for its own account as a result
of market-making or other trading activities and exchanges
such Old Capital Securities for New Capital Securities, then
such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange
Old Capital Securities for New Capital Securities in the
Exchange Offer will be required to represent that (i) it is
not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of
its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. Each Participating
Broker-Dealer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of
market-making activities or other trading activities and
must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff
of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Holding
Company and the Issuer Trust believe that Participating
Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold
allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of
the Securities Act, which may be the prospectus
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the
resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in
connection with resales of New Capital Securities received
in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights
Agreement and to the limitations described below under "The
Exchange Offer -- Resales of New Capital Securities," the
Holding Company and the Issuer Trust have agreed that this
Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date or, if
earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan
of Distribution." Any person, including any Participating
Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. See "The Exchange
Offer -- Resales of New Capital Securities."
Exchange Agent................ The exchange agent with respect to the Exchange Offer is
Chase Trust Company of California (the "Exchange Agent").
The addresses, and telephone and facsimile numbers of the
Exchange Agent are set forth in "The Exchange Offer --
Exchange Agent" and in the Letter of Transmittal.
Federal Income Tax
Consequences................ Although the matter is not free from doubt, an exchange of
Old Capital Securities for New Capital Securities should not
be taxable to Securityholders.
</TABLE>
15
<PAGE>
THE NEW CAPITAL SECURITIES
<TABLE>
<S> <C>
Securities Offered............ $200,000,000 aggregate Liquidation Amount of 8.536% Capital
Securities, Series A (Liquidation Amount $1,000 per Capital
Security).
Distribution Dates............ June 15 and December 15 of each year, commencing on the
first such date following the original issuance of the New
Capital Securities.
Extension Periods............. Distributions on New Capital Securities may be deferred for
the duration of any Extension Period selected by the Bank
with respect to the payment of interest on the Junior
Subordinated Debentures. No Extension Period will exceed 10
consecutive semiannual periods or extend beyond the Stated
Maturity. See "Description of New Securities -- Description
of Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount."
Ranking....................... The New Capital Securities will rank PARI PASSU, and
payments thereon will be made PRO RATA, with the Common
Securities except as described under "Description of New
Securities -- Description of Capital Securities --
Subordination of Common Securities." The Junior Subordinated
Debentures will be unsecured and subordinate and junior in
right of payment to the extent and in the manner set forth
in the Junior Subordinated Indenture to all Senior
Indebtedness (as defined herein). See "Description of New
Securities -- Description of Junior Subordinated
Debentures." The Guarantee will constitute an unsecured
obligation of the Bank and will rank subordinate and junior
in right of payment to the extent and in the manner set
forth in the Guarantee to all Senior Indebtedness of the
Bank. See "Description of New Securities -- Description of
Guarantee." The Parent Guarantee will constitute an
unsecured obligation of the Holding Company and will rank
subordinated and junior in right of payment to all Senior
Indebtedness of the Holding Company. See "Description of New
Securities -- Parent Guarantee."
Redemption.................... The Trust Securities are subject to mandatory redemption in
whole but not in part (i) at the Stated Maturity upon
repayment of the Junior Subordinated Debentures, (ii)
contemporaneously with the optional redemption at any time
by the Bank of the Junior Subordinated Debentures upon the
occurrence and continuation of a Tax Event, Investment
Company Event or Capital Treatment Event and (iii) at any
time on or after December 15, 2006, contemporaneously with
the optional redemption by the Bank of the Junior
Subordinated Debentures, in each case at the applicable
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
Redemption Price. See "Description of New Securities --
Description of Capital Securities -- Redemption."
Rating........................ The New Capital Securities are expected to be rated a3 by
Moody's Investors Service, Inc., BBB- by Standard & Poor's
Ratings Services and A- by Thomson BankWatch Inc. A security
rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at
any time by the assigning rating organization.
ERISA Considerations.......... Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Certain ERISA
Considerations."
Absence of Market for the
Capital Securities.......... The New Capital Securities will be a new issue of securities
for which there currently is no market. Although the Initial
Purchasers have informed the Issuer Trust and the Bank that
they currently intend to make a market in the New Capital
Securities, the Initial Purchasers are not obligated to do
so, and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the New
Capital Securities. See "Risk Factors--Absence of Public
Market."
Use of Proceeds............... Neither the Corporation nor the Issuer Trust will receive
any cash proceeds from the issuance of the New Capital
Securities offered hereby. See "Use of Proceeds From Sale of
Old Capital Securities."
</TABLE>
For additional information regarding the Capital Securities, see
"Description of New Securities" and "Certain Federal Income Tax Consequences."
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
17
<PAGE>
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in the
Exchange Offer.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE, THE JUNIOR SUBORDINATED
DEBENTURES AND THE PARENT GUARANTEE
The obligations of the Bank under the Guarantee issued by the Bank for the
benefit of the holders of Capital Securities and under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness of the Bank. Substantially all liabilities of the Bank constitute
Senior Indebtedness. The federal banking agencies possess broad powers to take
corrective action as deemed appropriate for insured depository institutions,
including without limitation, under certain circumstances, the ability to
prohibit the payment of principal or interest on subordinated debt. See
"Supervision, Regulation and Other Matters." The obligations of the Holding
Company under the Parent Guarantee issued by the Holding Company for the benefit
of the holders of the Junior Subordinated Debentures and the Guarantee are
unsecured and rank subordinate and junior in right of payment to all Senior
Indebtedness of the Holding Company. Because the Holding Company is a holding
company, the right of the Holding Company to participate in any distribution of
assets of any subsidiary, upon such subsidiary's liquidation or reorganization
or otherwise (and thus the ability of holders of the Capital Securities, the
Junior Subordinated Debentures and the Guarantee to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary.
Accordingly, the Parent Guarantee will be effectively subordinated to all
existing and future liabilities of the Holding Company's subsidiaries. See
"Description of New Securities -- Parent Guarantee." None of the Junior
Subordinated Indenture, the Guarantee, the Trust Agreement or the Parent
Guarantee places any limitation on the amount of secured or unsecured debt,
including Senior Indebtedness, that may be incurred by the Bank or the Holding
Company. See "Description of New Securities -- Description of Guarantee --
Status of the Guarantee" and "Description of New Securities -- Description of
Junior Subordinated Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Capital Securities
is solely dependent upon the Bank's making payments on the Junior Subordinated
Debentures as and when required or, if applicable, the Holding Company making
payments on the Junior Subordinated Debentures pursuant to its obligations under
the Parent Guarantee.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Bank has the right
under the Junior Subordinated Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. See "Description of New Securities --
Description of Junior Subordinated Debentures -- Debenture Events of Default."
As a consequence of any such deferral, semi-annual Distributions on the Capital
Securities by the Issuer Trust will be deferred (and the amount of Distributions
to which holders of the Capital Securities are entitled will accumulate
additional Distributions thereon at the rate of 8.536% per annum, compounded
semi-annually from the relevant payment date for such Distributions) during any
such Extension Period. During any such Extension Period, the Bank may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Bank's capital stock
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Bank that rank PARI PASSU
in all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Bank in connection with any employment contract, benefit
plan or other
18
<PAGE>
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Bank (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Bank's capital stock (or any capital stock of a
subsidiary of the Bank) for any class or series of the Bank's capital stock or
of any class or series of the Bank's indebtedness for any class or series of the
Bank's capital stock, (c) the purchase of fractional interests in shares of the
Bank's capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (d) any declaration
of a dividend in connection with any stockholder's rights plan, or the issuance
of rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks PARI PASSU with
or junior to such stock). Prior to the termination of any such Extension Period,
the Bank may further defer the payment of interest, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of 8.536%, compounded
semi-annually, to the extent permitted by applicable law), the Bank may elect to
begin a new Extension Period subject to the above conditions. There is no
limitation on the number of times that the Bank may elect to begin an Extension
Period. See "Description of New Securities -- Description of Capital Securities
- -- Distributions" and "Description of New Securities -- Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
continue to accrue income (in the form of original issue discount) in respect of
its PRO RATA share of the Junior Subordinated Debentures held by the Issuer
Trust for United States federal income tax purposes. As a result, a holder of
Capital Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "-- Sales or Redemptions of Capital
Securities."
The Bank has no current intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior Subordinated
Debentures. However, should the Bank elect to exercise such right in the future,
the market price of the Capital Securities is likely to be affected. A holder
that disposes of its Capital Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Capital Securities. In addition, as a result of the existence of the
Bank's right to defer interest payments, the market price of the Capital
Securities (which represent preferred undivided beneficial interests in the
assets of the Issuer Trust) may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to such
deferrals.
TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event, the Bank has the right to redeem the
Junior Subordinated Debentures in whole (but not in part) at any time within 90
days following the occurrence of such Tax Event, Investment Company Event or
Capital Treatment Event and thereby cause a mandatory redemption of the Capital
Securities. Any such redemption shall be at a price equal to the Make-Whole
Amount (as defined in "Description of New Securities -- Description of Capital
Securities -- Redemption"), together with accumulated Distributions to but
excluding the date fixed for redemption. The ability of the Bank to exercise its
right to redeem the Junior Subordinated Debentures prior to the Stated Maturity
may be
19
<PAGE>
subject to prior regulatory approval by the OCC or the Federal Reserve, if then
required under applicable OCC or Federal Reserve capital guidelines or policies.
A "Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Bank 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
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities, there is more than an insubstantial risk that (i) the
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Junior Subordinated Debentures, (ii) interest payable by the Bank
on the Junior Subordinated Debentures is not, or within 90 days of the delivery
of such opinion will not be, deductible by the Bank, in whole or in part, for
United States federal income tax purposes or (iii) the Issuer Trust is, or will
be within 90 days of the delivery of the opinion, subject to more than a DE
MINIMIS amount of other taxes, duties or other governmental charges.
See " -- Possible Tax Law Changes Affecting the Capital Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise to
a Tax Event, which may permit the Bank to cause a redemption of the Capital
Securities prior to December 15, 2006.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Bank experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Capital Securities.
A "Capital Treatment Event" means the reasonable determination by the Bank
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Capital Securities, there
is more than an insubstantial risk that (i) the Bank will not be entitled to
treat an amount equal to the Liquidation Amount of the Capital Securities as at
least "Tier 2 Capital" (or the then equivalent thereof) for purposes of the
risk-based capital adequacy guidelines of the OCC, as then in effect and
applicable to the Bank or (ii) the Corporation will not be entitled to treat an
amount equal to the Liquidation Amount of the Capital Securities as "Tier 1
Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Holding Company.
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holders of all of the outstanding Common Securities have the right at
any time to terminate the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Bank to terminate the Issuer Trust may be subject to prior regulatory
approval by the OCC or the Federal Reserve, if then required under applicable
OCC or Federal Reserve capital guidelines or policies. See "Description of New
Securities -- Description of Capital Securities -- Liquidation Distribution Upon
Termination."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated
20
<PAGE>
Debentures upon a liquidation of the Issuer Trust should not be a taxable event
to holders of the Capital Securities. However, if a Tax Event were to occur that
would cause the Issuer Trust to be subject to United States federal income tax
with respect to income received or accrued on the Junior Subordinated
Debentures, a distribution of the Junior Subordinated Debentures by the Issuer
Trust could be a taxable event to the Issuer Trust and the holders of the
Capital Securities. See "Certain Federal Income Tax Consequences -- Distribution
of Junior Subordinated Debentures to Securityholders."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities, or
for Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Issuer Trust occurs. Accordingly, the
Capital Securities that an investor may purchase, whether pursuant to the offer
made hereby or in the secondary market, or the Junior Subordinated Debentures
that a holder of Capital Securities may receive on liquidation of the Issuer
Trust may trade at a discount to the price that the investor paid to purchase
the Capital Securities offered hereby. Because holders of Capital Securities may
receive Junior Subordinated Debentures on termination of the Issuer Trust,
prospective purchasers of Capital Securities are also making an investment
decision with regard to the Junior Subordinated Debentures and should carefully
review all the information regarding the Junior Subordinated Debentures
contained herein. See "Description of New Securities -- Description of Junior
Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
Chase Trust Company of California will act as the trustee under the
Guarantee (the "Guarantee Trustee") and will hold the Guarantee for the benefit
of the holders of the Capital Securities. Chase Trust Company of California will
also act as Debenture Trustee for the Junior Subordinated Debentures and as
Property Trustee under the Trust Agreement. The Guarantee guarantees to the
holders of the Capital Securities the following payments, to the extent not paid
by the Issuer Trust: (i) any accumulated and unpaid Distributions required to be
paid on the Capital Securities, to the extent that the Issuer Trust has funds on
hand available therefor at such time, (ii) the Redemption Price with respect to
any Capital Securities called for redemption, to the extent that the Issuer
Trust has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary termination, winding-up or liquidation of the Issuer
Trust (unless the Junior Subordinated Debentures are distributed to holders of
the Capital Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Issuer Trust has funds on hand available therefor at such
time, and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Capital Securities on liquidation of the Issuer
Trust. The Guarantee is subordinate as described under "-- Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures." The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Guarantee. Any holder
of the Capital Securities may institute a legal proceeding directly against the
Bank to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Issuer Trust, the Guarantee Trustee or any other person
or entity. If the Bank were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Bank to pay any amounts payable in
respect of the Junior Subordinated Debentures on the payment date on which such
payment is due and payable, then a holder of Capital Securities may institute a
legal proceeding directly against the Bank for enforcement of payment to such
holder of any amounts payable in respect of such Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such holder (a "Direct Action"). In
21
<PAGE>
connection with such Direct Action, the Bank will have a right of set-off under
the Junior Subordinated Indenture to the extent of any payment made by the Bank
to such holder of Capital Securities in the Direct Action. Except as described
herein, holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Junior Subordinated Debentures or
assert directly any other rights in respect of the Junior Subordinated
Debentures. See "Description of New Securities -- Description of Junior
Subordinated Debentures -- Enforcement of Certain Rights by Holders of Capital
Securities," "-- Debenture Events of Default" and "Description of New Securities
- -- Description of Guarantee." The Trust Agreement provides that each holder of
Capital Securities by acceptance thereof agrees to the provisions of the
Guarantee and the Junior Subordinated Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Issuer Trust's rights as holder of Junior Subordinated
Debentures. Holders of Capital Securities will not be entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee except upon the
occurrence of certain events described herein. The Property Trustee, the
Administrative Trustees and the Bank may, subject to certain conditions, amend
the Trust Agreement without the consent of holders of Capital Securities to cure
any ambiguity or make other provisions not inconsistent with other provisions
under the Trust Agreement or to ensure that the Issuer Trust (i) will not be
taxable as a corporation or will be taxable as a grantor trust for United States
federal income tax purposes or (ii) will not be required to register as an
"investment company" under the Investment Company Act. See "Description of New
Securities -- Description of Capital Securities -- Voting Rights; Amendment of
Trust Agreement" and " -- Removal of Issuer Trustees; Appointment of
Successors."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities Act
or any state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Holding Company and the Issuer Trust do not intend to
register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities -- Description of Capital Securities -- General."
The Trust Agreement and the Registration Rights Agreement provide that, if
the Exchange Offer is not consummated within 30 days of the date hereof, the
Distribution rate borne by the Old Capital
22
<PAGE>
Securities will increase by 0.25% per annum commencing on the 31st day after the
date hereof, until the Exchange Offer is consummated or the date which is three
years from the original issuance of the Old Capital Securities. See "Description
of Old Capital Securities." Following consummation of the Exchange Offer, the
Old Capital Securities will not be entitled to any such increase in the
Distribution rate thereon. The New Capital Securities will not be entitled to
any such increase in the Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities Act
or Part 16 of the regulations of the OCC and will be subject to restrictions on
transferability to the extent that they are not exchanged for New Capital
Securities. Although the New Capital Securities will generally be permitted to
be resold or otherwise transferred by the holders (who are not affiliates of the
Corporation, the Bank or the Issuer Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Capital Securities may
be transferred by the holders thereof only in blocks having a Liquidation Amount
of not less than $250,000 (250 Capital Securities). The Corporation, the Bank
and the Issuer have been advised by the Initial Purchasers that the Initial
Purchasers presently intend to make a market in the New Capital Securities.
However, the Initial Purchasers are not obligated to do so and any market-making
activity with respect to the New Capital Securities may be discontinued at any
time without notice. In addition, such market-making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other trading market will develop for the New Capital Securities or
the Old Capital Securities or as to the liquidity of or the trading market for
the New Capital Securities or the Old Capital Securities. If an active public
market does not develop, the market price and liquidity of the New Capital
Securities may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors including, among
other things, prevailing interest rates, the Bank's operating results and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Bank and the Corporation, the New Capital Securities may trade
at a discount.
Notwithstanding the registration of the New Capital Securities pursuant to
the Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of
the Securities Act) of the Corporation, the Bank or the Issuer Trust may
publicly offer for sale or resell the New Capital Securities only in compliance
with the provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Subject to certain exceptions more fully described under "The Exchange Offer
- -- Acceptance for Exchange and Issuance of New Capital Securities," issuance of
the New Capital Securities in exchange for Old Capital Securities pursuant to
the Exchange Offer will be made only after a timely receipt by the Issuer Trust
of such Old Capital Securities, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the Old
Capital Securities desiring to tender such Old Capital Securities in exchange
for New Capital Securities should allow sufficient time to ensure timely
delivery. None of the Corporation, the Bank, the Issuer Trust or the Exchange
Agent is under any duty to give notification of defects or irregularities with
respect to the tenders of Old Capital Securities for exchange.
23
<PAGE>
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal"), was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued by
a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above described
provision of the Budget Proposal is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action.
If a similar provision were to apply to the Junior Subordinated Debentures, the
Bank would be unable to deduct interest on the Junior Subordinated Debentures.
Under current law, the Bank will be able to deduct interest on the Junior
Subordinated Debentures. There can be no assurance, however, that current or
future legislative proposals or final legislation will not affect the ability of
the Bank to deduct interest on the Junior Subordinated Debentures. Such a change
could give rise to a Tax Event, which may permit the Bank to cause a redemption
of the Capital Securities before December 15, 2006. See "Description of New
Securities -- Description of Junior Subordinated Debentures -- Redemption" and
"-- Description of Capital Securities -- Redemption." See also "Certain Federal
Income Tax Consequences -- Possible Tax Law Changes."
ZIONS BANCORPORATION AND ZIONS FIRST NATIONAL BANK
The Bank is a national banking association with its principal office in Salt
Lake City, Utah. The Bank provides a wide variety of commercial and retail
banking and mortgage-lending financial services. At December 31, 1996, the Bank
had total assets of $4.86 billion, total loans (net of unearned income) of $2.48
billion, total deposits of $3.17 billion and total equity capital of $0.37
billion. At December 31, 1995, the corresponding amounts were $4.29 billion,
$2.09 billion, $2.94 billion and $0.33 billion. The Bank's business is subject
to examination and regulation by federal banking authorities. Its primary
federal regulatory authority is the OCC.
The Bank is a wholly owned subsidiary of the Holding Company. The Holding
Company was organized under the laws of the State of Utah in 1955 and is
registered under the Bank Holding Company Act of 1956, as amended. The
Corporation is the second largest bank holding company headquartered in Utah and
provides a full range of banking and related services, primarily in Utah, Nevada
and Arizona. Its principal subsidiaries are banking subsidiaries and include the
Bank, the second largest commercial banking organization in the State of Utah,
Nevada State Bank, the fifth largest commercial bank in Nevada, and National
Bank of Arizona, the fifth largest commercial bank in Arizona. At December 31,
1996, the Corporation had total assets of $6.48 billion, total loans (net of
unearned income and allowance for loan losses) of $3.38 billion, total deposits
of $4.55 billion and total shareholders' equity of $0.51 billion. At December
31, 1995, the corresponding amounts were $5.62 billion, $2.74 billion, $4.10
billion and $0.43 billion. On November 19, 1996, the Holding Company entered
into an agreement to merge with Aspen Bancshares, a $450 million institution
headquartered in western Colorado. The Holding Company expects that this
transaction will close in the first half of 1997. The estimated aggregate
consideration will consist of common stock of the Holding Company valued at
approximately $75 million. On March 7, 1997, the Holding Company announced that
it had reached a definitive agreement with Wells Fargo Bank ("Wells Fargo") to
purchase 32 of Wells Fargo's branches in Arizona, Idaho, Nevada and Utah. The
Holding Company has agreed to acquire the deposit accounts and branch facilities
of such branches. At January 31, 1997, the branch deposits aggregated
approximately $550 million.
24
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES OF THE CORPORATION
The following table sets forth the ratios of earnings to fixed charges of
the Corporation for the respective periods indicated.
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Excluding Interest on Deposits.......... 2.82 2.59 2.43 3.00 3.46
Including Interest on Deposits.......... 1.69 1.59 1.60 1.70 1.57
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income (loss) before extraordinary items plus applicable income
taxes and fixed charges. Fixed charges, excluding interest on deposits, include
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 interest on deposits, include all interest
expense and the proportion deemed representative of the interest factor of rent
expense, net of income from subleases. Pretax earnings required for preferred
stock dividends were computed using tax rates for the applicable year.
ZIONS INSTITUTIONAL CAPITAL TRUST A
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on December 18, 1996, which will be governed by the Trust Agreement among
the Bank, as Depositor, Chase Trust Company of California, as Property Trustee,
Chase Manhattan Bank Delaware, as Delaware Trustee, the Administrative Trustees
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of the Issuer Trust. The Issuer Trust's business and
affairs are conducted by its trustees: initially Chase Trust Company of
California, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and three Administrative Trustees who are employees or officers of or
affiliated with the Bank. The Issuer Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of the Trust Securities). Accordingly, the
Junior Subordinated Debentures are the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures are the sole source of revenue
of the Issuer Trust.
All of the Common Securities are owned by the Bank. The Common Securities
rank PARI PASSU, and payments will be made thereon PRO RATA, with the Capital
Securities, except that upon the occurrence and during the continuation of a
Debenture Event of Default arising as a result of any failure by the Bank to pay
any amounts in respect of the Junior Subordinated Debentures when due, the
rights of the holders of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Capital Securities. See
"Description of New Securities -- Description of Capital Securities --
Subordination of Common Securities." The Bank has acquired Common Securities in
an aggregate liquidation amount equal to 3% of the total capital of the Issuer
Trust. The Issuer Trust has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The principal executive office of the Issuer
Trust is One South Main, Suite 1380, Salt Lake City, Utah 84111, Attention:
Administrative Trustee, and its telephone number is (801) 524-4787.
25
<PAGE>
USE OF PROCEEDS FROM SALE OF OLD CAPITAL SECURITIES
None of the Issuer Trust, the Bank or the Holding Company will receive cash
proceeds from the issuance of the New Capital Securities offered hereby. In
consideration for issuing the New Capital Securities in exchange for Old Capital
Securities as described in this Prospectus, the Issuer Trust will receive Old
Capital Securities in like Liquidation Amount. The Old Capital Securities
surrendered in exchange for the New Capital Securities will be retired and
cancelled.
The net proceeds to the Issuer Trust from the offering of the Old Capital
Securities was approximately $200 million.
All of the proceeds to the Issuer Trust from the sale of the Old Capital
Securities were invested by the Issuer Trust in the Junior Subordinated
Debentures. All of the net proceeds received by the Bank from the sale of the
Junior Subordinated Debentures have been and will be used for general banking
purposes. The Junior Subordinated Debentures will qualify as at least Tier 2 or
supplementary capital with respect to the Bank under the capital guidelines
established by the OCC and as Tier 1 or core capital with respect to the
Corporation under the capital guidelines established by the Federal Reserve.
However, it is intended that the Junior Subordinated Debentures will replace
Tier 1 capital of an equal or lesser amount which will be advanced from the Bank
to the Holding Company for general corporate uses.
26
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Corporation as of December 31, 1996. The issuance of the New Capital
Securities in the Exchange Offer will have no effect on the capitalization of
the Bank or the Corporation.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------
(IN THOUSANDS)
<S> <C>
FHLB Advances Over One Year.................................................................. $ 73,661
Long-Term Debt:
Guaranteed Preferred Beneficial Interests in Junior Subordinated Deferrable Interest
Debentures............................................................................... 200,000
Subordinated Notes......................................................................... 50,000
Other...................................................................................... 1,620
Total Long-Term Debt..................................................................... $ 251,620
----------
Total Long-Term Debt and FHLB Advances................................................. $ 325,281
----------
Shareholder's Equity:
Capital Stock:
Preferred Stock, Without Par Value; Authorized 3,000,000 Shares; Issued and Outstanding,
None................................................................................... --
Common Stock, Without Par Value; Authorized 30,000,000 Shares; Issued and Outstanding,
14,729,720 Shares...................................................................... 79,791
Retained Earnings.......................................................................... 429,496
Securities Valuation Allowance............................................................. (1,835)
----------
Total Shareholders' Equity............................................................... 507,452
----------
Total Capitalization of the Corporation(b)............................................. $ 832,733
----------
----------
</TABLE>
- ------------------------
(a) The sole assets of the Issuer Trust are the Junior Subordinated Debentures.
The Junior Subordinated Debentures held by the Issuer Trust (which accrue
interest at the rate of 8.536% per annum) will mature on December 15, 2026.
The Bank initially owns all of the Common Securities of the Issuer Trust
(which accummulate Distributions at a rate of 8.536% per annum). It is
anticipated that the Issuer Trust will not be subject to the reporting
requirements of the Exchange Act. See "Accounting Treatment."
(b) Subsequent to December 31, 1996, the capitalization of the Corporation has
been affected by various issuances, redemptions, repurchases and maturities
which are not reflected in this table.
27
<PAGE>
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Bank and, accordingly, the accounts of the Issuer Trust will
be included in the consolidated financial statements of the Bank and the
Corporation. The Capital Securities are presented in the consolidated balance
sheets of the Bank and the Corporation under the caption long-term debt. The
Capital Securities are identified in the notes to the consolidated financial
statements as a separate component of long-term debt entitled "Guaranteed
Preferred Beneficial Interests in Bank's Junior Subordinated Deferrable Interest
Debentures," with appropriate disclosure regarding such Capital Securities, the
Guarantee and the Junior Subordinated Debentures. For financial reporting
purposes, Distributions on the Capital Securities will be recorded in the
consolidated statements of income of the Bank and of the Corporation.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Holding
Company, the Bank and the Issuer Trust entered into the Registration Rights
Agreement with the Initial Purchasers, pursuant to which the Holding Company and
the Issuer Trust agreed to file and to use their reasonable best efforts to
cause to be declared effective by the Commission a registration statement with
respect to the exchange of the Old Capital Securities for capital securities
with terms identical in all material respects to the terms of the Old Capital
Securities. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Holding Company and the Issuer Trust under the Registration Rights
Agreement. The form and terms of the New Capital Securities are the same as the
form and terms of the Old Capital Securities, except that the New Capital
Securities (i) have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer applicable to the Old Capital
Securities and (ii) will not provide for any increase in the Distribution rate
thereon. In that regard, the Trust Agreement and the Registration Rights
Agreement provide, among other things, that, if the Exchange Offer is not
consummated by May 1, 1997, the Distribution rate borne by the Old Capital
Securities commencing on May 1, 1997, will increase by 0.25% per annum until the
Exchange Offer is consummated. Upon consummation of the Exchange Offer, holders
of Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
The Exchange Offer is not being made to, nor will the Issuer Trust or the
Holding Company accept tenders for exchange from, holders of Old Capital
Securities in any jurisdiction in which the Exchange Offer or the acceptance
thereof would not be in compliance with the securities or blue sky laws of such
jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Issuer Trust or any other person who has obtained
a properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC who desires to deliver such Old
Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Holding Company will exchange as soon as
practicable after the date hereof the Old Parent Guarantee for the New Parent
Guarantee. Concurrently, the Bank will exchange the Old Guarantee for the New
Guarantee. The New Parent Guarantee has been registered under the Securities
Act.
28
<PAGE>
TERMS OF EXCHANGE
The Issuer 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 $200,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Issuer Trust will issue,
promptly after the Expiration Date, an aggregate Liquidation Amount of up to
$200,000,000 of New Capital Securities in exchange for a like Liquidation Amount
of outstanding Old Capital Securities tendered and accepted in connection with
the Exchange Offer. Holders may tender their Old Capital Securities in whole or
in part in a Liquidation Amount of not less than $250,000 or any integral
multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Old Capital Securities being tendered. As of the date of this Prospectus,
$200,000,000 aggregate Liquidation Amount of Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Capital Securities will be
returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Holding Company will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the Exchange Offer. See "--
Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE HOLDING COMPANY OR THE BANK NOR ANY
TRUSTEE OF THE ISSUER TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on May 1,
1997, unless the Exchange Offer is extended by the Issuer Trust (in which case
the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended).
The Holding Company and the Issuer Trust expressly reserve the right in
their sole discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange,
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Holding Company and the
Issuer Trust determine, in their sole discretion, that any of the events or
conditions referred to under "-- Conditions to the Exchange Offer" have occurred
or exist, (iii) to extend the Expiration Date of the Exchange Offer and
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retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to withdraw
their tendered Old Capital Securities as described under "-- Withdrawal Rights,"
and (iv) to waive any condition or otherwise amend the terms of the Exchange
Offer in any respect. If the Exchange Offer is amended in a manner determined by
the Holding Company and the Issuer Trust to constitute a material change, or if
the Holding Company and the Issuer Trust waive a material condition of the
Exchange Offer, the Holding Company and the Issuer Trust will promptly disclose
such amendment by means of an amended or supplemented Prospectus that will be
distributed to the registered holders of the Old Capital Securities, and the
Issuer 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 Holding Company and the Issuer Trust may choose to make
any public announcement and subject to applicable law, the Holding Company and
the Issuer Trust shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to an
appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old Capital
Securities or a book-entry confirmation of a book-entry transfer of Old Capital
Securities into the Exchange Agent's account at DTC, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal, (ii)
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees or (in the case of a book-entry
transfer) an Agent's Message in lieu of the Letter of Transmittal, and (iii) any
other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgement from the tendering
participant, which acknowledgement states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Issuer Trust and
the Holding Company may enforce such Letter of Transmittal against such
participant.
Subject to the terms and conditions of the Exchange Offer, the Holding
Company and the Issuer Trust will be deemed to have accepted for exchange, and
thereby exchanged, Old Capital Securities validly tendered and not withdrawn as,
if and when the Issuer Trust gives oral or written notice to the Exchange Agent
of the Holding Company's and the Issuer Trust's acceptance of such Old Capital
Securities for exchange pursuant to the Exchange Offer. The Exchange Agent will
act as agent for the Holding Company and the Issuer Trust for the purpose of
receiving tenders of Old Capital Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving Old
Capital Securities, Letters of Transmittal and related documents and
transmitting New Capital Securities to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If for any reason whatsoever,
acceptance for exchange or the exchange of any Old Capital Securities tendered
pursuant to the Exchange Offer is delayed (whether before or after the Holding
Company's and the Issuer Trust's acceptance for exchange of Old Capital
Securities) or the Holding
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Company and the Issuer Trust extend the Exchange Offer or are unable to accept
for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Holding Company's and the Issuer
Trust's rights set forth herein, the Exchange Agent may, nevertheless, on behalf
of the Holding Company and the Issuer Trust and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Old Capital Securities and such Old Capital
Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "-- Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Issuer Trust will acquire
good, marketable and unencumbered title to the tendered Old Capital Securities,
free and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Holding Company, the
Issuer Trust or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Old Capital Securities tendered
pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or (in the case of a book-entry tender) an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at its address set forth under
"-- Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation, including an Agent's Message if the tendering holder
has not delivered a Letter of Transmittal, must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "-- Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
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DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (ii) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (i) or (ii) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations with respect to Old Capital Securities and
other required documents are received by the Exchange Agent.
The Holding Company's and the Issuer Trust's acceptance for exchange of Old
Capital Securities tendered pursuant to any of the procedures described above
will constitute a binding agreement between the tendering holder and the Issuer
Trust upon the terms and subject to the conditions of the Exchange Offer.
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DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Holding Company
and the Issuer Trust, in their sole discretion, whose determination shall be
final and binding on all parties. The Holding Company and the Issuer Trust
reserve the absolute right, in their sole discretion, to reject any and all
tenders determined by them not to be in proper form or the acceptance of which,
or exchange for, may, in the view of counsel to the Holding Company or the
Issuer Trust, be unlawful. The Holding Company and the Issuer Trust also reserve
the absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offer as set forth under "-- Conditions to the Exchange Offer" or
any condition or irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Holding Company's and the Issuer Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Holding
Company, the Issuer Trust, any affiliates or assigns of the Holding Company or
the Issuer 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 Issuer Trust, proper
evidence satisfactory to the Holding Company and the Issuer Trust, in their sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Holding Company and the Issuer Trust are making the Exchange Offer for
the Capital Securities in reliance on the position of the staff of the Division
of Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Holding Company nor the Issuer Trust sought its own interpretive letter, and
there can be no assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third parties. Based on
these interpretations by the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the Holding Company and the
Issuer Trust believe that New Capital Securities issued pursuant to this
Exchange Offer in exchange for Old Capital Securities may be offered for resale,
resold and otherwise transferred by a holder thereof (other than a holder who is
a broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an Affiliate or who intends to participate in the
Exchange Offer for the purpose of distributing New Capital Securities, or any
broker-dealer who purchased Old Capital Securities from the Issuer Trust to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (i) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (ii) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (iii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any sale or other transfer of such Old Capital Securities
unless such sale is made
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pursuant to an exemption from such requirements. In addition, as described
below, Participating Broker-Dealers must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of New Capital
Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Capital
Securities and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities. In addition, the Holding
Company and the Issuer Trust may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Holding Company and the Issuer 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 Participating
Broker-Dealer must acknowledge that it acquired the Old Capital Securities for
its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Capital Securities. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Holding
Company and the Issuer Trust believe that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities (other than Old
Capital Securities which represent an unsold allotment from the original sale of
the Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Capital Securities received in exchange for Old Capital Securities where
such Old Capital Securities were acquired by such Participating Broker-Dealer
for its own account as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration Rights Agreement,
the Holding Company and the Issuer Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 180 days after the Expiration Date or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any person, including any
Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Holding Company or the Issuer
Trust of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Capital Securities (or the New Parent Guarantee, as
applicable) pursuant to this Prospectus until the Holding Company or the Issuer
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 Holding
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Company or the Issuer Trust has given notice that the sale of the New Capital
Securities (or the New Parent Guarantee, as applicable) may be resumed, as the
case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Capital Securities tendered for the account of an
Eligible Institution. If Old Capital Securities have been tendered pursuant to
the procedures for book-entry transfer set forth in "-- Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Holding Company
and the Issuer Trust, in their sole discretion, whose determination shall be
final and binding on all parties. Neither the Holding Company, the Issuer Trust,
any affiliates or assigns of the Holding Company or the Issuer Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital Securities
which have been tendered but which are withdrawn will be returned to the holder
thereof promptly after withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date (as defined
herein) with respect to such Old Capital Securities prior to the original issue
date of the New Capital Securities or, if no such Distributions have been made,
will not receive any accumulated Distributions on such Old Capital Securities,
and will be deemed to have waived the right to receive any Distributions on such
Old Capital Securities accumulated from and after such Distribution Date or, if
no such Distributions have been made, from and after December 26, 1996.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Holding Company and the Issuer Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for
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exchange) or may waive any conditions to or amend the Exchange Offer, if any of
the following conditions has occurred or exists:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an Affiliate)
without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Capital Securities are acquired
in the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the
distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Holding Company's and the Issuer Trust's
judgment, would reasonably be expected to impair the ability of the Issuer
Trust or the Holding Company to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Holding Company's and the Issuer Trust's judgment,
would reasonably be expected to impair the ability of the Issuer Trust or
the Holding Company to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Utah or New York State authorities which, in the Holding
Company's and the Issuer Trust's judgment, would reasonably be expected to
impair the ability of the Issuer Trust or the Holding Company to proceed
with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Issuer Trust's
judgment, would reasonably be expected to impair the ability of the Issuer
Trust or the Holding Company to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Holding Company or the Issuer Trust, threatened for that purpose or any
governmental approval has not been obtained, which approval the Holding
Company and the Issuer Trust shall, in their sole discretion, deem necessary
for the consummation of the Exchange Offer as contemplated hereby; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Issuer Trust or the Holding Company
or any of its subsidiaries has occurred which, in the judgment of the
Holding Company and the Issuer Trust, might materially impair the ability of
the Issuer Trust or the Holding Company to proceed with the Exchange Offer.
If the Holding Company and the Issuer Trust determine in their sole
discretion that any of the foregoing events or conditions has occurred or
exists, the Holding Company and the Issuer Trust may, subject to applicable law,
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Holding
Company and the Issuer Trust will promptly disclose such waiver by means of an
amended or supplemented Prospectus that will be distributed to the registered
holders of the Old Capital Securities, and the Holding Company and the Issuer
Trust will extend the Exchange Offer to the extent required by Rule 14e-1 under
the Exchange Act.
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EXCHANGE AGENT
Chase Trust Company of California 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, all
whether by registered or certified mail, by hand or by overnight courier, should
be directed to the Exchange Agent as follows:
Chase Trust Company of California
c/oThe Chase Manhattan Bank
55 Water Street, Room 234, North Building
New York, New York 10041
Attention: Mr. Luis Padilla or Mr. Carlos Estevez
Telephone: (212) 658-0458
and if by facsimile, to (212) 638-7380 or 7381, Attention: Mr. Luis Padilla
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Holding 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 Holding Company will also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Holding Company nor the Issuer Trust will make any payment to
brokers, dealers or others soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust have issued the Old Capital
Securities and the Common Securities and will issue the New Capital Securities.
The New Capital Securities will represent preferred undivided beneficial
interests in the assets of the Issuer Trust and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities, as
well as other benefits as described in the Trust Agreement. The Trust Agreement
has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). This summary of certain provisions of the New Capital
Securities and the Trust Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions of
the Trust Agreement, including the definitions therein of certain terms.
Wherever particular defined terms of the Trust Agreement are referred to herein,
such defined terms are incorporated herein by reference. A copy of the form of
the Trust Agreement is available upon request from the Issuer Trustees.
GENERAL
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $200,000,000 aggregate Liquidation Amount
outstanding. The Capital Securities 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 is held by the Property Trustee in trust for the benefit of the
holders of the Capital Securities and Common Securities. The Guarantee is a
guarantee on a subordinated basis with respect to the Capital Securities but
does not guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Capital Securities when the Issuer Trust does not have funds
on hand available to make such payments. See "-- Description of Guarantee."
DISTRIBUTIONS
Distributions on the Capital Securities are cumulative and will accumulate
from December 26, 1996 at the annual rate of 8.536% of the stated Liquidation
Amount of $1,000, payable semi-annually in arrears on June 15 and December 15 of
each year (each a "Distribution Date"), to the holders of the Capital Securities
at the close of business on the fifteenth day (whether or not a Business Day (as
defined below)) next preceding the relevant Distribution Date. The first
Distribution Date for the Capital Securities will be June 15, 1997. The amount
of Distributions payable for any period less than a full Distribution period
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. Distributions payable for
each full Distribution period will be computed by dividing the rate per annum by
two. If any date on which Distributions are payable on the Capital Securities is
not a Business Day, then payment of the Distributions payable on such date will
be made on the next succeeding day that is a Business Day (without any
additional Distributions or other payment in respect of any such delay), with
the same force and effect as if made on the date such payment was originally
payable.
So long as no Debenture Event of Default has occurred and is continuing, the
Bank has the right under the Junior Subordinated Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each Extension Period, provided that no Extension Period may extend beyond
the Stated Maturity of the Junior Subordinated Debentures. As a consequence of
any such election, semi-annual Distributions on the Capital Securities will be
deferred by the Issuer Trust during any such Extension Period. Distributions to
which holders of the Capital Securities are entitled will accumulate additional
Distributions thereon at the rate per annum of 8.536% thereof, compounded
semi-annually from the relevant payment date for such Distributions, computed on
the basis of a 360-day year of twelve 30-day months and the actual days elapsed
in a partial month in such period. Additional Distributions
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<PAGE>
payable for each full Distribution period will be computed by dividing the rate
per annum by two. The term "Distributions" as used herein shall include any such
additional Distributions. During any such Extension Period, the Bank may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Bank's capital stock
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Bank that rank PARI PASSU
in all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Bank in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Bank (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Bank's capital
stock (or any capital stock of a subsidiary of the Bank) for any class or series
of the Bank's capital stock or of any class or series of the Bank's indebtedness
for any class or series of the Bank's capital stock, (c) the purchase of
fractional interests in shares of the Bank's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks PARI PASSU with or junior to such stock). Prior
to the termination of any such Extension Period, the Bank may further defer the
payment of interest, provided that no Extension Period may exceed 10 consecutive
semiannual periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Bank may elect to begin a new Extension
Period. There is no limitation on the number of times that the Bank may elect to
begin an Extension Period. See "-- Description of Junior Subordinated Debentures
- -- Option To Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Bank has no current intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior Subordinated
Debentures.
The revenue of the Issuer Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer Trust will invest the proceeds from the issuance
and sale of the Capital Securities. See "-- Description of Junior Subordinated
Debentures." If the Bank does not make payments on the Junior Subordinated
Debentures, the Issuer Trust may not have funds available to pay Distributions
or other amounts payable on the Capital Securities. The payment of Distributions
and other amounts payable on the Capital Securities (if and to the extent the
Issuer Trust has funds legally available for and cash sufficient to make such
payments) is guaranteed by the Bank on a limited basis as set forth herein under
"-- Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Trust Securities, upon not less than 30 nor more than
60 days' notice, at a redemption price (the "Redemption Price") equal to the
aggregate Liquidation Amount of such Trust Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption Date")
and the related amount of the premium, if any, paid by the Bank upon the
concurrent redemption of such Junior Subordinated Debentures. See "--
Description of Junior Subordinated Debentures -- Redemption." If less than all
of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
39
<PAGE>
allocated to the redemption PRO RATA of the Capital Securities and the Common
Securities. The amount of premium, if any, paid by the Bank upon the redemption
of all or any part of the Junior Subordinated Debentures to be repaid or
redeemed on a Redemption Date shall be allocated to the redemption PRO RATA of
the Capital Securities and the Common Securities.
The Bank has the right to redeem the Junior Subordinated Debentures (i) on
or after December 15, 2006, in whole at any time or in part from time to time,
or (ii) in whole (but not in part) at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company Event
or Capital Treatment Event (each as defined below). A redemption of the Junior
Subordinated Debentures would cause a mandatory redemption of a Like Amount of
the Capital Securities and Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices. expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated Distributions to but excluding the
date fixed for redemption, if redeemed during the 12-month period beginning
December 15 of the year indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---------------------------------------- ------------
<S> <C>
2006.................................... 104.2680%
2007.................................... 103.8412
2008.................................... 103.4144
2009.................................... 102.9876
2010.................................... 102.5608
2011.................................... 102.1340
2012.................................... 101.7072
2013.................................... 101.2804
2014.................................... 100.8536
2015.................................... 100.4268
</TABLE>
and at 100% on or after December 15, 2016.
The Redemption Price, in the case of a redemption prior to December 15, 2006
following a Tax Event, Investment Company Event or Capital Treatment Event as
described under (ii) above, will equal for each Capital Security the Make-Whole
Amount for a corresponding $1,000 principal amount of Junior Subordinated
Debentures together with accumulated Distributions to but excluding the date
fixed for redemption. The "Make-Whole Amount" will be equal to the greater of
(i) 100% of the principal amount of such Junior Subordinated Debentures or (ii)
as determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable as part of the Redemption
Price with respect to an optional redemption of such Junior Subordinated
Debentures on December 15, 2006, together with the present values of scheduled
payments of interest from the Redemption Date to December 15, 2006 (the
"Remaining Life"), in each case discounted to the Redemption Date on a semi-
annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 1.55% if such Redemption Date occurs on or before
December 15, 1997 or (ii) 0.50% if such Redemption Date occurs after December
15, 1997.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively United States Treasury securities adjusted to
constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
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<PAGE>
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. Treasury Rate shall be calculated on the third Business
Day preceding the Redemption Date.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on
which banking institutions in The City of New York are authorized or required by
law or executive order to remain closed, or (c) a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after December 15, 2006, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Quotation Agent" means Goldman, Sachs & Co. and their successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), the Bank shall
substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other
Primary Treasury Dealer selected by the Debenture Trustee after consultation
with the Bank.
"Comparable Treasury Price" means (A) the average of five Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Debenture Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Junior Subordinated Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and (ii) with respect to a distribution of
Junior Subordinated Debentures to holders of Trust Securities in connection with
a dissolution or liquidation of the Issuer Trust, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Bank 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
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities, there is more than an insubstantial risk that (i) the
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income
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<PAGE>
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Bank on the Junior Subordinated Debentures is not, or within 90 days of
the delivery of such opinion, will not be, deductible by the Bank, in whole or
in part, for United States federal income tax purposes or (iii) the Issuer Trust
is, or will be within 90 days of the delivery of such opinion, subject to more
than a DE MINIMIS amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Bank experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Capital Securities.
"Capital Treatment Event" means the reasonable determination by the Bank
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Capital Securities, there
is more than an insubstantial risk that (i) the Bank will not be entitled to
treat an amount equal to the Liquidation Amount of the Capital Securities as at
least "Tier 2 Capital" or the then equivalent thereof) for purposes of the
risk-based capital guidelines of the OCC, as then in effect and applicable to
the Bank, or (ii) the Corporation will not be entitled to treat an amount equal
to the Liquidation Amount of the Capital Securities as "Tier 1 Capital" (or the
then equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Holding Company.
PAYMENT OF ADDITIONAL SUMS. If a Tax Event described in clause (i) or (iii)
of the definition of Tax Event above has occurred and is continuing and the
Issuer Trust is the holder of all of the Junior Subordinated Debentures, the
Bank will pay Additional Sums (as defined below), if any, on the Junior
Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Capital Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at the
Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "-- Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. With respect to Capital Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Capital Securities funds sufficient to pay
the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price
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<PAGE>
to the holders thereof upon surrender of their certificates evidencing the
Capital Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Capital Securities called for redemption
shall be payable to the holders of the Capital Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of the holders of such Capital Securities so called for redemption
will cease, except the right of the holders of such Capital Securities to
receive the Redemption Price, but without interest on such Redemption Price, and
such Capital Securities will cease to be outstanding. If any date fixed for
Option of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Capital Securities called for
redemption is improperly withheld or refused and not paid either by the Issuer
Trust or by the Bank pursuant to the Guarantee as described under "--
Description of Guarantee," Distributions on such Capital Securities will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Issuer Trust for such Capital Securities to the
date such Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Bank or its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated PRO
RATA to the Capital Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be selected on a PRO RATA basis not more than 60 days prior to
the Redemption Date by the Property Trustee from the outstanding Capital
Securities not previously called for redemption or if the Capital Securities are
then held in the form of a Global Capital Security (as defined below), in
accordance with DTC's customary procedures, provided, in each case, that each
holder of any Capital Securities has at least 250 Capital Securities remaining
after the redemption. The Property Trustee shall promptly notify the securities
registrar for the Trust Securities in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities which has been or is
to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Bank defaults in payment of the Redemption
Price on the Junior Subordinated Debentures, on and after the Redemption Date
interest will cease to accrue on the Junior Subordinated Debentures or portions
thereof (and, unless payment of the Redemption Price in respect of the Capital
Securities is withheld or refused and not paid either by the Issuer Trust or the
Bank pursuant to the Guarantee, Distributions will cease to accumulate on the
Capital Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made PRO RATA based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by the Bank to
pay any amounts in respect of the Junior Subordinated Debentures when due, no
payment of any Distribution
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<PAGE>
on, or Redemption Price of, any of the Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Capital Securities for all
Distribution periods terminating on or prior thereto, or in the case of payment
of the Redemption Price the full amount of such Redemption Price on all of the
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Capital Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effect of all such Events of Default with respect
to such Capital Securities have been cured, waived or otherwise eliminated. See
"-- Events of Default; Notice" and "-- Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Capital Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Capital Securities and not on behalf of the holders
of the Common Securities, and only the holders of the Capital Securities will
have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The amount payable on the Capital Securities in the event of any liquidation
of the Issuer Trust is $1,000 per Capital Security plus accumulated and unpaid
Distributions, subject to certain exceptions, which may be in the form of a
distribution of such amount in Junior Subordinated Debentures.
The holders of all of the outstanding Common Securities have the right at
any time to terminate the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer Trust.
The OCC's risk-based capital guidelines currently provide that a national
bank's capital instruments may be redeemed prior to maturity with the prior
approval of the OCC, and that the OCC typically will consider requests for the
redemption of capital instruments when the instruments are to be redeemed with
the proceeds of, or are replaced by, a like amount of a similar or higher
quality capital instrument. The Federal Reserve's risk-based capital guidelines
currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
In the event the Bank, while a holder of Common Securities, terminates the
Issuer Trust prior to the stated maturity of the Capital Securities and the
termination of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the OCC or the Federal Reserve under their respective
risk-based capital guidelines or policies, the termination of the Issuer Trust
by the Bank may be subject to the prior approval of the OCC or the Federal
Reserve. Moreover, any changes in applicable law, changes in the OCC's or the
Federal Reserve's risk-based capital guidelines or policies, or changes to the
OCC's or Federal Reserve's classification of the Capital Securities or Junior
Subordinated Debentures for risk-based capital purposes, could impose a
requirement on the Bank that it obtain the prior approval of the OCC, or impose
a requirement on the Holding Company that it obtain the prior approval of the
Federal Reserve, to terminate the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
terminate upon expiration of its term or, if earlier, will terminate on the
first to occur of: (i) certain events of bankruptcy, dissolution or
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<PAGE>
liquidation of the holders of the Common Securities; (ii) the distribution of a
Like Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to terminate the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities); (iii) redemption of all of the Trust Securities
as described under "-- Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If termination of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to the holders of such Trust Securities a Like Amount of the
Junior Subordinated Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Issuer Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Issuer Trust as provided by applicable law, an amount equal to, in the case of
holders of Capital Securities, 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 Issuer Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Issuer Trust on its Capital Securities shall be paid on a PRO
RATA basis. The holders of the Common Securities will be entitled to receive
distributions upon any such liquidation PRO RATA with the holders of the Capital
Securities, except that if a Debenture Event of Default has occurred and is
continuing as a result of any failure by the Bank to pay any amounts in respect
of the Junior Subordinated Debentures when due, the Capital Securities shall
have a priority over the Common Securities.
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures (i) the Capital Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Capital Securities held by DTC or its nominee and
(iii) any certificates representing the Capital Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Capital
Securities and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on the Capital Securities until such
certificates are presented to the security registrar for the Trust Securities
for transfer or reissuance.
If the Bank does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Capital Securities.
There can be no assurance as to the market prices for the Capital Securities
or the Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a termination and liquidation of the Issuer 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 Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Capital Securities
(whatever the reason for such Event of Default
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and whether it is voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "-- Description
of Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Bank by the holders of at least 25% in aggregate Liquidation Amount of
the outstanding Capital Securities, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not been
appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities, the
Administrative Trustees and the Bank, unless such Event of Default has been
cured or waived. The Bank, as Depositor, and the Administrative Trustees are
required to file annually with the Property Trustee a certificate as to whether
or not they are in compliance with all the conditions and covenants applicable
to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Bank to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Capital Securities will have a preference
over the Common Securities with respect to payments of any amounts in respect of
the Capital Securities as described above. See "-- Subordination of Common
Securities," "-- Liquidation Distribution Upon Termination" and "-- Description
of Junior Subordinated Debentures -- Debenture Events of Default."
The existence of an Event of Default does not entitle the holders of Capital
Securities to accelerate the maturity thereof.
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
holders of at least a majority in aggregate Liquidation Amount of the
outstanding Capital Securities may remove the Property Trustee or the Delaware
Trustee, with or without cause. In no event will holders of Capital Securities
have the right to vote to appoint Administrative Trustees, which voting rights
are vested exclusively in the Bank as holder of the Common Securities. If the
Property Trustee or the Delaware Trustee is removed by the holders of the
outstanding Capital Securities, the successor may be appointed by the holders of
at least 25% in Liquidation Amount of Capital Securities. Any Delaware Trustee
must meet the applicable requirements of Delaware law. Any Property Trustee must
be a national or state-chartered bank, and at the time of appointment have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization and have capital and surplus of at
least $10,000,000. 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.
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MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any state, so long as (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer Trust with respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same terms as the
Capital Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Capital Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization,
(iv) 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, (v) such successor entity has a purpose substantially
identical to that of the Issuer Trust, (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer Trust has
received an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (vii) the Bank 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 Issuer Trust may not, except with the consent
of holders of 100% in aggregate Liquidation Amount of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey, offer
or lease its properties and assets substantially as an entirety to, any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation or classified as other than a grantor
trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "-- Description of 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 holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Capital Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent
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with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, which are not
inconsistent with the other provisions of the Trust Agreement, provided that any
such amendment does not adversely affect in any material respect the interests
of any holder of Trust Securities, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as may be necessary to ensure
that the Issuer Trust will not be taxable as a corporation or will be taxable as
a grantor trust for United States federal income tax purposes at any time that
any Trust Securities are outstanding or to ensure that the Issuer Trust will not
be required to register as an "investment company" under the Investment Company
Act, and any amendments of the Trust Agreement will become effective when notice
of such amendment is given to the holders of Trust Securities. The Trust
Agreement may be amended by the holders of a majority of the Common Securities
and the Property Trustee with (i) the consent of holders representing not less
than a majority in aggregate Liquidation Amount of the outstanding Capital
Securities and (ii) receipt by the Issuer Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect the Issuer
Trust's not being taxable as a corporation or being taxable as a grantor trust
for United States federal income tax purposes or the Issuer Trust's exemption
from status as an "investment company" under the Investment Company Act, except
that without the consent of each holder of Trust Securities, the Trust Agreement
may not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 13 of the Junior Subordinated Indenture, (iii) exercise any right
to rescind or annul a declaration that the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Junior Subordinated Indenture or the Junior Subordinated Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the holders of at least a majority in aggregate Liquidation Amount
of the outstanding Capital Securities, except that if a consent under the Junior
Subordinated Indenture would require the consent of each holder of Junior
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Capital
Securities. The Property Trustee may not revoke any action previously authorized
or approved by a vote of the holders of the Capital Securities except by
subsequent vote of the holders of the Capital Securities. The Property Trustee
will notify each holder of Capital Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Capital Securities, before taking any
of the foregoing actions, the Property Trustee will obtain an opinion of counsel
experienced in such matters to the effect that the Issuer Trust will not be
taxable as a corporation or classified as other than a grantor trust 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 holders of Capital Securities 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 registered holder of Capital Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Capital Securities will be required to
redeem and cancel Capital Securities in accordance with the Trust Agreement.
Notwithstanding that holders of 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 Bank, the Issuer Trustees or any affiliate of
the Bank or any Issuer Trustees, will, for purposes of such vote or consent, be
treated as if they were not outstanding.
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BOOK ENTRY, DELIVERY AND FORM
The Capital Securities will be issued in fully registered form in minimum
blocks of at least 250 (representing a minimum of $250,000 aggregate Liquidation
Amount) and the Capital Securities must at all times be held in blocks of at
least 250.
The New Capital Securities initially will be represented by a global Capital
Security (the "Global Capital Security") which will be deposited with, or on
behalf of, DTC and registered in the name of Cede & Co. ("Cede") as DTC's
nominee. Except as set forth below, record ownership of the Global Capital
Security may be transferred, in whole or in part, only to another nominee of DTC
or to a successor of DTC or its nominee.
An owner of a beneficial interest in a Global Capital Security may hold its
interest in the Global Capital Security directly through DTC if such person is a
participant in DTC, or indirectly through organizations that are participants in
DTC ("Participants"). Transfers between Participants will be effected in the
ordinary way in accordance with DTC rules and will be settled in same-day funds.
Except as provided below, owners of beneficial interests in the Global
Capital Security will not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders thereof.
Payment of Distributions on, and the Redemption Price of, the Global Capital
Security will be made to Cede, the nominee for DTC, as the registered holder of
the Global Capital Security, by wire transfer of immediately available funds on
each Distribution Date or Redemption Date. Neither the Bank nor the Issuer
Trustees (or any securities registrar, paying agent or exchange agent under the
Trust Agreement) will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Capital Security, for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
The Bank and the Issuer Trust have been informed by DTC that, with respect
to any payment of Distributions on, or the Redemption Price of, the Global
Capital Security, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the Capital Securities represented by the Global Capital
Security, as shown on the records of DTC (adjusted as necessary so that such
payments are made with respect to whole Capital Securities only), unless DTC has
reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in Capital Securities
represented by the Global Capital Security held through such Participants will
be the responsibility of such Participants, as is the case with securities held
for the accounts of customers registered in "street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Capital Securities represented by the Global
Capital Security to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Furthermore, the laws of some states require that certain persons take
physical delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interests in the Global Capital Security to such persons may
be limited.
DTC has advised the Bank and the Issuer Trust that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Security are credited and only in respect of the aggregate Liquidation
Amount of the Capital Securities represented by the Global Capital Security as
to which such Participant or Participants has or have given such direction.
DTC has advised the Bank and the Issuer Trust as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing
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corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchaser. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Capital Security among Participants of DTC,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. The Global Capital Security is
exchangeable for definitive Capital Securities in registered certificated form
if (i) DTC advises the Bank and the Property Trustee that it is no longer
willing or able to properly discharge its responsibilities with respect to the
Global Capital Security, and the Property Trustee is unable to locate a
qualified successor, (ii) the Issuer Trust at its option advises DTC in writing
that it elects to terminate the book-entry system through DTC or (iii) after the
occurrence of a Debenture Event of Default. 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 DTC (in accordance with its
customary procedures).
So long as DTC or its nominee is the registered holder of the Global Capital
Security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Capital Securities represented by the Global Capital
Security for all purposes under the Trust Agreement. Except as provided above,
owners of beneficial interests in the Global Capital Security will not be
entitled to have any of the individual Capital Securities represented by the
Global Capital Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Capital Securities in
definitive form and will not be considered the owners or holders thereof under
the Trust Agreement.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities held in global form will be
made to DTC, which will credit the relevant accounts at DTC on the applicable
Distribution Dates or, if the Capital Securities are not held by DTC, such
payments will be made by check mailed to the address of the holder entitled
thereto as such address appears on the securities register for the Trust
Securities. The paying agent (the "Paying Agent") will initially be the Property
Trustee and any co-paying agent chosen by the Property Trustee and acceptable to
the Administrative Trustees. The Paying Agent will be permitted to resign as
Paying Agent upon 30 days' written notice to the Property Trustee and the Bank.
If the Property Trustee is no longer the Paying Agent, the Administrative
Trustees will appoint a successor (which must be a bank or trust company
reasonably acceptable to the Administrative Trustees and the Bank) to act as
Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Capital Securities after the Capital Securities
have been called for redemption.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically set
forth in the Trust Agreement and, after such Event of Default, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative courses of
action, or 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 Trust Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
For information concerning the relationships between Chase Trust Company of
California, the Property Trustee, and the Bank, see "-- Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer Trust in such a way that the Issuer Trust
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act or taxable as a corporation or as other than a
grantor trust for United States federal income tax purposes and so that the
Junior Subordinated Debentures will be treated as indebtedness of the Bank for
United States federal income tax purposes. In this connection, the Bank and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Bank 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
Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Chase Trust Company of California is acting
as Debenture Trustee. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Junior Subordinated Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Junior Subordinated Indenture, including the
definitions therein of certain terms. Whenever particular defined terms of the
Junior Subordinated Indenture (as amended or supplemented from time to time) are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Issuer
Trust invested the proceeds thereof, together with the consideration paid by the
Bank for the Common Securities, in the Junior Subordinated Debentures issued by
the Bank. The Junior Subordinated Debentures bear interest, accruing from
December 26, 1996, at the annual rate of 8.536% of the principal amount thereof,
payable semi-annually in arrears on June 15 and December 15 of each year (each,
an "Interest Payment Date"), commencing June 15, 1997, to the person in whose
name each Junior Subordinated Debenture is
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registered at the close of business on the fifteenth day (whether or not a
Business Day) next preceding such Interest Payment Date. It is anticipated that,
until the liquidation, if any, of the Issuer Trust, each 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 less than a full interest period will be computed on the basis of
a 360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period will be computed by dividing the rate per annum by two. If any date on
which interest is payable on the 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 (without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on the date such payment was originally payable. Accrued interest that is not
paid on the applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at the rate per annum of
8.536%, compounded semi-annually and computed on the basis of a 360-day year of
twelve 30-day months and the actual days elapsed in a partial month in such
period. The amount of additional interest payable for any full interest period
will be computed by dividing the rate per annum by two. The term "interest" as
used herein includes semi-annual interest payments, interest on semi-annual
interest payments not paid on the applicable Interest Payment Date and
Additional Sums (as defined below), as applicable. The Junior Subordinated
Debentures will mature on December 15, 2026.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the Bank.
The Junior Subordinated Debentures will not be subject to a sinking fund and
will not be eligible as collateral for any loan made by the Bank. The federal
banking agencies possess broad powers to take corrective action as deemed
appropriate for an insured depository institution, including without limitation,
under certain circumstances, the ability to prohibit the payment of principal or
interest on subordinated debt. See "Supervision, Regulation and Other Matters."
The Junior Subordinated Indenture does not limit the incurrence or issuance of
other secured or unsecured debt by the Bank, including Senior Indebtedness,
whether under the Junior Subordinated Indenture or any existing or other
indenture that the Bank may enter into in the future or otherwise. See "--
Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing, the
Bank has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. At the end of such Extension
Period, the Bank must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of 8.536%, compounded semi-annually and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full interest
period will be computed by dividing the rate per annum by two. During an
Extension Period, interest will continue to accrue and holders of Junior
Subordinated Debentures (or holders of Capital Securities while outstanding)
will be required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Bank may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Bank's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Bank that rank PARI PASSU in all
respects with or junior in interest to the Junior Subordinated Debentures (other
than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Bank in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in
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connection with the issuance of capital stock of the Bank (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Bank's capital stock (or any capital stock of a subsidiary of the Bank) for any
class or series of the Bank's capital stock or of any class or series of the
Bank's indebtedness for any class or series of the Bank's capital stock, (c) the
purchase of fractional interests in shares of the Bank's capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (d) any declaration of a dividend in connection
with any stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or repurchase of
rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks PARI PASSU with or junior to such
stock). Prior to the termination of any such Extension Period, the Bank may
further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semiannual periods or extend beyond the Stated Maturity of
the Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Bank may elect to begin a
new Extension Period subject to the above conditions. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Bank must
give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Capital Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. The Property Trustee will give notice of the Bank's
election to begin a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Bank may
elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Bank (i) on or after December 15, 2006, in whole at any time or in
part from time to time, or (ii) in whole (but not in part) at any time within 90
days following the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event (each as defined under "--
Description of Capital Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Capital Securities.
The OCC's risk-based capital guidelines currently provide that a national
bank's capital instruments may be redeemed prior to maturity with the prior
approval of the OCC, and that the OCC typically will consider requests for the
redemption of capital instruments when the instruments are to be redeemed with
the proceeds of, or are replaced by, a like amount of a similar or higher
quality capital instrument. The Federal Reserve's risk-based capital guidelines
currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Bank prior to
their Stated Maturity would constitute the redemption of capital instruments
under the OCC's current risk-based capital guidelines and may be subject to the
prior approval of the OCC. The redemption of the Junior Subordinated Debentures
also could be subject to the additional prior approval of the Federal Reserve
under its current risk-based capital guidelines.
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<PAGE>
The redemption price for Junior Subordinated Debentures in the case of a
redemption under (i) above shall equal the following prices, expressed in
percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption. If redeemed during the 12-month period
beginning December 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---------------------------------------- ------------
<S> <C>
2006.................................... 104.2680%
2007.................................... 103.8412
2008.................................... 103.4144
2009.................................... 102.9876
2010.................................... 102.5608
2011.................................... 102.1340
2012.................................... 101.7072
2013.................................... 101.2804
2014.................................... 100.8536
2015.................................... 100.4268
</TABLE>
and at 100% on or after December 15, 2016.
The redemption price for Junior Subordinated Debentures, in the case of a
redemption prior to December 15, 2006 following a Tax Event, Investment Company
Event or Capital Treatment Event, as described under (ii) above, will equal the
Make-Whole Amount (as defined under "-- Description of Capital Securities
Redemption"), together with accrued interest to but excluding the date fixed for
redemption.
ADDITIONAL SUMS
The Bank has covenanted in the Junior Subordinated Indenture that, if and
for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Bank will
pay as additional sums on the Junior Subordinated Debentures such amounts as may
be required so that the Distributions payable by the Issuer Trust will not be
reduced as a result of any such additional taxes, duties or other governmental
charges. See "-- Description of Capital Securities -- Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Property Trustee, as trustee of the Issuer Trust. If the Junior
Subordinated Debentures are distributed to holders of Capital Securities, it is
anticipated that the depositary arrangements for the Junior Subordinated
Debentures will be substantially identical to those in effect for the Capital
Securities. See "-- Description of Capital Securities -- Book Entry, Delivery
and Form."
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede, the nominee for DTC, as the registered holder of the
Junior Subordinated Debentures, as described under "-- Description of the
Capital Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee or at the offices
of any paying agent or transfer agent appointed by the Bank, provided that
payment of interest may be made at the option of the Bank by check mailed to the
address of the persons entitled thereto or by wire transfer.
The Junior Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $250,000 and integral multiples of
$1,000 in excess thereof. Junior Subordinated Debentures will be exchangeable
for other Junior Subordinated Debentures of like tenor, of any authorized
denominations, and of a like aggregate principal amount.
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<PAGE>
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Bank for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Bank will appoint the Debenture Trustee as securities registrar
under the Junior Subordinated Indenture. The Bank may at any time designate
additional transfer agents with respect to the Junior Subordinated Debentures.
In the event of any redemption, neither the Bank nor the Debenture Trustee
shall be required to (i) issue, register the transfer of or exchange Junior
Subordinated Debentures during a period beginning at the opening of business 15
days before the day of selection for redemption of the Junior Subordinated
Debentures to be redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) transfer or exchange any
Junior Subordinated Debentures so selected for redemption, except, in the case
of any Junior Subordinated Debentures being redeemed in part, any portion
thereof not to be redeemed.
Any moneys deposited with the Debenture Trustee or any paying agent, or then
held by the Bank in trust, for the payment of the principal of (and premium, if
any) or interest on any 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 Bank, be repaid to the Bank and the
holder of such Junior Subordinated Debenture shall thereafter look, as a general
unsecured creditor, only to the Bank for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE BANK
The Bank has covenanted that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Bank's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Bank that rank PARI PASSU in all respects with or
junior in interest to the Junior Subordinated Debentures (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Bank in connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Bank (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable event, (b) as a result of an exchange or conversion of any
class or series of the Bank's capital stock (or any capital stock of a
subsidiary of the Bank) for any class or series of the Bank's capital stock or
of any class or series of the Bank's indebtedness for any class or series of the
Bank's capital stock, (c) the purchase of fractional interests in shares of the
Bank's capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (d) any declaration
of a dividend in connection with any stockholder's rights plan, or the issuance
of rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks PARI PASSU with
or junior to such stock), if at such time (i) there has occurred any event (a)
of which the Bank has actual knowledge that with the giving of notice or the
lapse of time, or both, would constitute a Debenture Event of Default and (b)
that the Bank has not taken reasonable steps to cure, (ii) if the Junior
Subordinated Debentures are held by the Issuer Trust, the Bank is in default
with respect to its payment of any obligations under the Guarantee or (iii) the
Bank has given notice of its selection of an Extension Period as provided in the
Junior Subordinated Indenture and has not rescinded such notice, or such
Extension Period, or any extension thereof, is continuing.
The Bank has covenanted in the Junior Subordinated Indenture (i) to continue
to hold, directly or indirectly, 100% of the Common Securities, provided that
certain successors that are permitted pursuant
55
<PAGE>
to the Junior Subordinated Indenture may succeed to the Bank's ownership of the
Common Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, wind-up or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Capital Securities in liquidation of the Issuer Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time the Bank, the Holding Company and the Debenture Trustee
may, without the consent of the holders of the Junior Subordinated Debentures,
amend, waive or supplement the provisions of the Junior Subordinated Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interests of the holders of the Junior Subordinated
Debentures or the holders of the Capital Securities so long as they remain
outstanding) and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Junior Subordinated Indenture contains
provisions permitting the Bank and the Debenture Trustee, with the consent of
the holders of not less than a majority in principal amount of the Junior
Subordinated Debentures, to modify the Junior Subordinated Indenture in a manner
affecting the rights of the holders of the Junior Subordinated Debentures,
except that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity of the Junior Subordinated Debentures, or reduce the principal amount
thereof, the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the currency in which, any
such amount is payable or impair the right to institute suit for the enforcement
of any Junior Subordinated Debenture or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Junior Subordinated Indenture.
Furthermore, so long as any of the Capital Securities remain outstanding, no
such modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Junior Subordinated Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of the outstanding Capital
Securities unless and until the principal of (and premium, if any, on) the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture for 90 days
after written notice to the Bank from the Debenture Trustee or the holders
of at least 25% in aggregate outstanding principal amount of the outstanding
Junior Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Bank.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in
56
<PAGE>
"-- Description of Capital Securities -- Events of Default; Notice," the
occurrence of a Debenture Event of Default will also constitute an Event of
Default in respect of the Trust Securities.
The holders of at least a majority in aggregate principal amount of
outstanding 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 principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Capital Securities shall
have such right. The holders of a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures may annul such declaration and waive
the default if all defaults (other than the non-payment of the principal of
Junior Subordinated Debentures which has become due solely by such acceleration)
have been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee. Should the holders of Junior Subordinated Debentures fail to
annul such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the outstanding Capital Securities shall have
such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture. See "-- Modification of Junior Subordinated Indenture."
The Bank is required to file annually with the Debenture Trustee a certificate
as to whether or not the Bank is in compliance with all the conditions and
covenants applicable to it under the Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Bank to pay any amounts payable in
respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Capital Securities may institute a
legal proceeding directly against the Bank for enforcement of payment to such
holder of an amount equal to the amount payable in respect of Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Capital Securities held by such holder (a "Direct
Action"). The Bank may not amend the Junior Subordinated Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Capital Securities. The Bank will have the right under
the Junior Subordinated Indenture to set-off any payment made to such holder of
Capital Securities by the Bank in connection with a Direct Action.
The holders of the Capital Securities would not be able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
except under the circumstances described in the preceding paragraph. See "--
Description of Capital Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Bank may not consolidate
with or merge into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, and no Person may
consolidate with or merge into the Bank or convey, transfer or lease its
57
<PAGE>
properties and assets substantially as an entirety to the Bank, unless (i) if
the Bank 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
Bank's obligations in respect of the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would constitute a Debenture
Event of Default, has occurred and is continuing; and (iii) certain other
conditions as prescribed in the Junior Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford holders of
the Junior Subordinated Debentures protection in the event of a highly leveraged
or other transaction involving the Bank that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable or (ii) will become due
and payable at the Stated Maturity within one year, and the Bank 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 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, as the case may be, then
the Junior Subordinated Indenture will cease to be of further effect (except as
to the Bank's obligations to pay all other sums due pursuant to the Junior
Subordinated Indenture and to provide the officers' certificates and opinions of
counsel described therein), and the Bank will be deemed to have satisfied and
discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to all
Senior Indebtedness (as defined below) of the Bank. If the Bank defaults in the
payment of any principal, premium, if any, or interest, if any, or any other
amount payable on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for redemption or by declaration of
acceleration or otherwise, then, unless and until such default has been cured or
waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" of the Bank means any obligation of
the Bank to its creditors, whether now outstanding or subsequently incurred,
other than any obligation as to which, in the instrument creating or evidencing
the obligation or pursuant to which the obligation is outstanding, it is
provided that such obligation is not Senior Indebtedness, whether now
outstanding or hereinafter incurred. Senior Indebtedness of the Bank includes,
without limitation, the Bank's outstanding subordinated debt securities, any
subordinated debt securities issued in the future with substantially similar
subordination terms, and the Bank's obligations to depositors, its obligations
under banker's acceptances and letters of credit and its obligations to other
creditors, including its obligations to any Federal Reserve Bank and the FDIC
(except for obligations to the FDIC under Section 1815(c) of Title 12 of the
United States Code which requires banks to indemnify the FDIC for its losses
arising from any failed, commonly controlled bank) but does not include (a) any
obligations of the Bank that, when incurred and without respect to any election
under IIII(b) of the Bankruptcy Reform Act of 1978, was without recourse to the
Bank, (b) any obligation of the Bank to any of its subsidiaries, (c) obligations
to any employee of the Bank, (d) any Junior Subordinated Debentures, (e) trade
accounts payable of the Bank and (f) accrued liabilities arising in the ordinary
course of business of the Bank. As of December 31, 1996, the Bank had $4.45
billion of Senior Indebtedness outstanding.
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In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Bank, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Bank, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Bank for the benefit of creditors or (iv) any other
marshalling of the assets of the Bank, all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made on account of the Junior
Subordinated Debentures. In such event, any payment or distribution on account
of the Junior Subordinated Debentures, whether in cash, securities or other
property, that would otherwise (but for the subordination provisions) be payable
or deliverable in respect of the Junior Subordinated Debentures will be paid or
delivered directly to the holders of Senior Indebtedness in accordance with the
priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Bank ranking on
a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Bank the amounts at the time due and owing on
the Junior Subordinated Debentures and such other obligations before any payment
or other distribution, whether in cash, property or otherwise, will be made on
account of any capital stock or obligations of the Bank ranking junior to the
Junior Subordinated Debentures and such other obligations. If any payment or
distribution on account of the Junior Subordinated Debentures of any character
or any security, whether in cash, securities or other property is received by
any holder of any Junior Subordinated Debentures in contravention of any of the
terms hereof and before all the Senior Indebtedness has been paid in full, such
payment or distribution or security will be received in trust for the benefit
of, and must be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. By reason of such subordination, in the event of the
insolvency of the Bank, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Bank. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Bank. The Bank
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
PARENT GUARANTEE
Pursuant to the Junior Subordinated Indenture, the Holding Company has
irrevocably and unconditionally guaranteed the obligations of the Bank under the
Old Junior Subordinated Debentures (the "Old Debenture Guarantee"). Pursuant to
the Exchange Offer, the Holding Company will exchange the Old Debenture
Guarantees for the New Debenture Guarantees as soon as practicable after the
date hereof. See "-- Parent Guarantee" and "The Exchange Offer."
GOVERNING LAW
The Junior Subordinated Indenture and the 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
The Debenture Trustee, other than during the occurrence and continuance of a
default by the Bank in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated Indenture at the request of any holder
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of Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that 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.
Chase Trust Company of California, the Debenture Trustee, may serve from
time to time as trustee under other indentures or trust agreements with the Bank
or its subsidiaries relating to other issues of their securities. In addition,
the Bank and certain of its affiliates may have other banking relationships with
Chase Trust Company of California and its affiliates.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Bank concurrently with
the issuance of the Old Capital Securities by the Issuer Trust for the benefit
of the holders from time to time of the Old Capital Securities. As soon as
practicable after the date hereof, the Old Guarantee will be exchanged by the
Bank for the New Guarantee, and the guarantee by the Holding Company of the Old
Guarantee will be exchanged by the Bank for an identical guarantee of the
Holding Company of the Bank's obligations under the New Guarantee (together with
the New Debenture Guarantee, the "New Parent Guarantee"). Chase Trust Company of
California will act as Guarantee Trustee under the New Guarantee. The New Parent
Guarantee has been qualified under the Trust Indenture Act. This summary of
certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the Guarantee, including the definitions therein of certain terms. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Capital Securities.
GENERAL
The Bank has irrevocably agreed 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 Capital Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer Trust may have or assert other
than the defense of payment. The following payments with respect to the Capital
Securities, to the extent not paid by or on behalf of the Issuer Trust (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on such Capital Securities, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
(ii) the Redemption Price with respect to any Capital Securities called for
redemption, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary termination,
winding-up or liquidation of the Issuer Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Capital Securities), the lesser of
(a) the Liquidation Distribution, to the extent that the Issuer Trust has funds
on hand available therefor at such time, and (b) the amount of assets of the
Issuer Trust remaining available for distribution to holders of the Capital
Securities on liquidation of the Issuer Trust. The Bank's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Bank to the holders of the Capital Securities or by causing the Issuer Trust
to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Capital Securities, but will apply only
to the extent that the Issuer Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
If the Bank does not make payments on the Junior Subordinated Debentures
held by the Issuer Trust, the Issuer Trust will not be able to pay any amounts
payable in respect of the Capital Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Bank. See "-- Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Bank, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Bank may
enter into in the future or otherwise.
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The Bank has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Junior Subordinated Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of the Issuer Trust's obligations under the 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 Issuer Trust's obligations in respect of the
Capital Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures, the Guarantee, the Expense Agreement and the Parent
Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Bank and will
rank subordinate and junior in right of payment to all Senior Indebtedness of
the Bank in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(I.E., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Capital Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "-- Description of Capital Securities -- Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Bank and shall inure to the benefit of the holders of the
Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Bank to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such nonpayment default remains unremedied
for 30 days. The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
Any registered holder of Capital Securities may institute a legal proceeding
directly against the Bank to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Issuer Trust, the Guarantee
Trustee or any other person or entity.
The Bank, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Bank is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Bank in performance of the Guarantee, undertakes to perform only
such duties as are specifically set forth in
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the Guarantee and, after the occurrence of an event of 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 is 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.
For information concerning the relationship between Chase Trust Company of
California, the Guarantee Trustee, and the Bank, see "-- Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Capital Securities, upon full payment of
the amounts payable with respect to the Capital Securities upon liquidation of
the Issuer Trust or upon distribution of Junior Subordinated Debentures to the
holders of the Capital Securities. The Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of the
Capital Securities must restore payment of any sums paid under the Capital
Securities or the Guarantee.
PARENT GUARANTEE
The Holding Company will irrevocably and unconditionally guarantee the
obligations of the Bank under the Guarantee. See "-- Parent Guarantee."
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to an Agreement as to Expenses and Liabilities entered into by the
Bank under the Trust Agreement (as amended or supplemented from time to time,
the "Expense Agreement"), the Bank, as holder of the Common Securities, has
irrevocably and unconditionally guaranteed to each person or entity to whom the
Issuer Trust becomes indebted or liable, the full payment of any costs, expenses
or liabilities of the Issuer Trust, other than obligations of the Issuer Trust
to pay to holders of the Trust Securities of the amounts due such holders
pursuant to the terms of the Trust Securities. The Expense Agreement constitutes
an unsecured obligation of the Bank and ranks subordinate and junior in right of
payment to all Senior Indebtedness of the Bank in the same manner as the
Guarantee and the Junior Subordinated Debentures.
PARENT GUARANTEE
Pursuant to the Indenture and the Guarantee Agreement, the Holding Company
has irrevocably and unconditionally guaranteed to the holders of the Junior
Subordinated Debentures and the Old Guarantee, and pursuant to the Exchange
Offer, the Holding Company will irrevocably and unconditionally guarantee to the
holders of the Junior Subordinated Debentures and the New Guarantee, the full
payment of all amounts payable by the Bank under the Junior Subordinated
Debentures and the Guarantees (such guarantee, the "Parent Guarantee").
The Parent Guarantee constitutes an unsecured obligation of the Holding
Company and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Holding Company.
As used herein, "Senior Indebtedness" of the Holding Company means any
obligation of the Holding Company to its creditors, whether now outstanding or
subsequently incurred, other than any obligation as to which, in the instrument
creating or evidencing the obligation or pursuant to which the
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obligation is outstanding, it is provided that such obligation is not Senior
Indebtedness, but does not include trade accounts payable and accrued
liabilities arising in the ordinary course of business. Senior Indebtedness of
the Holding Company includes the Holding Company's outstanding subordinated debt
securities and any subordinated debt securities issued by the Holding Company in
the future with substantially similar subordination terms, but does not include
any junior subordinated debt securities issued by the Holding Company in the
future with subordination terms substantially similar to those of the Junior
Subordinated Debentures. Substantially all of the existing indebtedness of the
Holding Company constitutes Senior Indebtedness. As of December 31, 1996, the
Holding Company had approximately $56.4 million of Senior Indebtedness
outstanding. Neither the Parent Guarantee nor the Junior Subordinated Indenture
place any limitation on the amount of additional Senior Indebtedness that may be
incurred by the Holding Company. The Holding Company expects from time to time
to incur additional indebtedness constituting Senior Indebtedness.
The Parent Guarantee constitutes a guarantee of payment and not of
collection (I.E., the guaranteed party may institute a legal proceeding directly
against the Holding Company to enforce its rights under the Parent Guarantee
without first instituting a legal proceeding against any other person or
entity). The Parent Guarantee will be held by the Debenture Trustee and the
Guarantee Trustee for the respective benefit of the holders of the Junior
Subordinated Debentures and the Guarantee. The Parent Guarantee will not be
discharged except by payment of all obligations of the Bank under the Junior
Subordinated Debentures and the Guarantee in full to the extent not paid by the
Bank.
Any registered holder of Junior Subordinated Debentures and any holder of
the Guarantee may institute a legal proceeding directly against the Holding
Company to enforce its rights under the Parent Guarantee without first
instituting a legal proceeding against the Bank, the Issuer Trust, the Debenture
Trustee, the Guarantee Trustee or any other person or entity.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances); and (ii) the New Capital Securities will not provide for
any increase in the Distribution rate thereon. The Old Securities provide that,
in the event that the Exchange Offer is not consummated on or prior to May 1,
1997, or in certain limited circumstances, in the event a shelf registration
statement (the "Shelf Registration Statement") with respect to the resale of the
Old Capital Securities is not declared effective on or prior to June 24, 1997,
then interest will accrue (in addition to the interest rate on the Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal amount
of the Junior Subordinated Debentures and Distributions will accrue (in addition
to the stated Distribution rate on the Capital Securities) at the rate of 0.25%
per annum on the Liquidation Amount of the Capital Securities, for the period
from the occurrence of such event until the earlier of such time as the Exchange
Offer is consummated, any required Shelf Registration Statement is effective or
the date that is three years from the original issuance of the Old Capital
Securities. The New Securities are not, and upon consummation of the Exchange
Offer the Old Securities will not be, entitled to any such additional interest
or Distributions. Accordingly, holders of Old Capital Securities should review
the information set forth under "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of New Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES,
THE GUARANTEE, THE EXPENSE AGREEMENT AND THE PARENT GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed by the Bank as and to the extent set forth under
"Description of New Securities -- Description of Guarantee." Taken together, the
Bank's
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obligations under the Junior Subordinated Debentures, the Junior Subordinated
Indenture, the Trust Agreement, the Expense Agreement and the Guarantee provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the 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 Issuer Trust's obligations in respect of the
Capital Securities. If and to the extent that the Bank does not make payments on
the Junior Subordinated Debentures, the Issuer Trust will not have sufficient
funds to pay Distributions or other amounts due on the Capital Securities. The
Guarantee does not cover payment of amounts payable with respect to the Capital
Securities when the Issuer Trust does not have sufficient funds to pay such
amounts. In such event, the remedy of a holder of the Capital Securities is to
institute a legal proceeding directly against the Bank for enforcement of
payment of the Bank's obligations under Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Capital Securities held
by such holder.
The obligations of the Bank under the Junior Subordinated Debentures, the
Guarantee and the Expense Agreement are subordinate and junior in right of
payment to all Senior Indebtedness.
PARENT GUARANTEE
Payments by the Bank under the Junior Subordinated Debentures and the
Guarantee are irrevocably guaranteed by the Holding Company. Therefore, if and
to the extent that the Bank does not make payments on the Junior Subordinated
Debentures, the Holding Company is obligated to make such payments, and to the
extent that such payments are made, the Issuer Trust will have sufficient funds
to pay Distributions on the Capital Securities. In such instance, if the Bank
does not make or cause the Issuer Trust to make payments due under the
Guarantee, the Holding Company, to the extent the Issuer Trust has such funds
available, will be obligated to make such payments under the Guarantee.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated Debentures,
such payments will be sufficient to cover Distributions and other payments
distributable on the Capital Securities, primarily because (i) the aggregate
principal amount of the Junior Subordinated Debentures will be equal to the sum
of the aggregate stated Liquidation Amount of the Capital Securities and Common
Securities; (ii) the interest rate and interest and other payment dates on the
Junior Subordinated Debentures will match the Distribution rate, Distribution
Dates and other payment dates for the Capital Securities; (iii) the Bank, as
holder of the Common Securities, will pay for all and any costs, expenses and
liabilities of the Issuer Trust except the Issuer Trust's obligations to holders
of the Trust Securities; and (iv) the Trust Agreement further provides that the
Issuer Trust will not engage in any activity that is not consistent with the
limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Bank has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Bank has theretofore
made, or is concurrently on the date of such payment making, a payment under the
Guarantee or in connection with a Direct Action.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Bank to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other person or entity. See "Description of New Securities -- Description
of Guarantee." In addition, a holder of any Capital Security may institute a
legal proceeding directly against the Holding Company to enforce its rights
under the Parent Guarantee without first instituting a legal proceeding against
the Guarantee Trustee, the Debenture Trustee, the Bank, the Issuer Trust or any
other person or entity. See "Description of New Securities -- Parent Guarantee."
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A default or event of default under any Senior Indebtedness of the Bank
would not constitute a default or Event of Default in respect of the Capital
Securities. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Bank, the subordination provisions of the Junior
Subordinated Indenture provide that no payments may be made in respect of the
Junior Subordinated
Debentures until such Senior Indebtedness has been paid in full or any payment
default thereunder has been cured or waived. See "Description of New Securities
- -- Description of Junior Subordinated Debentures -- Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Capital Securities represent preferred undivided beneficial interests in
the assets of the Issuer Trust, and the Issuer Trust exists for the sole purpose
of issuing its Capital Securities and Common Securities and investing the
proceeds thereof in Junior Subordinated Debentures. A principal difference
between the rights of a holder of a Capital Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from the Bank payments on Junior Subordinated Debentures
held, while a holder of Capital Securities is entitled to receive Distributions
or other amounts distributable with respect to the Capital Securities from the
Issuer Trust (or from the Bank under the Guarantee) only if and to the extent
the Issuer Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Issuer Trust, other than any such termination, winding-up or liquidation
involving the distribution of the Junior Subordinated Debentures, after
satisfaction of liabilities to creditors of the Issuer Trust as required by
applicable law, the holders of the Capital Securities will be entitled to
receive, out of assets held by the Issuer Trust, the Liquidation Distribution in
cash. See "Description of New Securities -- Description of Capital Securities --
Liquidation Distribution Upon Termination." Upon any voluntary or involuntary
liquidation or bankruptcy of the Bank, the Property Trustee, as registered
holder of the Junior Subordinated Debentures, would be a subordinated creditor
of the Bank, subordinated and junior in right of payment to all Senior
Indebtedness as set forth in the Junior Subordinated Indenture, but entitled to
receive payment in full of all amounts payable with respect to the Junior
Subordinated Debentures before any stockholders of the Bank receive payments or
distributions. Since the Bank is the guarantor under the Guarantee and has
agreed under the Expense Agreement to pay for all costs, expenses and
liabilities of the Issuer Trust (other than the Issuer Trust's obligations to
the holders of the Trust Securities), the positions of a holder of the Capital
Securities and a holder of such Junior Subordinated Debentures relative to other
creditors and to stockholders of the Bank in the event of liquidation or
bankruptcy of the Bank are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust the
income of which is subject to United States federal income tax regardless of
source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Capital Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies, (iii) persons that will hold Capital Securities as
part of a
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position in a "straddle" or as part of a "hedging," "conversion" or other
integrated investment transaction for United States federal income tax purposes,
(iv) persons whose functional currency is not the United States dollar or (v)
persons that do not hold Capital Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, counsel to the Bank and the
Issuer Trust. This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and pronouncements and judicial decisions now in effect, all of which
are subject to change at any time. Such changes may be applied retroactively in
a manner that could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting a beneficial owner of
Capital Securities. In particular, legislation has been proposed in the past
that could adversely affect the Bank's ability to deduct interest on the Junior
Subordinated Debentures, which may in turn permit the Bank to cause a redemption
of the Capital Securities. See "-- Possible Tax Law Changes." The authorities on
which this summary is based are subject to various interpretations, and it is
therefore possible that the United States federal income tax treatment of the
purchase, ownership and disposition of Capital Securities may differ from the
treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES AND THE ISSUER TRUST
Under current law and assuming compliance with the terms of the Trust
Agreement and certain factual matters, the Issuer Trust will not be taxable as a
corporation for United States federal income tax purposes. As a result, each
beneficial owner of Capital Securities (a "Securityholder") will be required to
include in its gross income its PRO RATA share of the interest income, including
original issue discount ("OID"), paid or accrued with respect to the Junior
Subordinated Debentures whether or not cash is actually distributed to the
Securityholders. See "-- Interest Income and Original Issue Discount." The
Junior Subordinated Debentures will be classified as indebtedness of the Bank
for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a contingency that
stated interest will not be timely paid that is "remote" because of the terms of
the relevant debt instrument will be ignored in determining whether such debt
instrument is issued with OID. As a result of the terms and conditions of the
Junior Subordinated Debentures that prohibit certain payments with respect to
the Bank's capital stock and indebtedness if the Bank elects to extend interest
payment periods, the Bank believes that the likelihood of its exercising its
option to defer payments of interest is remote. Based on the foregoing, the Bank
believes that the Junior Subordinated Debentures will not be considered to be
issued with OID at the time of their original issuance and, accordingly, a
Securityholder should include in gross income such Securityholder's allocable
share of interest on the Junior Subordinated Debentures. The following
discussion assumes that unless and until the Bank exercises its option to defer
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will not be treated as issued with OID.
Under the Regulations, if the Bank exercises its option to defer any payment
of interest, the Junior Subordinated Debentures would at that time be treated as
issued with OID, and all stated interest on the Junior Subordinated Debentures
would thereafter be treated as OID as long as the Junior Subordinated Debentures
remained outstanding. In such event, all of a Securityholder's taxable interest
income with respect to the Junior Subordinated Debentures would be accounted for
as OID on an economic accrual basis regardless of such Securityholder's method
of tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a Securityholder would be required to
include in gross income OID even though the Bank would not make any actual cash
payments during an Extension Period.
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The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.
Subsequent uses of the term "interest" in this summary include income in the
form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO SECURITYHOLDERS
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures as described under the caption "Description of New
Securities -- Description of Capital Securities -- Liquidation Distribution Upon
Termination" will be non-taxable and will result in the Securityholder receiving
directly his or her PRO RATA share of the Junior Subordinated Debentures
previously held indirectly through the Issuer Trust, with a holding period and
aggregate tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Capital Securities before such distribution. If,
however, the liquidation of the Issuer Trust were to occur because the Issuer
Trust is subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debentures, the distribution of
Junior Subordinated Debentures to Securityholders by the Issuer Trust would be a
taxable event to the Issuer Trust and each Securityholder, and the
Securityholder would recognize gain or loss as if the Securityholder had
exchanged its Capital Securities for the Junior Subordinated Debentures it
received upon the liquidation of the Issuer Trust. A Securityholder will include
interest in income in respect of Junior Subordinated Debentures received from
the Issuer Trust in the manner described above under "-- Interest Income and
Original Issue Discount."
SALES OR REDEMPTIONS OF CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Capital
Securities will recognize gain or loss equal to the difference between its
adjusted tax basis in the Capital Securities and the amount realized on the sale
of such Capital Securities. Assuming that the Bank does not exercise its option
to defer payment of interest on the Junior Subordinated Debentures, a
Securityholder's adjusted tax basis in the Capital Securities generally will be
its initial purchase price. If the Junior Subordinated Debentures are deemed to
be issued with OID as a result of the Bank's deferral of any interest payment, a
Securityholder's tax basis in the Capital Securities generally will be its
initial purchase price, increased by OID previously includible in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Capital Securities since and
including the date of the first Extension Period. Such gain or loss generally
will be a capital gain or loss (except to the extent any amount realized is
treated as a payment of accrued interest with respect to such Securityholder's
PRO RATA share of the Junior Subordinated Debentures required to be included in
income) and generally will be a long-term capital gain or loss if the Capital
Securities have been held for more than one year.
Should the Bank exercise its option to defer any payment of interest on the
Junior Subordinate Debentures, the Capital Securities may trade at a price that
does not accurately reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debentures. In the event of such a
deferral, a Securityholder who disposes of its Capital Securities between record
dates for payments of distributions thereon will be required to include in
income as ordinary income accrued but unpaid interest on the Junior Subordinated
Debentures to the date of disposition as OID, but may not receive the cash
related thereto. However, such Securityholder will add such amount to its
adjusted tax basis in the Capital Securities. To the extent the selling price is
less than the Securityholder's adjusted tax basis, such Securityholder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
Although the matter is not free from doubt, an exchange of Old Capital
Securities for New Capital Securities should not be taxable to Securityholders.
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BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the Capital Securities held
of record by United States Persons (other than corporations and other exempt
Securityholders) will be reported to the IRS. "Backup" withholding at a rate of
31% will apply to payments of interest to non-exempt United States Persons
unless the Securityholder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury regulations, certifies that such number
is correct, certifies as to no loss of exemption from backup withholding and
meets certain other conditions.
Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Securityholder establishes an exemption from
information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Capital Securities will be reported to
Securityholders on Form 1099 and mailed to Securityholders by January 31
following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal"), was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued by
a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above described
provision of the Budget Proposal is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action.
If a similar provision were to apply to the Junior Subordinated Debentures, the
Bank would be unable to deduct interest on the Junior Subordinated Debentures.
Under current law, the Bank will be able to deduct interest on the Junior
Subordinated Debentures. There can be no assurance, however, that current or
future legislative proposals or final legislation will not affect the ability of
the Bank to deduct interest on the Junior Subordinated Debentures. Such a change
could give rise to a Tax Event, which may permit the Bank to cause a redemption
of the Capital Securities, as described more fully in this Prospectus under
"Description of New Securities -- Description of Capital Securities --
Redemption."
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as
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described in Section 4(b)(5) of ERISA) are not subject to the requirements of
ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Issuer Trust would be deemed
to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code
if "plan assets" of the Plan were used to acquire an equity interest in the
Issuer Trust and no exception were applicable under the Plan Assets Regulation.
An "equity interest" is defined under the Plan Assets Regulation as any interest
in an entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the assets
of the Issuer Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Issuer Trust, less than 25% of the value of each class of equity interests in
the Issuer Trust were held by Plans, other employee benefit plans not subject to
ERISA or Section 4975 of the Code (such as governmental, church and foreign
plans), and entities holding assets deemed to be "plan assets" of any Plan
(collectively, "Benefit Plan Investors"). No assurance can be given that the
value of the Capital Securities held by Benefit Plan Investors will be less than
25% of the total value of such Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. All
of the Common Securities will be purchased and initially held by the Bank.
Certain transactions involving the Issuer Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Capital Securities were acquired
with "plan assets" of such Plan and the assets of the Issuer Trust were deemed
to be "plan assets" of Plans investing in the Issuer Trust. For example, if the
Bank is a Party in Interest with respect to an investing Plan (either directly
or by reason of its ownership of the Bank or other subsidiaries), extensions of
credit between the Bank and the Issuer Trust (as represented by the Junior
Subordinated Debentures and the Guarantee) would likely be prohibited by Section
406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, UNLESS exemptive
relief were available under an applicable administrative exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Capital
Securities if assets of the Issuer Trust were deemed to be "plan assets" of
Plans investing in the Issuer Trust as described above. Those class exemptions
are PTCE 96-23 (for certain transactions determined by in-house asset managers),
PTCE 95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank collective
investment funds), PTCE 90-1 (for certain transactions involving insurance
company separate accounts), and PTCE 84-14 (for certain transactions determined
by qualified professional asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of any
Plan, UNLESS such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption. Any purchaser or holder of the Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (a) is not a Plan or a Plan Asset Entity and is not purchasing
such securities on behalf of or with "plan assets" of any Plan or (b) is
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14 or another applicable exemption with respect to such purchase or
holding. If a purchaser or holder of the Capital Securities that is a Plan or a
Plan Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60,
91-38, 90-1 or 84-14, the Bank and the Issuer Trust may require a satisfactory
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opinion of counsel or other evidence with respect to the availability of such
exemption for such purchase and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in nonexempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Issuer Trust
were deemed to be "plan assets" and the availability of exemptive relief under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
SUPERVISION, REGULATION AND OTHER MATTERS
The following information is not intended to be an exhaustive description of
the statutes and regulations applicable to the Bank or the Corporation. The
discussion is qualified in its entirety by reference to all particular statutory
or regulatory provisions. Additional information regarding supervision and
regulation is included in the documents incorporated herein by reference. See
"Additional Information."
The business of the Bank is influenced by prevailing economic conditions and
governmental policies, both foreign and domestic. The actions and policy
directives of the Federal Reserve determine to a significant degree the cost and
the availability of funds obtained from money market sources for lending and
investing. The Federal Reserve's policies and regulations also influence,
directly and indirectly, the rates of interest paid by commercial banks on their
time and savings deposits. The nature and impact on the Bank of future changes
in economic conditions and monetary and fiscal policies, both foreign and
domestic, are not predictable.
The Bank is subject to supervision and examination by federal bank
regulatory authorities. The Bank's primary bank regulatory authority is the OCC.
The federal bank regulatory authorities have each adopted risk-based capital
guidelines to which the Bank is subject. These guidelines are based on an
international agreement developed by the Basle Committee on Banking Regulations
and Supervisory Practices, which consists of representatives of central banks
and supervisory authorities in 12 countries including the United States of
America. The guidelines establish a systematic analytical framework that makes
regulatory capital requirements more sensitive to differences in risk profiles
among banking organizations, takes off-balance sheet exposures into explicit
account in assessing capital adequacy and minimizes disincentives to holding
liquid, low-risk assets. Risk-based assets are determined by allocating assets
and specified off-balance sheet commitments and exposures into four weighted
categories, with higher levels of capital being required for the categories
perceived as representing greater risk.
All banks are required to maintain a minimum total risk-based ratio of 8%,
of which half (4%) must be "Tier 1" capital. In addition, the federal bank
regulators established leverage ratio (Tier 1 capital to total adjusted average
assets) guidelines providing for a minimum leverage ratio of 3% for banks
meeting certain specified criteria, including excellent asset quality, high
liquidity, low interest rate exposure and the highest regulatory rating.
Institutions not meeting these criteria are expected to maintain a ratio which
exceeds the 3% minimum by at least 100 to 200 basis points. The federal bank
regulatory authorities may, however, set higher capital requirements when a
bank's particular circumstances warrant. As of December 31, 1996, the Bank's
total risk-based capital ratio was 19.47%, of which 11.36% constituted Tier 1
capital. The Bank's leverage ratio at such date was 6.61%.
Effective January 17, 1995, the federal bank regulatory agencies, including
the FDIC, the Federal Reserve and the OCC, amended their respective agency
risk-based capital standards to include concentration of credit risk and the
risks of non-traditional activities. The Federal Reserve, the OCC and the FDIC
also issued a joint policy statement, effective June 26, 1996, that provides
guidance on sound practices for interest rate risk management. The policy
describes critical factors affecting the agencies' evaluation of a bank's
interest rate risk when making a determination of capital adequacy.
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The federal banking agencies possess broad powers to take corrective action
as deemed appropriate for an insured depository institution and its holding
companies. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase. The
agencies' corrective powers can include, among other things, requiring an
insured financial institution to adopt a capital restoration plan which cannot
be approved unless guaranteed by the institution's parent holding company;
placing limits on asset growth and restrictions on activities; placing
restrictions on transactions with affiliates; restricting the interest rates the
institution may pay on deposits; prohibiting the institution from accepting
deposits from correspondent banks; prohibiting the payment of principal or
interest on subordinated debt; prohibiting the holding company from making
capital distributions without prior regulatory approval; and, ultimately,
appointing a receiver for the institution. Business activities may also be
influenced by an institution's capital classification. For instance, only a
"well capitalized" depository institution may accept brokered deposits without
prior regulatory approval and only an "adequately capitalized" depository
institution may accept brokered deposits with prior regulatory approval. At
December 31, 1996, the Bank exceeded the required ratios for classification as
"well capitalized."
The Bank's deposits are insured by the FDIC and are subject to FDIC
insurance assessments. The amount of FDIC assessments paid by individual insured
depository institutions is based on their relative risk as measured by
regulatory capital ratios and certain other factors. During 1995, the FDIC's
Board of Directors significantly reduced premium rates assessed for deposits
insured by the Bank Insurance Fund (the "BIF"), resulting in the Bank not
currently being assessed a premium on its BIF-insured deposits. With respect to
deposits insured by the Savings Association Insurance Fund ("SAIF"), on
September 30, 1996, President Clinton signed into law legislation that mandated
a one-time assessment on SAIF-insured deposits to recapitalize the SAIF. The
legislation also mandates reductions in deposit premium rates on SAIF-insured
deposits.
Under federal law, a financial institution insured by the FDIC under common
ownership with a failed institution can be required to indemnify the FDIC for
its losses resulting from the insolvency of the failed institution, even if such
indemnification causes the affiliated institution also to become insolvent. As a
result, the Bank could, under certain circumstances, be obligated for the
liabilities of its affiliates that are FDIC-insured institutions. In addition,
if any insured depository institution becomes insolvent and the FDIC is
appointed its conservator or receiver, the FDIC may disaffirm or repudiate any
contract or lease to which such institution is a party, the performance of which
is determined to be burdensome and the disaffirmance or repudiation of which is
determined to promote the orderly administration of the institution's affairs.
If Federal law were construed to permit the FDIC to apply these provisions to
debt obligations of an insured depository institution, the result could be that
such obligations would be prepaid without premium. Federal law also accords the
claims of a receiver of an insured depository institution for administrative
expenses and the claims of holders of deposit liabilities of such an institution
priority over the claims of general unsecured creditors of such an institution
in the event of a liquidation or other resolution of such institution.
The Bank Holding Company Act of 1956, as amended, currently permits
adequately capitalized and adequately managed bank holding companies from any
state to acquire banks and bank holding companies located in any other state,
subject to certain conditions. Effective June 1, 1997, the Bank will have the
ability, subject to certain restrictions, including state opt-out provisions, to
consolidate with other banking subsidiaries of the Holding Company or to acquire
by acquisition or merger branches outside of its home state. States may
affirmatively opt-in earlier, which Utah, Arizona and Nevada (among other
states) have done. Competition may increase as banks branch across state lines
and enter new markets.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Issuer has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Expiration Date (subject to
extension under certain limited circumstances described herein) or, if earlier,
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "The Exchange Offer -- Resales of New Capital Securities."
The Issuer Trust will not receive any proceeds from the issuance of the New
Capital Securities offered hereby. New Capital Securities received by
broker-dealers for their own accounts may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Capital Securities or a combination of
such methods of resale, at market prices prevailing at the time of resale at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Capital
Securities. Any broker-dealer that resells New Capital Securities that were
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities may
be deemed to be underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
VALIDITY OF NEW CAPITAL SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the Trust Agreement and the creation of the
Issuer Trust will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Holding Company, the Bank and the Issuer Trust. The validity of
the Parent Guarantee will be passed upon for the Bank and the Holding Company by
Sullivan & Cromwell, Los Angeles, California and certain matters of Utah law
relating to the validity of the Parent Guarantee will be passed upon for the
Bank and the Holding Company by Callister Nebeker & McCullough, a Professional
Corporation, Salt Lake City, Utah. Certain matters relating to United States
federal income tax considerations will be passed upon for the Bank and the
Holding Company by Sullivan & Cromwell.
EXPERTS
The consolidated financial statements of the Corporation and subsidiaries as
of and for the year ended December 31, 1995 in the Corporation's 1995 Annual
Report on Form 10-K and the consolidated financial statements of the Corporation
and subsidiaries as of and for the year ended December 31, 1996 in the
Corporation's Current Report on Form 8-K filed March 11, 1997 have been audited
by KPMG Peat Marwick LLP, independent certified public accountants, as set forth
in their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
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ZIONS INSTITUTIONAL CAPITAL TRUST A
ZIONS BANCORPORATION
All tendered Old Capital Securities, executed Letters of Transmittal and
other related documents should be directed to the Exchange Agent. Requests for
assistance and for additional copies of the Prospectus, the Letter of
Transmittal and other related documents should be directed to the Exchange
Agent.
The Exchange Agent
for the Exchange Offer is
CHASE TRUST COMPANY OF CALIFORNIA
BY FACSIMILE:
(212) 638-7380 or 7381
Attention: Mr. Luis Padilla
Confirm by telephone:
(212) 658-0458
BY REGISTERED OR CERTIFIED MAIL:
c/o The Chase Manhattan Bank
55 Water Street, Room 234, North Building
New York, New York 10041
Attention:Mr. Luis Padilla or Mr. Carlos Estevez
BY HAND:
c/o The Chase Manhattan Bank
55 Water Street, Room 234, North Building
New York, New York 10041
Attention:Mr. Luis Padilla or Mr. Carlos Estevez
BY OVERNIGHT COURIER:
c/o The Chase Manhattan Bank
55 Water Street, Room 234, North Building
New York, New York 10041
Attention:Mr. Luis Padilla or Mr. Carlos Estevez
