As filed with the Securities and Exchange Commission on September
___, 1999
Reg. No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Main Street Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
23-2960905
(I.R.S. Employer Identification No.)
601 Penn Street Reading, Pennsylvania 19601
(610)685-1400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
MBNK Capital Trust I
(Exact name of the registrant as specified
in its Trust Agreement)
Delaware
(State or other jurisdiction of incorporation
or organization of registrant)
Applied for
(I.R.S. Employer Identification No.)
_________________________________________, Delaware
[Phone Number]
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Robert D. McHugh, Jr.
Executive Vice President and Chief Financial Officer
Main Street Bancorp, Inc.
601 Penn Street
Reading, Pennsylvania 19601
(Name, address, including zip code, and telephone number,
including area code, of agent for service of each registrant)
With copies to:
Jeffrey P. Waldron
Stevens & Lee
One Glenhardie Corporate Center Suite 202
1275 Drummers Lane, Wayne, Pennsylvania 19087
(610) 293-4961
Jonathan H. Talcott
Alston & Bird LLP
601 Pennsylvania Avenue, N.W., North Building 11th Floor
Washington, D.C. 20004
(202) 756-3304
-------------------------
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after the Registration Statement
becomes effective
--------------------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933 other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [ ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each class of Amount to be maximum offering maximum aggregate Amount of
securities to be registered registered price per unit(1) offering price(1) registration fee
<S> <C> <C> <C> <C>
Junior Subordinated Deferrable Interest 4,000,000 $10.00 $40,000,000 $11,120.00
Debentures of Main Street
Bancorp, Inc.(2)
Preferred Securities of MBNK
Capital Trust I 4,000,000 $10.00 $40,000,000 NA
Main Street Bancorp, Inc.
Guarantee with respect to
Preferred Securities(3)(4) NA NA NA NA
Total _____ 100% $ _____(5) $_______
</TABLE>
(1) Estimated solely for the purpose of computing the
registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures will
be purchased by MBNK Capital Trust I with the proceeds of
the sale of the Preferred Securities.
(3) No separate consideration will be received for the Main
Street Guarantee.
(4) This Registration Statement is deemed to cover the Junior
Subordinated Deferrable Interest Debentures of Main Street
Bancorp, Inc., the rights of holders of Junior Subordinated
Deferrable Interest Debentures of Main Street Bancorp, Inc.,
under the indenture, the rights of holders of Preferred
Securities of MBNK Capital Trust I under the Trust
Agreement, the rights of holders of the Preferred Securities
under the Guarantee, which, taken together, fully,
irrevocably and unconditionally guarantee all of the
respective obligations of MBNK Capital Trust I under the
Preferred Securities.
(5) Such amount represents the principal amount of Junior
Subordinated Deferrable Interest Debentures issued at their
principal amount and the issue price rather than the
principal amount of Junior Subordinated Deferrable Interest
Debentures issued at an original issue discount. Such
amount also represents the initial public offering price of
the MBNK Capital Trust I Preferred Securities.
___________________________________
The Registrants hereby amend this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Subject to Completion
Dated ____________, 1999
MBNK CAPITAL TRUST I
$40,000,000
______% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10.00 PER PREFERRED SECURITY)
fully and unconditionally guaranteed, as
described in this prospectus, by
MAIN STREET BANCORP, INC.
The preferred securities represent undivided beneficial
interests in the assets of MBNK Capital Trust I. The Trust will
invest the proceeds of this offering of preferred securities in
the _____% junior subordinated debentures of Main Street Bancorp,
Inc.
For each of the preferred securities that you own, you
are entitled to receive cumulative cash distributions at an
annual rate of _____% on March 31, June 30, September 30 and
December 31 of each year, beginning December 31, 1999 from
payments on the debentures. We may defer payment of
distributions at any time for up to 20 consecutive quarters. The
preferred securities are effectively subordinated to all of our
senior and subordinated indebtedness and the senior and
subordinated indebtedness of our subsidiaries. The junior
subordinated debentures mature, and the preferred securities must
be redeemed, on September 30, 2029. The Trust may redeem the
preferred securities, at a redemption price of $10.00 per
preferred security plus accumulated and unpaid distributions, at
any time on or after September 30, 2004, or earlier under certain
circumstances.
The preferred securities have been approved for
listing, subject to official notice of issuance, on the American
Stock Exchange, Inc. under the trading symbol "_______."
--------------------------------
WE URGE YOU TO CAREFULLY READ THE "RISK FACTORS"
SECTION BEGINNING ON PAGE __, WHERE WE DESCRIBE SPECIFIC RISKS
RELATED TO AN INVESTMENT IN THE PREFERRED SECURITIES AND RISKS
RELATING TO MAIN STREET BANCORP, INC., ALONG WITH THE REMAINDER
OF THIS PROSPECTUS, BEFORE YOU MAKE YOUR INVESTMENT DECISION.
--------------------------
These securities are not savings accounts, deposits or
obligations of any bank and are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency.
<PAGE 1>
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
Price to Underwriting Proceeds to
Public(1) Commission(2) Issuer Trust(3)(4)
Per Capital
Security (4)
Total (4)
(1) Plus accumulated distributions (as described in this
prospectus) if any.
(2) We and the Trust have each agreed to indemnify the
underwriters against certain liabilities, including
certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting" on page __.
(3) Before deducting estimated expenses, payable by us of
$250,000.
(4) Since the proceeds of the sale of the preferred
securities will be invested in the junior subordinated
debentures we will issue, we have agreed to pay to the
underwriters, as compensation for their arranging the
investment of such proceeds, $_____ per preferred
security or $_____ in the aggregate. See
"Underwriting" on page __.
The preferred securities are offered by the underwriters as
specified in this prospectus, subject to (1) the underwriters
receipt and acceptance, (2) the Trust's prior sale of the
preferred securities to the underwriters, and (3) the
underwriters' right to reject any order for the preferred
securities in whole or in part and to withdraw, cancel or modify
the order without notice. We expect that delivery of the
preferred securities will be made on or about _____________,
1999, against payment for the preferred securities in immediately
available funds.
Wheat First Securities Janney Montgomery Scott LLC
The date of this prospectus is __________, 1999
<PAGE 2>
MAIN STREET BANCORP, INC.
BANKING FACILITIES
[Map of the locations of the banking facilities of Main
Street Bank superimposed over a diagram of the Commonwealth of
Pennsylvania indicating the locations of the banking facilities.]
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements.
We have based these forward-looking statements on our current
expectations and projections about future events. These forward-
looking statements are subject to risks, uncertainties and
assumptions, including, among other things the factors discussed
in "Risk Factors on page __."
We undertake no obligation to publicly update or
otherwise revise any forward-looking statements, whether as a
result of new information, future events or otherwise. In light
of these risks, uncertainties and assumptions, the events
discussed in any forward-looking statements in this prospectus
might not occur.
------------------------
You should rely on the information contained or
incorporated by reference in this prospectus only. We have not,
and our underwriters have not, authorized any person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it.
We are not, and our underwriters are not, making an offer to sell
the preferred securities in any jurisdiction where the offer or
sale is not permitted.
You should assume that the information appearing in
this prospectus is accurate as of the date on the front cover of
this prospectus only.
Certain persons participating in this offering may
engage in transactions that stabilize, maintain, or otherwise
affect the price of the preferred securities being offered,
including over-allotting the preferred securities and bidding for
and purchasing preferred securities at a price above that which
otherwise might prevail in the open market. For a description of
these activities, see "Underwriting." Such transactions, if
commenced, may be discontinued at any time. In connection with
this offering certain underwriters may engage in passive market
making transactions in the preferred securities on the American
Stock Exchange or otherwise in accordance with Rule 103 of
Regulation M. See "Underwriting" on page __.
<PAGE 3>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere
in this prospectus. Because this is a summary, it may not
contain all of the information that is important to you. To
understand the offering fully, you should read the entire
prospectus, including the financial statements and related notes,
before making a decision to invest in the preferred securities.
The terms "Main Street," "company," "we," "our," "us" and
"corporation" as used in this prospectus refer to Main Street
Bancorp, Inc. and its subsidiaries as a consolidated entity,
except where it is made clear that it means only our bank
subsidiary, Main Street Bank. Also, sometimes we refer to Main
Street Bank as the "bank."
MAIN STREET BANCORP, INC.
We are a bank holding company headquartered in Reading,
Pennsylvania. We were formed on May 1, 1998, through the
consolidation of BCB Financial Services Corporation and Heritage
Bancorp, Inc. BCB Financial Services Corporation was the holding
company for Berks County Bank, which was formed in 1987 and was
headquartered in Reading, Pennsylvania. Heritage Bancorp, Inc.
was the holding company for Heritage National Bank, which was
formed in 1828 and was headquartered in Pottsville, Pennsylvania.
Effective on January 1, 1999, Berks County Bank and Heritage
National Bank merged and changed the name of the resulting entity
to Main Street Bank. Our bank operates under the names Berks
County Bank, Heritage Bank and Main Street Bank.
At January 1, 1999, Main Street Bank operated twenty-
two full service branches in Berks, Dauphin, Montgomery and
Schuylkill Counties in Pennsylvania as well as 8 loan production
offices in Berks, Bucks, Chester, Lancaster, Lehigh, Montgomery,
and Schuylkill Counties. In December 1998, we announced plans to
open 23 new branch offices during 1999, more than doubling the
number of full-service community banking offices from 22 to 45.
As of August 31, we have opened 17 of the new branches. We
anticipate opening the six remaining new branches by the end of
1999. The majority of these new branches are located in Chester,
Lehigh and Montgomery counties, according to the United States
Census Bureau, these are three of the fastest growing counties in
Pennsylvania, and according to SNL Securities LC these counties
have some of the highest average household incomes in the state.
To finance our branch expansion program, we have
borrowed funds from the Federal Home Loan Bank and other sources.
We have invested these funds in corporate and government
securities, which yield a higher return than the cost of the
borrowed funds. As our new branches mature, we plan to repay the
borrowed funds and replace the securities with the new deposits
and loans that these new branches attract. By using this
leverage as part of our expansion strategy, we hope to provide
<PAGE 4> ourselves with greater flexibility and mitigate the
costs related to the strategy.
Through our subsidiary, Main Street Bank, we offer a
range of commercial and retail banking services to our customers,
including personal and business checking and savings accounts,
certificates of deposit, residential mortgage, consumer and
commercial loans, and private banking services. We also perform
personal, corporate, pension, and other fiduciary services. In
addition, we provide safe deposit boxes, traveler's checks,
credit cards, wire transfer of funds, ACH (Automated Clearing
House) origination and other typical banking services. We are a
member of the MAC/Plus network.
To expand our product offerings, in 1999 we began to
offer title insurance. We intend to offer discount brokerage
services, on-line home banking, 401(k) and employee benefit
plans, alternate investments services and general insurance
products in the next six to twelve months.
We are committed to building a strong, customer-
friendly community bank. As a community bank, we believe we
respond quickly to our customers through local decision-making
and to tailor products and services to meet their needs. We
believe this customer-friendly approach provides us with a
competitive advantage over many of the larger financial
institutions in our market area. In addition, we believe that we
have benefitted from recent acquisitions of locally headquartered
financial institutions by larger regional or national out-of-town
financial institutions.
Our management team possesses extensive banking
experience and has worked together for many years. Our Chief
Executive Officer and Chief Financial Officer have been with Main
Street Bank and its predecessor since 1987.
As of June 30, 1999, we had, on a consolidated basis,
total assets of $1.3 billion, deposits of $905.9 million, loans
of $580.0 million, and stockholders' equity of $87.5 million.
Our principal executive offices are located at 601 Penn
Street, Reading, Pennsylvania 19601, and our telephone number at
that address is (610) 685-1400.
MBNK CAPITAL TRUST I
MBNK Capital Trust I is a Delaware statutory business
trust that we created for the limited purposes of:
* issuing the preferred securities and the common
securities; and
* investing the proceeds that the Trust receives from
the issuance of the preferred securities and the common <PAGE 5>
securities in an equivalent amount of junior subordinated
debentures issued by us.
Once the Trust issues all of the preferred securities
in this offering, the purchasers of preferred securities offered
by this prospectus will own all of the preferred securities of
the Trust. We will purchase all of the common securities. The
common securities will represent an aggregate liquidation amount
equal to at least 3.00% of the total capital of the Trust.
The junior subordinated debentures and payments
received thereunder will be the only assets of the Trust, and
payments under the junior subordinated debentures will be the
only revenue of the Trust.
The Trust will be governed by the trust agreement among
us, as depositor, The Bank of New York (Delaware), as Delaware
trustee, and the administrators, who are selected by us.
The principal executive offices of the Trust are c/o
____________________________________________, Delaware and its
telephone number is (___) ___-____.
<PAGE 6>
THE OFFERING
The Securities Being
Offered _________ preferred securities having a
liquidation amount of $10.00 per
preferred security. The preferred
securities represent preferred undivided
beneficial interests in the assets of
the Trust, which will consist solely of
the junior subordinated debentures and
payments received thereunder.
The Offering Price $10.00 per preferred security.
The Payment of
Distributions Subject to its right to defer payments
as described below, the Trust will pay
cash distributions to you on each
preferred security at an annual rate of
_____%. The distributions will be
cumulative, will accumulate from
____________, 1999, the issue date of
the preferred securities, and will be
payable quarterly in arrears on
March 31, June 30, September 30, and
December 31 of each year, commencing
December 31, 1999.
We Have the Option to
Defer Interest
Payments At any time we are not in default under
the junior subordinated debentures, we
may defer payments of interest on the
junior subordinated debentures for up to
20 consecutive quarters, but not beyond
their stated maturity date. The Trust
will defer quarterly distributions on
the preferred securities during any time
that we defer payments on the junior
subordinated debentures. Deferred
quarterly distributions will accumulate
additional amounts and unpaid
distributions will accumulate, at an
annual rate of _____% compounded
quarterly. During any period that we
defer interest payments, we may not
declare or pay any cash distributions on
our capital stock or our debt securities
that rank equal to or lower than the
junior subordinated debentures. After
the end of any period in which we defer
interest payments, if we have paid all
deferred and current interest under the
<PAGE 7> junior subordinated debentures,
we may defer interest payments again for
up to another 20 consecutive quarters,
but not beyond the junior subordinated
debentures stated maturity date. We can
defer interest payments for multiple
extension periods of varying lengths
throughout the term of the junior
subordinated debentures. If we defer
interest payments, you will be required
to include the amount of the deferred
distributions in your gross income for
United States federal income tax
purposes and pay taxes on the amount of
the deferred distributions before you
receive any cash distributions. In
addition, if you dispose of your
preferred securities before we pay you
such cash distributions, you will not
receive the cash related to such
distributions from the Trust. See
"Description of the Preferred Securities
- Distributions" on page __.
Maturity of the Junior
Subordinated Deben-
tures and Redemption
of the Preferred
Securities
is Possible We must repay the junior subordinated
debentures at their scheduled maturity
on September 30, 2029. In addition
subject to any regulatory approvals that
may then be required, we may redeem the
junior subordinated debentures prior to
their scheduled maturity (1) on or after
September 30, 2004, in whole at any time
or in part from time to time, or (2) at
any time, in whole, but not in part,
within 90 days after:
* certain tax events occur or
become likely to occur;
* the Trust is deemed to be an
investment company; or
* there is an adverse change in
the treatment of the preferred
securities as Tier 1 capital
for bank regulatory purposes.
Upon any repayment or redemption of the
junior subordinated debentures, the
<PAGE 8> trust will redeem the preferred
securities and will pay you the
liquidation amount of $10.00 per
preferred security plus any accumulated
and unpaid distributions. See
"Description of Preferred Securities -
Redemption" on page __.
How the Securities
Will Rank in Right
of Payment The preferred securities, the junior
subordinated debentures, and the
guarantee will rank as follows with
regard to right of payment:
* Generally, the preferred
securities will rank equally
with the common securities and
the Trust will pay
distributions on the preferred
securities and the common
securities pro rata. However,
if we default with respect to
the junior subordinated
debentures, then no
distributions on the common
securities will be paid until
all accumulated and unpaid
distributions on the preferred
securities have been paid by
the Trust. See "Description
of Preferred Securities -
Subordination of Common
Securities" on page __.
* Our obligations under the
junior subordinated debentures
are unsecured and generally
will be subordinate and rank
junior in priority of payment
to our existing and future
senior and other subordinated
indebtedness. See
"Description of Junior
Subordinated Debentures --
Subordination" on page __.
* Our obligations under the
guarantee are unsecured and
generally will be subordinate
and rank junior in priority of
payment to our senior
indebtedness and other
subordinated indebtedness.
<PAGE 9> See "Description of
Guarantee -- Status of the
Guarantee" on page __.
* Because we are a holding
company, the junior
subordinated debentures and
the guarantee will effectively
be subordinated to all
existing and future
liabilities of our
subsidiaries including the
bank's deposit liabilities.
See "Description of Junior
Subordinated Debentures --
General" on page __ and
"Description of Guarantee -
Status of the Guarantee" on
page __.
The Junior Subordinated
Debentures May Be
Distributed to You Under certain circumstances and after we
obtain any necessary regulatory
approvals, we may dissolve the Trust.
If we dissolve the Trust, the Trust will
distribute to you your pro rata share of
the junior subordinated debentures in
liquidation of the Trust. See
"Description of Preferred Securities --
Liquidation Distribution upon
Dissolution" on page __.
Our Guarantee of
Payment We will fully and unconditionally
guarantee that the Trust will pay you
distributions quarterly, if not
deferred, and the liquidation amount
upon liquidation of the Trust, but only,
in each case, to the extent funds are
held by the Trust. We will guarantee
the preferred securities through:
* our obligations under a
guarantee agreement executed
for the benefit of the holders
of the preferred securities;
* our obligations to make
payments under the junior
subordinated debentures; and
* our obligations under the
indenture and trust agreement.
<PAGE 10>
If we do not make payments on the junior
subordinated debentures, the Trust will
not have sufficient funds to make
payments on the preferred securities.
The guarantee does not cover payments
when the Trust does not have sufficient
funds. However, if we do not make
principal and interest payments on the
junior subordinated debentures, you may
institute a legal proceeding directly
against us to force us to make
distributions directly to you. See
"Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee" on
page __.
Limited Voting Rights You will have no voting rights except in
limited circumstances. See "Description
of Preferred Securities -- Voting
Rights; Amendment of Trust" on
page _____.
Use of Proceeds The Trust will invest all of the
proceeds from the sale of the preferred
securities and the common securities in
our junior subordinated debentures. We
will use the net proceeds from our sale
of the junior subordinated debentures
(1) to infuse approximately $32 million
of capital into the bank, and (2) for
general corporate purposes, including
possible repurchases of our common
stock. Funds retained for general
corporate purposes will be temporarily
invested in short-term investment
securities. See "Use of Proceeds" on
page __.
Lack of Rating The preferred securities will not be
rated by any rating services and are not
anticipated to be rated in the future.
No other security we have issued has
been rated.
American Stock Exchange
Symbol The preferred securities have been
approved for listing on the American
Stock Exchange subject to official
notice of issuance. <PAGE 11>
The preferred securities will be a new
issue of securities for which there
currently is not market. However, there
can be no assurance that an active
public market in the preferred
securities will develop or, if one does
develop, that it will be maintained.
Accordingly, there can be no assurance
as to the development or liquidity of
any market for the preferred securities.
See "Underwriting" on page __.
ERISA Considerations You should carefully consider the
information set forth under "Certain
ERISA Considerations" on page __.
RISK FACTORS
Before purchasing the preferred securities offered by
this prospectus you should carefully consider the "Risk Factors"
beginning on page __. <PAGE 12>
SELECTED CONSOLIDATED FINANCIAL DATA
The following is our selected consolidated financial
information. The balance sheet and income statement data as of
and for the five years ended December 31, 1998 are taken from our
audited consolidated financial statements as of the end of and
for each such year. The balance sheet and income statement data
as of and for the six months ended June 30, 1999 and 1998 are
taken from our unaudited condensed consolidated financial
statements as of the end of and for each such six-month period.
The quarterly data include all adjustments which are, in our
opinion, necessary to present a fair statement of these periods
and are of a normal recurring nature. Results for the six months
ended June 30, 1999 are not necessarily indicative of results for
the entire year. You should read this selected consolidated
financial information in conjunction with our consolidated
financial statements and notes that are contained in our Annual
Report on Form 10-K and are incorporated by reference into this
prospectus.
<PAGE 13>
MAIN STREET BANCORP, INC. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
As of or for
the As of or for the
Year
Ended Six Months Ended
December
31, June 30,
1994 1995 1996
1997 1998 1998 1999
(Dollars in thousands,
except share and per share data)
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Income Statement Data:
Total interest income $ 31,861 $ 36,413 $ 41,809
$ 54,463 $ 65,719 $ 30,505 $ 40,810
Total interest expense 12,519 15,803 18,654
25,978 33,264 14,762 22,912
Net interest income 19,342 20,610 23,155
28,485 32,455 15,743 17,898
Provision for loan losses 644 828 867
1,140 2,210 485 600
Other income 2,724 2,769 3,559
4,535 10,301 4,779 2,888
Other expenses 14,331 16,350 16,536
19,234 25,092 12,991 16,468
Federal income taxes
(benefit) 2,013 1,890 2,428
3,317 3,711 1,951 (665)
Net income $ 5,078 $ 4,311 $ 6,883
$ 9,329 $ 11,743 $ 5,095 $ 4,383
Per Share Data:
Earnings per share(1)(2)
Basic 0.63 0.51 0.82
1.02 1.13 0.49 0.42
Diluted 0.63 0.50 0.82
1.00 1.12 0.48 0.42
Cash dividends declared per
share(2) 0.22 0.25 0.30
0.36 0.49 0.22 0.28
Book value per share(2)(3) 6.22 6.71 7.16
8.60 9.14 9.03 8.41
Average shares outstanding(2) 8,048,922 8,482,808 8,345,300
9,184,980 10,357,974 10,340,160 10,399,650
Balance Sheet Data
Total assets $ 468,187 $ 509,917 $ 666,476
$ 813,863 $ 1,158,541 $ 864,357 $ 1,306,896 <PAGE 14>
Total loans, net 305,356 318,449 397,790
477,838 533,395 512,246 579,882
Total securities 125,796 138,388 203,236
280,020 534,551 286,127 616,915
Total deposits 381,837 432,988 518,567
626,760 818,550 698,552 905,909
Borrowings 28,776 16,275 81,120
84,758 221,072 60,006 303,712
Total stockholders' equity $ 52,565 $ 56,311 $ 59,785
$ 88,720 $ 94,912 $ 93,642 $ 87,536
Performance Ratios
Return on average assets 1.06% 0.90% 1.22%
1.28% 1.28% 1.22% 0.70%
Return on average
stockholders' equity 10.24 7.95 12.05
13.16 12.34 11.21 9.42
Net interest margin(4) 4.64 4.73 4.54
4.30 4.03 4.21 3.53
Total other expenses as a
percentage of average assets 2.99 3.42 2.93
2.63 2.73 3.11 2.64
Asset Quality Ratios:
Allowance for loan losses as a
percentage of loans 1.44 1.51 1.26
1.19 1.34 1.14 1.18
Allowance for loan losses as a
percentage of non-performing
loans(5) 83.19 103.54 125.70
91.90 86.67 75.25 122.99
Non-performing loans as a
percentage of total loans,
net(5) 1.73 1.46 1.00
1.22 1.54 1.51 0.96
Non-performing assets as a
percentage of total
assets(5) 1.16 1.19 0.78
0.82 0.75 0.97 0.48
Net charge-offs as a percentage
of average loans, net 0.03 0.13 0.19
0.11 0.14 0.06 0.15
Liquidity and Capital Ratios:
Equity to assets(6) 10.95 11.34 10.14
9.71 10.34 10.88 7.47
Tier 1 capital to risk-
weighted assets (7) 18.48 17.04 14.81
17.56 14.83 16.59 13.92
Leverage ratio(7)(8) 11.99 11.60 9.81
10.93 8.70 10.55 7.43
Total capital to risk-weighted
assets(7) 19.74 18.24 16.06
18.72 15.97 17.68 14.93 <PAGE 15>
Dividend payout ratio 35.09 48.67 36.25
35.13 43.57 45.22 66.44
</TABLE>
______________________
(1) Earnings per share amounts have been computed in accordance
with the provisions of FASB Statement No. 128, Earnings Per
Share.
(2) Average shares outstanding and per common share data are
adjusted for all stock dividends and stock splits effected
through June 30, 1999.
(3) Based upon total shares issued and outstanding at the end of
each respective period.
(4) Represents net interest income as a percentage of average
total interest earning assets, calculated on a tax-
equivalent basis.
(5) Non-performing loans are comprised of (a) loans which are on
a nonaccrual basis, (b) accruing loans that are 90 days or
more past due which are insured for credit loss, and
(c) restructured loans. Non-performing assets are comprised
of non-performing loans and foreclosed real estate (assets
acquired in foreclosure).
(6) Based upon average daily balances for the respective
periods.
(7) Based on Federal Reserve Board risk-based capital
guidelines, as applicable to the Company.
(8) The leverage ratio is defined as Tier 1 capital to average
total assets.
<PAGE 16>
RISK FACTORS
You should carefully consider the following risk
factors before purchasing the preferred securities offered by
this prospectus. There could be other factors not listed below
that may affect the Trust and us.
Risk Factors Relating to the Preferred Securities
The Trust will Rely Solely Upon Payments by us and, Indirectly,
on Payments by the bank for Funds to Make Distributions on the
Preferred Securities.
The Trust will depend solely on our payments on the
junior subordinated debentures to pay amounts due to you on the
preferred securities. We are a separate legal entity from our
subsidiaries and do not have significant operations of our own.
We will depend primarily on any dividends we receive from the
bank, which may be limited by regulations, and our cash and
liquid investments, to pay interest to the Trust on the junior
subordinated debentures.
Our Obligations under the Guarantee and the Junior Subordinated
Debentures are Subordinated to Most of our Other Creditors and
All of the Creditors of the Bank.
Our obligations under the guarantee and the junior
subordinated debentures are unsecured and generally are
subordinated in right of payment to all of our existing and
future senior debt, subordinated debt and additional senior
obligations, which totaled $303.7 million at June 30, 1999.
Because we are a holding company, the creditors of our
subsidiaries also will have priority over you in any distribution
of our subsidiaries' assets in a liquidation, reorganization or
otherwise. Therefore, the junior subordinated debentures will be
effectively subordinated to all existing and future liabilities
of our subsidiaries, and you should look only to our assets for
payments on the junior subordinated debentures. The junior
subordinated debentures do not limit our ability or the ability
of our subsidiaries to incur additional debt. See "Description
of Junior Subordinated Debentures -- Subordination" on page __.
We may Defer Interest Payments under the Junior Subordinated
Debentures.
So long as we are not in default under the junior
subordinated debentures, we may defer the payment of interest on
the junior subordinated debentures at any time or from time to
time for up to 20 consecutive quarters. Any deferral, however,
cannot extend beyond the stated maturity date of the junior
subordinated debentures.
<PAGE 17>
During any period in which we defer interest payments,
the Trust will defer quarterly distributions on the preferred
securities, which will continue to accumulate distributions at an
annual rate of _____%, and unpaid distributions will accumulate
additional distributions at the annual rate of _____% compounded
quarterly from the relevant distribution payment date. During a
deferral period you will be required to include deferred
distributions in income, in the form of original issue discount,
for federal income tax purposes on the preferred securities, but
you will not receive distributions attributable to that income.
In addition, during a deferral period, your tax basis in the
preferred securities will increase by the amount of accumulated
but unpaid distributions. If you sell the preferred securities
during a deferral period, your increased tax basis will decrease
the amount of any capital gain or increase the amount of any
capital loss that you may have otherwise recognized on the sale.
A capital loss, except in certain limited circumstances, cannot
be applied to offset ordinary income. As a result, deferral of
distributions could result in your recognition of ordinary
income, with a related tax liability, and a capital loss you may
use only to offset a capital gain. See "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment
Period" on page __ and "Certain United States Federal Income Tax
Consequences" on page __.
Should we elect to exercise our right to defer interest
payments on the junior subordinated debentures, the market price
for the preferred securities would likely be adversely affected.
If you dispose of preferred securities during a deferral period,
you might not recover the same return on your investment as
someone who continues to hold the preferred securities. Due to
our right to defer interest payments, the market price of the
preferred securities may be more volatile than the market prices
of other securities without the deferral feature. In addition,
the market price for the preferred securities may decline during
any period that we are deferring interest payments on the junior
subordinated debentures. If this were the case, the preferred
securities would not trade at a price that accurately reflects
the value of accumulated but unpaid interest on the underlying
junior subordinated debentures.
The Guarantee Covers Payments Only If the Trust has Funds
Available.
If we do not make payments on the junior subordinated
debentures, the Trust will not have sufficient funds to pay
distributions or the $10.00 per preferred security liquidation
amount. Because the guarantee does not cover payments when the
Trust does not have sufficient funds, you will not be able to
rely on the guarantee for payment of these amounts. Instead, you
or the property trustee may enforce the rights of the Trust under
the junior subordinated debentures directly against us. See
"Description of Guarantee" on page __.
<PAGE 18>
In Certain Circumstances the Trust May Redeem the Preferred
Securities, Which May Require you to Reinvest your Principal
Sooner than Expected.
Under the following circumstances and, subject to
regulatory approvals, we may redeem the junior subordinated
debentures before the stated maturity of the junior subordinated
debentures:
* We may redeem the junior subordinated debentures
in whole, but not in part, prior to maturity
within 90 days after certain occurrences at any
time during the life of the Trust. These
occurrences include certain adverse tax,
Investment Company Act or bank regulatory
developments. If we redeem the junior
subordinated debentures due to the occurrence of
one of these events, the Trust may redeem the
preferred securities.
* We may also at any time shorten the maturity of
the junior subordinated debentures to a date not
earlier than September 30, 2004.
If we redeem the junior subordinated debentures, the
Trust will redeem a pro rata amount of the preferred securities,
and you may be required to reinvest your principal at a time when
you may not be able to earn a return that is as high as you were
earning on the preferred securities. See "Description of
Preferred Securities -- Redemption" on page __.
You Will Have Only Limited Voting Rights, and We Can Amend the
Trust Agreement Under Certain Circumstances Without your Consent.
You will have limited voting rights as a holder of
preferred securities. Your voting rights will relate only to the
modification of the preferred securities and the exercise of the
Trust's rights as holder of the junior subordinated debentures.
You will not usually be able to appoint, remove or replace the
property trustee or the Delaware trustee because these rights
generally reside with us as the holder of the common securities.
However, if an event of default with respect to the junior
subordinated debentures occurs and is continuing, the holders of
a majority in aggregate liquidation amount of the preferred
securities may remove the trustees. Even if it would adversely
affect your rights, we, together with the property trustee and
the trust administrators, may amend the trust agreement without
your consent to ensure that the Trust will be classified as a
grantor trust for United States federal income tax purposes or to
ensure that the Trust will not be required to register as an
investment company.
<PAGE 19>
We Can Distribute the Junior Subordinated Debentures to you,
Which May Affect the Market Price of the Preferred Securities.
The Trust may be dissolved at any time before maturity
of the junior subordinated debentures on September 30, 2029. As
a result, and subject to the terms of the trust agreement, the
trustees may distribute the junior subordinated debentures to the
holders of the preferred securities. See "Description of
Preferred Securities -- Liquidation Distribution Upon
Dissolution" on page __.
We cannot predict the market price for the junior
subordinated debentures that may be distributed. Accordingly,
the junior subordinated debentures that you receive upon a
distribution, or the preferred securities you hold pending such a
distribution, may trade at a price that is less than you paid to
purchase the preferred securities. Because you may receive
junior subordinated debentures, you must also make an investment
decision with regard to the junior subordinated debentures. You
should carefully review all of the information regarding the
junior subordinated debentures contained in this prospectus.
If the junior subordinated debentures are distributed
by the Trust, we will use our best efforts to list the junior
subordinated debentures for trading on the American Stock
Exchange, however, we may not be able to achieve that listing and
a market for the junior subordinated debentures may not develop.
The Holders of the Preferred Securities and the Junior
Subordinated Debentures are Not Protected by Covenants in the
Trust Agreement or the Indenture.
Neither the indenture, which sets forth the terms of
the junior subordinated debentures, nor the trust agreement,
which sets forth the terms of the preferred securities and the
common securities, protects holders of junior subordinated
debentures or the preferred securities, respectively, in the
event we experience significant adverse changes in our financial
condition or results of operations. In addition, neither the
indenture nor the trust agreement limits our ability or the
ability of any subsidiary to incur additional indebtedness.
In Some Instances, You Must Rely on the Property Trustee to
Enforce Your Rights if There is an Event of Default under the
Indenture.
You may not be able to directly enforce your rights
against us if an event of default under the indenture occurs. If
an event of default with respect to the junior subordinated
debentures occurs and is continuing, the event also will be an
event of default under the trust agreement. In that case, you
would rely on the enforcement by the property trustee of its
rights against us as holder of the junior subordinated
debentures. The holders of a majority in liquidation amount of
<PAGE 20> the preferred securities will have the right to direct
the property trustee to enforce its rights. If the property
trustee does not enforce its rights following an event of default
and a request by the record holders to do so, any record holder
may take action directly against us to enforce the property
trustee's rights. If an event of default occurs under the trust
agreement that is attributable to an event of default with
respect to the junior subordinated debentures, or if we default
under the guarantee, you may, to the extent permitted by
applicable law, proceed directly against us. You will not be
able to exercise directly any other remedies available to the
holders of the junior subordinated debentures unless the property
trustee fails to do so.
The Market Price for the Preferred Securities May be Less than
the Liquidation Amount.
There is no current public market for the preferred
securities. Although the preferred securities have been approved
for listing, subject to official notice of issuance, on the
American Stock Exchange, there is no guarantee that an active or
liquid public trading market will develop for the preferred
securities or that listing of the preferred securities will
continue on the American Stock Exchange. If an active trading
market does not develop, the market price and liquidity of the
preferred securities will be adversely affected. Even if an
active public market does develop, there is no guarantee that the
market price for the preferred securities will equal or exceed
the price you pay for the preferred securities.
Future trading prices of the preferred securities may
be subject to significant fluctuations in response to prevailing
interest rates, our future operating results and financial
condition, the market for similar securities and general economic
and market conditions. The initial public offering price of the
preferred securities has been set at the liquidation amount of
the preferred securities and may be greater than the market price
following the offering.
The Preferred Securities are not FDIC Insured.
Neither the Federal Deposit Insurance Corporation nor
any other governmental agency has insured the preferred
securities.
Risk Factors Relating to Main Street Bancorp and Our Industry
We May Experience Difficulties in Managing our Growth.
As part of our general strategy, we are significantly
expanding our branch network and we may acquire banks and related
businesses that we believe provide a strategic fit with our
business. We cannot assure you that we will be able to
adequately and profitably manage this branch expansion or growth
<PAGE 21> through acquisitions. Establishing new branches and
acquiring other banks and businesses will involve risks commonly
associated with expansion and acquisitions, including:
* we will incur start-up costs associated with
building and remodeling our new branch sites,
equipping these sites, hiring new employees to
staff these branches, and these costs will occur
before these branches generate material deposit
and loan business;
* we may have difficulty in attracting deposits at
our new branch sites and generating loan volume in
our new markets;
* we may experience disruption to our business;
* we may experience diversion of our management's
time and attention; and
* we may incur amortization expense if we account
for an acquisition as a purchase and dilution to
our shareholders if we use our common stock as
consideration for the acquisition.
It May Be Difficult for us to Maintain our Historical Growth
Rate.
We have opened additional branches in the past few
years that have significantly enhanced our rate of growth. We
cannot assure you that we will continue to sustain this rate of
growth or grow at all. Branch expansion opportunities may be
more limited, especially in our Eastern Pennsylvania market.
Competition for suitable acquisition candidates is intense. We
may target acquisition candidates that a variety of larger
financial institutions with substantially greater resources than
us also may be interested in acquiring, which may make it more
difficult for us to acquire any candidate.
Risks Associated with Financing Our Expansion Strategy
Our expansion strategy has made us vulnerable to
dramatic changes in interest rates. We have borrowed funds from
the Federal Home Loan Bank on an overnight basis and invested
them, pending their use in our expansion strategy, in government
and corporate fixed income securities with longer maturities. As
our branch expansion strategy provides us with a larger deposit
base, we will pay down our overnight borrowings and will decrease
our costs of funds. As we establish our new branches, we will
replace our investment in securities with loans. However, until
we have successfully completed our strategy, we will have lower
gross margins and could be more effected by swings in interest
rates.
<PAGE 22>
Changes in the Local Economic Conditions Could Adversely Affect
our Loan Portfolio.
Our success depends to a great extent upon the general
economic conditions of the Eastern Pennsylvania area. Unlike
larger banks that are more geographically diversified, we
primarily provide banking and financial services to customers in
these areas. Local economic conditions may affect the ability of
the borrowers to repay real estate and construction loans and the
value of the collateral securing these loans. We cannot assure
you that favorable economic conditions will exist in our market.
Our Allowance for Loan Losses May not Be Adequate to Cover Actual
Loan Losses.
As a lender, we are exposed to the risk that our
customers will be unable to repay their loans according to their
terms and that any collateral securing the payment of their loans
may not be sufficient to assure repayment. Credit losses are
inherent in the lending business and could have a material
adverse effect on our operating results. Our credit risk with
respect to our real estate and construction loan portfolio
relates principally to the general creditworthiness of our
borrowers and the value of real estate serving as security for
the repayment of loans. Our credit risk with respect to our
commercial and consumer installment loan portfolio relates
principally to the general creditworthiness of businesses and
individuals within our local market.
We make various assumptions and judgments about the
collectibility of our loan portfolio and provide an allowance for
potential losses based on a number of factors. If our
assumptions are wrong, our allowance for loan losses may not be
sufficient to cover our loan losses. We may have to increase the
allowance in the future. Additions to our allowance for loan
losses would decrease our net income.
We May Be Unable to Manage Interest Rate Risks that Could Reduce
our Net Interest Income.
Like other financial institutions, our results of
operations are affected principally by net interest income, which
is the difference between interest earned on loans and
investments and interest expense paid on deposits and other
borrowings. We cannot predict or control changes in interest
rates. Regional and local economic conditions and the policies
of regulatory authorities, including monetary policies of the
Board of Governors of the Federal Reserve System, affect interest
income and interest expense. While we continually take measures
intended to manage the risks from changes in market interest
rates, changes in interest rates can still have a material
adverse effect on our profitability.
<PAGE 23>
In addition, certain assets and liabilities may react
in different degrees to changes in market interest rates. For
example, interest rates on some types of assets and liabilities
may fluctuate prior to changes in broader market interest rates,
while rates on other types may lag behind. Further, some of our
assets, such as adjustable rate mortgages, have features,
including rate caps, which restrict changes in their interest
rates.
Factors such as inflation, recession, unemployment,
money supply, international disorders, instability in domestic
and foreign financial markets, and other factors beyond our
control may affect interest rates. Changes in market interest
rates also will affect the level of voluntary prepayments on our
loans, the receipt of payments on our mortgage-backed securities
and the redemption prior to maturity of our municipal bond
portfolio. As a result we may receive proceeds that may be
reinvested at a lower rate than the loan mortgage-backed security
or bond being prepaid. Although we pursue an asset-liability
management strategy designed to control our risk from changes in
market interest rates, changes in interest rates can still have a
material adverse effect on our profitability.
We Cannot Predict how Changes in Technology will Impact our
Business.
The financial services industry, including the banking
sector, is increasingly affected by advances in technology,
including developments in:
* telecommunications;
* data processing;
* automation;
* internet banking;
* telebanking; and
* debit cards and "smart cards."
Our ability to compete successfully in the future will
depend on whether we can anticipate and respond to technological
changes. To develop these and other new technologies we will
likely have to make additional capital investments. Although we
continually invest in new technology, we cannot assure you that
we will have sufficient resources or access to the necessary
technology to remain competitive in the future.
<PAGE 24>
The Banking Business is Highly Competitive.
We operate in a competitive environment. In Eastern
Pennsylvania and Southcentral New Jersey, other commercial banks,
savings and loan associations, credit unions, finance companies,
mutual funds, insurance companies, brokerage and investment
banking firms and other financial intermediaries offer similar
services. Many of these competitors have substantially greater
resources and lending limits and may offer certain services we do
not currently provide. In addition, some of our nonbank
competitors are not subject to the same extensive regulations
that govern us, the bank and our subsidiaries. Our profitability
depends upon the ability of the bank to compete in our market
area.
Our Operations May Be Adversely Affected if we, or Certain
Persons with whom we do Business, Fail to Adequately Address the
Year 2000 Issue.
A critical issue has emerged in the banking industry
and for the economy overall regarding how existing application
software programs and operating systems can accommodate the date
value for the year 2000. The "year 2000 issue" arose because
many of these existing programs and systems use only the last two
digits in referring to a year. Therefore, these computer
programs do not properly recognize a year beginning with "20"
instead of the familiar "19." If not corrected, many computer
applications and other technology-based systems could fail or
create erroneous results. The effects of this problem will vary
from system to system, and the extent of the potential impact of
the year 2000 issue is not yet known. The year 2000 issue may
adversely affect a bank's operations. We could experience
interruptions in our business and suffer significant losses if
we, or a supplier or vendor with whom we contract, are unable to
achieve year 2000 readiness before January 1, 2000. We are in
the process of working with our third party service providers and
software vendors to assure that we and our subsidiaries are
prepared for the year 2000.
We are Subject to Extensive Regulation.
The banking industry is heavily regulated under both
federal and state law. These regulations are primarily intended
to protect depositors and the Federal Deposit Insurance
Corporation, not our creditors or shareholders. We and our
nonbank subsidiaries also are subject to the supervision of the
Federal Reserve Board, in addition to other regulatory and self-
regulatory organizations. Regulations affecting banks and
financial services companies undergo continuous change, and the
ultimate effect of such changes cannot be predicted. Regulations
and laws may be modified at any time, and new legislation may be
enacted that affects us, the bank or our subsidiaries. We cannot
assure you that such modifications or new laws will not adversely
affect us, the bank or our subsidiaries. <PAGE 25>
We will depend primarily upon dividends from the bank
to meet our obligations under the junior subordinated debentures.
Banking regulations may restrict or even prevent us from
receiving dividends from the bank in the future.
<PAGE 26>
USE OF PROCEEDS
The Trust will invest all the proceeds from the sale of
the preferred securities in the junior subordinated debentures.
We will use the net proceeds we receive from the sale of the
junior subordinated debentures as follows:
* to infuse approximately $32 million of capital
into the bank;
* for general corporate purposes, including possible
repurchases of our common stock.
Funds retained for general corporate purposes will be temporarily
invested in short-term investment securities.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of
earnings to fixed charges for each of the periods indicated:
<TABLE>
<CAPTION>
Years
Ended Six Months Ended
December 31, June 30,
1994 1995 1996 1997
1998 1998 1999
<S> <C> <C> <C>
<C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits 5.30% 5.52%
5.45% 3.51% 3.50% 3.90% 1.50%
Including Interest on Deposits 1.56 1.39
1.49 1.48 1.46 1.47 1.16
</TABLE>
For purposes of calculating the ratio of earnings to
fixed charges, earnings consist of earnings before income taxes
plus interest and one-half of rental expense. Fixed charges,
excluding interest on deposits, consist of interest on
indebtedness and one-half of rental expense (which is deemed
representative of the interest factor). Fixed charges, including
interest on deposits, consists of the foregoing items plus
interest on deposits.
<PAGE 27>
CAPITALIZATION
The following tables set forth (1) our consolidated
capitalization at June 30, 1999, (2) our consolidated
capitalization giving effect to the issuance of the preferred
securities, (3) our actual consolidated regulatory capital ratios
as of June 30, 1999, and (4) our capital ratios after giving
effect to the issuance of the preferred securities. The table
assumes application of the net proceeds from the corresponding
sale of the junior subordinated debentures to the Trust as if the
sale of the preferred securities had been completed on June 30,
1999, and as if the underwriters' over-allotment was not
exercised.
June 30, 1999
Actual As Adjusted
(dollars in thousands, except
share and per share amounts)
Other borrowed funds $218,712 $218,712
Long-term debt 85,000 85,000
Guaranteed preferred beneficial
interests in corporation's junior
subordinated deferrable interest
debentures, series A ---- 40,000
Total debt 303,712 343,712
Stockholders' equity
common stock 10,408 10,408
surplus 64,259 64,259
retained earnings 20,698 20,698
accumulated other comprehensive
income (7,829) (7,829)
Total stockholders' equity 87,536 87,536
Total capitalization $391,248 $431,248
Leverage ratio 7.43% 9.60%(1)
Tier 1 capital to risk-weighted
assets 13.92% 18.34%(1)
Total capital to risk-weighted
assets 14.93% 20.53%(1)
(1) Assumes $40,000,000 from the proceeds of the offering of the
preferred securities are invested in assets with a 20% risk
weighting under the risk-based capital rules. <PAGE 28>
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be
treated as our subsidiary and, accordingly, the accounts of the
Trust will be included in our consolidated financial statements.
The preferred securities will be included in our consolidated
balance sheets under the caption "Company Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trust Holding
Solely Subordinated Debentures" and appropriate disclosures about
the preferred securities, the guarantee and the junior
subordinated debentures will be included in the notes to our
consolidated financial statements. For financial reporting
purposes, we will record distributions on the preferred
securities in our consolidated statements of income.
Our future reports filed under the Securities Exchange
Act of 1934 will include a footnote to the consolidated financial
statements stating that:
* the Trust is wholly-owned;
* the sole assets of the Trust are the junior
subordinated debentures and specifying their
principal amount, interest rate and maturity date;
and
* our obligations described in this prospectus, in
the aggregate, constitute a full, irrevocable and
unconditional guarantee on a subordinated basis by
us of the obligations of the Trust under the
preferred securities.
<PAGE 29>
MBNK CAPITAL TRUST I
The Trust is a statutory business trust created under
Delaware law pursuant to the filing of a Certificate of Trust
with the Delaware Secretary of State on September 1, 1999 and the
execution of the trust agreement (as discussed below). The Trust
will be governed by the trust agreement among us, as depositor,
The Bank of New York (Delaware), as Delaware trustee, The Bank of
New York Company, as property trustee and two individuals
selected by us to act as administrators with respect to the
Trust. While we hold the common securities, we intend to select
two individuals who are our employees or officers or affiliated
with us to serve as the administrators. See "Description of
Preferred Securities -- Miscellaneous" on page __. The Trust
exists for the exclusive purposes of:
* issuing and selling the preferred securities and
the common securities;
* using the proceeds from the sale of the preferred
securities and the common securities to acquire
the junior subordinated debentures; and
* engaging in only those other activities necessary,
convenient or incidental thereto (such as
registering the transfer of the preferred
securities and the common securities).
Accordingly, the junior subordinated debentures will be the sole
assets of the Trust, and payments under the junior subordinated
debentures will be the sole source of revenue of the Trust.
We will own all of the common securities. The common
securities will rank equally, and payments on them will be made
pro rata, with the preferred securities, except that upon the
occurrence and during the continuation of an event of default
under the junior subordinated debentures, our rights as the
holder of the common securities to payment in respect of
distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of
the preferred securities. See "Description of Preferred
Securities -- Subordination of Common Securities" on page __. We
will acquire common securities in an aggregate liquidation amount
equal to at least 3.00% of the total capital of the Trust. The
Trust has a term of 30 years, but may terminate earlier as
provided in the trust agreement.
The address of the Delaware trustee is The Bank of New
York (Delaware), White Clay Center, Route 271, Corporate Trust
Department, Newark, Delaware 19711, and the telephone number is
(302) __________________.
<PAGE 30>
The address of the property trustee, the guarantee
trustee and the debenture trustee is The Bank of New York, 101
Barclay Street, Floor 21, West, Corporate Trust Trustee
Administration, New York, New York 10286, and the telephone
number is (212) __________________.
DESCRIPTION OF PREFERRED SECURITIES
The Trust will issue the preferred securities and the
common securities under the trust agreement for the Trust. The
preferred securities will represent preferred undivided
beneficial interests in the assets of the Trust and you as a
holder of the preferred securities will be entitled to a
preference in certain circumstances with respect to the
distributions and other amounts payable on liquidation or
redemption over the common securities, as well as other benefits
described in the trust agreement. This summary of certain terms
and provisions of the preferred securities and the trust
agreement is not complete. You should read the form of the trust
agreement, including the definitions, which is filed as an
exhibit to the registration statement of which this prospectus is
a part. Wherever particular defined terms of the trust agreement
are referred to in this prospectus, such defined terms are
incorporated herein by reference. A copy of the form of the
trust agreement also is available upon request from the trustees.
In addition, the trust agreement will be qualified as
an indenture under the Trust Indenture Act of 1939. The terms of
the preferred securities include those made a part of the trust
agreement by the Trust Indenture Act. Therefore, this summary is
qualified by reference to the Trust Indenture Act and you should
be familiar with its provisions.
GENERAL
The preferred securities will be limited to $40 million
aggregate liquidation amount outstanding. The preferred
securities will rank equally, and payments will be made pro rata,
with the common securities except as described under
"-- Subordination of Common Securities" on page __. We will
purchase and hold all of the common securities. The Trust will
use the proceeds from selling the preferred securities and the
common securities to purchase the junior subordinated debentures
from us. The junior subordinated debentures will be registered
in the name of the Trust and held by the property trustee in
trust for your benefit and for our benefit as holder of the
common securities. The guarantee we will execute for the benefit
of the holders of the preferred securities will be a guarantee on
a subordinated basis with respect to the preferred securities,
but will not guarantee payment of distributions or amounts
payable on redemption or liquidation of the preferred securities
when the Trust does not have funds on hand available to make such
payments. See "Description of Guarantee" on page __.
<PAGE 31>
DISTRIBUTIONS
You will receive distributions on each preferred
security at the annual rate of _____% of the stated liquidation
amount of $10.00, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, to the person
in whose name each preferred security is registered at the close
of business on the 15th day of the month of the relevant
distribution date, even if the day is not a business day. Each
date on which distributions will be paid is referred to as a
distribution date in this prospectus. Distributions on the
preferred securities will be cumulative. Distributions will
accumulate from ___________, 1999. The first distribution date
for the preferred securities will be December 31, 1999.
Distributions payable for each full distribution period
will be computed by dividing the annual rate by four. 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. If any date on which distributions
are payable on the preferred 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 because of the
delay), except that if such business day falls in the next
calendar year, the payment will be made on the immediately
preceding business day.
The term "distributions" includes quarterly
distributions, distributions that accumulate on distributions not
paid on the applicable distribution date and, if applicable, any
additional sums we pay during a tax event, all as further
described herein.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no event of default under the indenture has
occurred and is continuing, we have the right under the indenture
to defer the payment of interest on the junior subordinated
debentures at any time or from time to time for an "extension
period" that does not (a) exceed 20 consecutive quarterly periods
with respect to each extension period, (b) extend beyond the
maturity date of the junior subordinated debentures, or (c) end
on a date that is not a distribution date. As a consequence of
any such deferral, quarterly distributions on the preferred
securities will be deferred during the extension period.
Distributions to which you are entitled will accumulate
additional amounts thereon at an annual rate of ______%.
During any extension period, we may not:
* declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation
<PAGE 32> payment with respect to, any of our
capital stock; or
* make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem
any of our debt securities that rank equally with
in all respects or junior in interest to the
junior subordinated debentures; except that we
may:
(a) repurchase, redeem or make other acquisitions of
shares of our capital stock in connection with any
employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or
more of our employees, officers, directors or
consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan,
or in connection with the issuance of our capital
stock (or securities convertible into or
exercisable for such capital stock) as
consideration in any acquisition transactions
entered into prior to the applicable extension
period;
(b) take any necessary action in connection with any
reclassification, exchange or conversion of any
class or series of our capital stock (or any
capital stock of a subsidiary of ours) for any
class or series of our capital stock or any class
or series of our indebtedness for any class or
series of our capital stock;
(c) purchase fractional interests in shares of our
capital stock pursuant to the conversion or
exchange provisions of such capital stock or the
security being converted or exchanged;
(d) declare a dividend in connection with any
shareholders' rights plan, or issue rights, stock
or other property under any shareholders' rights
plan, or redeem or repurchase rights pursuant
thereto; or
(e) declare a 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 equally with or junior to such stock.
So long as no event of default under the indenture has
occurred and is continuing, before the end of an extension
period, we may extend the extension period (subject to the limits
imposed on the duration and ending date of an extension period),
<PAGE 33> further deferring the payment of interest. Upon the
termination of an extension period and the payment of all amounts
then due, we may elect to begin a new extension period subject to
the above conditions. No interest or additional interest will be
due on the junior subordinated debentures during an extension
period, except at its end. We must give you and the property
trustee notice of our election of an extension period at least
one business day prior to the next succeeding interest payment
date on which interest on the junior subordinated debentures
would be payable but for such deferral for so long as the
preferred securities are held by the Trust, or at least one
business day prior to the earlier of (1) the date the
distributions on the preferred securities would have been payable
but for the election to begin the extension period and (2) the
date the property trustee is required to give you notice of the
record date or the date the distributions are payable, but in any
event not less than one business day prior to the record date.
The property trustee will give you notice of our election to
begin a new extension period. Subject to the foregoing, there is
no limitation on the number of times that we may elect to begin
an extension period. During an extension period, distributions
will continue to accumulate, and you will be required to accrue
and recognize income for United States federal income tax
purposes. See "Description of Junior Subordinated Debentures --
Option To Extend Interest Payment Period" on page __ and "Certain
United States Federal Income Tax Consequences--Interest Income
and Original Issue Discount" on page __. We currently do not
intend to exercise our right to defer payments of interest by
extending the interest payment period on the junior subordinated
debentures.
The revenue of the Trust available for distribution to
you will be limited to payments under the junior subordinated
debentures. Under the terms of the trust agreement, the trust
cannot issue any securities other than the preferred securities
and the common securities, incur any indebtedness, or pledge any
of its assets. If we do not make payments on the junior
subordinated debentures, the Trust may not have funds available
to pay distributions or other amounts payable on the preferred
securities. The payment of distributions and other amounts
payable on the preferred securities (if and to the extent the
Trust has funds sufficient to make such payments) is guaranteed
by us on a limited basis as set forth herein under "Description
of Guarantee" on page __.
REDEMPTION
The junior subordinated debentures mature on
September 30, 2029. We may redeem the junior subordinated
debentures (1) on or after September 30, 2004 in whole at any
time or in part from time to time, or (2) 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), in each case
<PAGE 34> subject to prior regulatory approval if it is then
required. See "-- Liquidation Distribution Upon Dissolution" on
page __. We also may repurchase the junior subordinated
debentures, in whole or in part, from the Trust any time after
September 30, 2004. A redemption or repurchase of the junior
subordinated debentures would cause a mandatory redemption of a
proportionate amount of the preferred securities and common
securities at the redemption price. The redemption price for
each preferred security shall equal $10.00 plus accumulated but
unpaid distributions including any additional amounts to, but not
including, the redemption date.
"Tax event" means the receipt by us and the Trust of an
opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including an
announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or
taxing authority, 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 adopted (regardless of retroactive
application) or is effective or which pronouncement or action or
decision is announced on or after the date of issuance of the
preferred securities, there is more than an insubstantial risk
that:
* the 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;
* interest payable by us on the junior subordinated
debentures is not, or within 90 days of the
delivery of such opinion will not be, deductible
by us, in whole or in part, for United States
federal income tax purposes; or
* the Trust is, or will be within 90 days of the
delivery of such opinion, subject to more than a
insignificant amount of other taxes, duties or
other governmental charges.
If a tax event described in the first or third
circumstances above has occurred and is continuing and the Trust
holds all of the junior subordinated debentures, we will pay on
the junior subordinated debentures any additional amounts as may
be necessary in order that the amount of distributions then due
and payable by the Trust on the outstanding preferred securities
and common securities of the Trust will not be reduced as a
result of any additional taxes, duties and other governmental
charges to which the Trust has become subject.
"Investment company event" means the receipt by us and
the Trust of an opinion of counsel experienced in such matters to
<PAGE 35> the effect that, as a result of the occurrence of a
change in law or regulation or a written change (including any
pronounced 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 the Trust is or will be considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, which change becomes effective or
would become effective on or after the date of the issuance of
the preferred securities.
"Capital treatment event" means the reasonable
determination by us 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, 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 preferred securities, there is more than
an insubstantial risk that we will not be entitled to treat an
amount equal to the liquidation amount of the preferred
securities as Tier 1 capital (or the then equivalent thereof) for
purposes of the risk-based capital adequacy guidelines of the
Federal Reserve Board, as then in effect and applicable to us.
The Federal Reserve Board has determined that the
proceeds of certain qualifying securities like the preferred
securities will qualify as Tier 1 capital for us only up to an
amount not to exceed, when taken together with all of our
cumulative preferred stock, if any, 25% of our Tier 1 capital.
We or the Trust must request an opinion of counsel with
regard to the matter deemed to be an event within a reasonable
period of time after we or the Trust, as appropriate, become
aware of the possible occurrence of any such event.
REDEMPTION PROCEDURES
If we repay or redeem the junior subordinated
debentures, we must give the property trustee not less than 30
nor more than 60 days' notice in order that it can redeem a
proportionate amount of the preferred and common securities.
Redemptions of the preferred securities will be made
and the redemption price will be payable on each redemption date
only to the extent that the Trust has funds on hand available for
the payment of such redemption price. See also "-- Subordination
of Common Securities" on page __.
If the Trust gives notice of redemption of any of the
preferred securities, then, by 12:00 noon, Eastern time, on the
redemption date, to the extent funds are available, in the case
<PAGE 36> of preferred securities held in book-entry form, the
property trustee will deposit irrevocably with The Depository
Trust Company funds sufficient to pay the applicable redemption
price and will give DTC irrevocable instructions and authority to
pay the redemption price to you. With respect to preferred
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 preferred securities funds sufficient to pay
the applicable redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption
price to you once you surrender your certificates evidencing the
preferred securities. Notwithstanding the foregoing,
distributions payable on or prior to the redemption date for any
preferred securities called for redemption will be payable to
holders of preferred securities on the relevant record dates for
the related distribution dates.
If notice of redemption is given and funds are
deposited as required, then upon the date of such deposit all of
your rights with respect to your preferred securities so called
for redemption will cease, except your right to receive the
redemption price and any distributions payable in respect of the
preferred securities on or prior to the redemption date, but
without interest, and preferred securities that are redeemed will
cease to be outstanding. If any date fixed for redemption of
preferred 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 and not a holiday (without
any interest or other payment in respect of any such delay),
except that if such business day falls in the next calendar year
such payment will be made on the immediately preceding business
day. In the event that payment of the redemption price for the
preferred securities called for redemption is improperly withheld
or refused and not paid either by the Trust or by us pursuant to
the guarantee as described under "-- Description of Guarantee" on
page __ distributions on such preferred securities will continue
to accumulate at the then applicable rate, from the redemption
date originally established by the Trust for such preferred
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), we or our
affiliates may from time to time purchase outstanding preferred
securities by tender, in the open market or by private agreement,
and may resell such securities at any time that (a) interest on
the junior subordinated debentures is not being deferred during
an extension period, and (b) there is no event of default or an
event that could cause an event of default under the indenture or
an event of default under the guarantee.
If less than all the preferred securities and common
securities are to be redeemed on a redemption date, then the
<PAGE 37> aggregate liquidation amount of such preferred
securities and common securities to be redeemed shall be
allocated pro rata to the preferred securities and the common
securities based upon the relative liquidation amounts of such
classes. The particular preferred securities to be redeemed
shall be selected in a manner that the property trustee deems
fair, not more than 60 days prior to the redemption date by the
property trustee from the outstanding preferred securities not
previously called for redemption, or in accordance with DTC's
customary procedures if the preferred securities are then held in
book-entry form. The property trustee shall promptly notify the
securities registrar for the preferred securities in writing of
the preferred securities selected for redemption and, in the case
of any preferred securities selected for partial redemption, the
liquidation amount of the preferred securities to be redeemed.
For all purposes of the trust agreement, unless the context
otherwise requires, all provisions relating to the redemption of
preferred securities shall relate, in the case of any preferred
securities redeemed or to be redeemed only in part, to the
portion of the aggregate liquidation amount of preferred
securities which has been or is to be redeemed.
The property trustee will mail to you a notice of any
redemption at your address as it appears on the securities
register for the Trust at least 30 days but not more than 60 days
before the redemption date if your preferred securities will be
redeemed. Unless we default 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 called for
redemption.
Unless payment of the redemption price in respect of
the preferred securities is withheld or refused and not paid
either by the Trust or us pursuant to the guarantee,
distributions will cease to accumulate on the preferred
securities or portions thereof called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, the redemption price of,
and the liquidation distribution in respect of, as described
under "-- Liquidation Distribution Upon Dissolution" on page __,
the preferred securities and common securities, as applicable,
will be made pro rata based on the liquidation amount of such
preferred securities and common securities. However, if on any
distribution date, redemption date or liquidation date an event
of default under the junior subordinated debentures has occurred
and is continuing because we have not paid amounts due on the
junior subordinated debentures, no payment of any distribution
on, or redemption price of, or liquidation distribution in
respect of, any of the common securities, and no other payment on
account of the redemption, liquidation or other acquisition of
such common securities, will be made unless payment in full in
<PAGE 38> cash of all accumulated and unpaid distributions on all
the outstanding preferred securities for all distribution periods
terminating on or prior thereto, or in the case of payment of the
redemption price or a liquidation distribution, the full amount
of such redemption price or liquidation distribution on all the
outstanding preferred securities then called for redemption or
liquidation, as the case may be, shall have been made or provided
for, and all funds immediately 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 preferred
securities then due and payable. The existence of a default does
not entitle you to accelerate the maturity of the preferred
securities.
In the case of any event of default with respect to the
preferred securities (as described below under "-- Events of
Default; Notice" on page __) resulting from an event of default
with respect to junior subordinated debentures (as described
below under "Description of Junior Subordinated Debentures --
Debenture Events of Default" on page __), we, as the holder of
the common securities, shall have no right to act with respect to
any event of default under the trust agreement until the effects
of all events of default with respect to such preferred
securities have been cured, waived or otherwise eliminated. See
"-- Events of Default; Notice" on page __ and "Description of
Junior Subordinated Debentures -- Debenture Events of Default" on
page __. Until all events of default under the trust agreement
with respect to the preferred securities have been so cured,
waived or otherwise eliminated, the property trustee will act
solely on your behalf and not on our behalf as the holder of the
common securities, and only you will have the right to direct the
property trustee to act on your behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the preferred securities in the
event of any liquidation of the Trust is $10.00 per preferred
security plus accumulated and unpaid distributions (as long as
the Trust has assets available therefor), subject to certain
exceptions, which may be in the form of a distribution of junior
subordinated debentures having an equal aggregate principal
amount.
We, as the holder of all the outstanding common
securities, have the right at any time to dissolve the Trust and
to cause the junior subordinated debentures to be distributed to
you and us, as the holder of the common securities, in
liquidation of the Trust.
The Federal Reserve Board'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
<PAGE 39> should consult with the Federal Reserve Board 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 (this consultation
may not be necessary if the equity or capital instrument is
redeemed with the proceeds of, or replaced by, a like amount of a
similar or higher quality capital instrument and the Federal
Reserve Board considers the organization's capital position to be
fully adequate after the redemption).
In the event we, while the holder of the common
securities, dissolve the Trust prior to the maturity date of the
preferred securities and the dissolution of the Trust is deemed
to constitute the redemption of capital instruments by the
Federal Reserve Board under its risk-based capital guidelines or
policies, our dissolution of the Trust may be subject to the
prior approval of the Federal Reserve Board. Moreover, any
changes in applicable law or changes in the Federal Reserve
Board's risk-based capital guidelines or policies could impose a
requirement on us to obtain the prior approval of the Federal
Reserve Board to dissolve the Trust.
Pursuant to the trust agreement, the Trust will
automatically dissolve upon expiration of its term or, if
earlier, will dissolve on the first to occur of:
* the termination date of the Trust;
* certain events of bankruptcy, dissolution or
liquidation of us or another holder of the common
securities;
* we, as the holders of common securities, have
given written direction to the property trustee to
dissolve the Trust (which direction, subject to
the foregoing restrictions, is optional and wholly
within our discretion);
* the repayment of all the preferred securities in
connection with the redemption of all of the
junior subordinated debentures and common
securities as described under "-- Redemption" on
page __; and
* the entry of an order for the dissolution of the
Trust by a court of competent jurisdiction.
If dissolution of the Trust occurs as described in any of the
second, third and fifth circumstances described above, the Trust
will be wound-up and liquidated by the property trustee as
expeditiously as the property trustee determines to be possible
by distributing, after paying or making reasonable provision to
pay all claims and obligations of the Trust in accordance with
The Delaware Business Trust Act, to you and to us, as holder of
<PAGE 40> the common securities, a proportionate amount of the
junior subordinated debentures, unless such distribution is not
practical.
If distribution of the junior subordinated debentures
is not practical, you, and we, as holder of the common
securities, will be entitled to receive out of the assets of the
Trust available for distribution to you and us, after paying or
making reasonable provision to pay all claims and obligations of
the Trust in accordance with the Delaware Business Trust Act, an
amount equal to the aggregate of the liquidation amount plus
accumulated and unpaid distributions thereon to the date of
payment. If such liquidation distribution can be paid only in
part because the Trust has insufficient assets available to pay
in full the aggregate liquidation distribution, then the amounts
payable directly by the Trust on the preferred and common
securities shall be paid on a pro rata basis.
We, as the holder of the common securities, will be
entitled to receive distributions upon any such liquidation pro
rata with you, except that if an event of default under the
junior subordinated debentures has occurred and is continuing
because we have not paid amounts due on the junior subordinated
debentures, the preferred securities shall have a priority over
the common securities. See "-- Subordination of Common
Securities" on page __.
After the liquidation date is fixed for any
distribution of junior subordinated debentures:
* the preferred securities will no longer be deemed
to be outstanding;
* DTC or its nominee, as the registered holder of
preferred securities, will receive a registered
global certificate or certificate representing the
junior subordinated debentures to be delivered
upon such distribution with respect to preferred
securities held by DTC or its nominee; and
* any certificates representing the preferred
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 preferred
securities and bearing accrued and unpaid interest
in an amount equal to the accumulated and unpaid
distributions on the preferred securities until
such certificates are presented to the security
registrar for the preferred securities and common
securities for transfer or reissuance.
If we do not redeem the junior subordinated debentures
prior to maturity, the Trust is not liquidated and the junior
<PAGE 41> subordinated debentures are not distributed to you,
then the preferred securities will remain outstanding until the
repayment of the junior subordinated debentures and the
distribution of the liquidation distribution to you.
Under current United States federal income tax law and
interpretations and assuming, as expected, that the Trust is
treated as a grantor trust, a distribution of the junior
subordinated debentures should not be a taxable event to you.
Should there be a change in law, a change in legal
interpretation, a tax event or other circumstances, however, the
distribution could be a taxable event to you. If we elect
neither to redeem the junior subordinated debentures prior to
maturity nor to liquidate the Trust and distribute the junior
subordinated debentures to you, the preferred securities will
remain outstanding until the repayment of the junior subordinated
debentures. See "Certain United States Federal Income Tax
Consequences."
There can be no assurance as to the market prices for
the preferred securities or the junior subordinated debentures
that may be distributed in exchange for preferred securities if a
dissolution and liquidation of the Trust occurs. Accordingly,
the preferred securities that you may purchase, or the junior
subordinated debentures that you may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price
that you paid to purchase the preferred securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of
default under the trust agreement with respect to the preferred
securities (whatever the reason for such event of default and
whether it is voluntary or involuntary or effected by operation
of law or pursuant to a judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
* the occurrence of an event of default with respect
to the junior subordinated debentures (see
"Description of Junior Subordinated Debentures --
Debenture Events of Default" on page __);
* default by the Trust in the payment of any
distribution when it becomes due and payable, and
continuation of such default for a period of
30 days;
* default by the Trust in the payment of any
redemption price of any preferred security or
common security when it becomes due and payable;
* default in the performance, or breach, in any
material respect, of any covenant or warranty of
<PAGE 42> the trustees in the trust agreement
(other than a covenant or warranty a default in
the performance of which or the breach of which is
dealt with in either the second or third bulleted
clause 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 trustees and us by the holders of at least 25%
in aggregate liquidation amount of the outstanding
preferred 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
* 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 the event of default to
you, as a holder of the preferred securities, and to us, as the
holder of the common securities, and the administrators, unless
the event of default has been cured or waived. We, as depositor,
and the administrators are required to file annually with the
property trustee a certificate as to whether or not we are in
compliance with all the conditions and covenants applicable to us
under the trust agreement.
If an event of default with respect to the junior
subordinated debentures has occurred and is continuing because we
have not paid amounts due on the junior subordinated debentures,
the preferred securities will have a preference over the common
securities with respect to payments of any amounts as described
above. See "-- Subordination of Common Securities" on page __,
"-- Liquidation Distribution Upon Dissolution" on page __ and
"Description of Junior Subordinated Debentures -- Debenture
Events of Default" on page __.
REMOVAL OF TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of a majority in aggregate liquidation
amount of the outstanding preferred securities may remove the
property trustee or the Delaware trustee (but not any
administrator) for cause at any time, or with or without cause,
if an event of default with respect to the junior subordinated
debentures has occurred and is continuing. If a trustee is
removed by the holders of the outstanding preferred securities,
the successor may be appointed by the holders of at least 25% in
aggregate liquidation amount of preferred securities. If a
trustee resigns, such trustee will appoint its successor. If a
trustee fails to appoint a successor, the holders of at least 25%
in aggregate liquidation amount of the outstanding preferred
<PAGE 43> securities may appoint a successor. If a successor has
not been appointed by the holders, any holder of preferred
securities or common securities or the other trustee may petition
a court in the State of Delaware to appoint a successor. Any
Delaware trustee must meet the applicable requirements of
Delaware law. Any property trustee must be a national or state-
chartered bank and have a combined capital and surplus of at
least $50,000,000. No resignation or removal of a 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. You do not have any
right to appoint, remove or replace the administrators of the
Trust. Only we, as holder of the common securities, have these
rights.
MERGER OR CONSOLIDATION OF 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 trustee is a party, or
any entity succeeding to all or substantially all the corporate
trust business of such trustee, will be the successor of such
trustee under the trust agreement, provided such entity is
otherwise qualified and eligible under the trust agreement. The
succession will occur without the execution or filing of any
paper or any further act on the part of the parties to the trust
agreement.
MERGERS, REPLACEMENTS OR SIMILAR TRANSACTIONS OF THE TRUST
The Trust may not merge with or into, consolidate,
amalgamate or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, any entity
except as described below or as otherwise set forth in the trust
agreement. The Trust may, at our request as the holder of the
common securities, and with the consent of the holders of a
majority aggregate liquidation amount of the outstanding
preferred securities, but without the consent of the property
trustee or the Delaware trustee, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to a trust
organized as such under the laws of any state, so long as:
* such successor entity (1) expressly assumes all
the obligations of the Trust with respect to the
preferred securities or (2) substitutes for the
preferred securities other securities having
substantially the same terms as the preferred
securities so long as the substitute securities
have the same priority as the preferred securities
with respect to distributions and payments upon
liquidation, redemption and otherwise;
<PAGE 44>
* a trustee of such successor entity, possessing the
same powers and duties as the property trustee, is
appointed to hold the junior subordinated
debentures;
* such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does
not cause the preferred securities (including any
substitute securities) to be downgraded by any
nationally recognized statistical rating
organization, if then rated;
* such merger, consolidation, amalgamation,
replacement conveyance transfer or lease does not
adversely affect the rights, preferences and
privileges of the holders of the preferred
securities (including any substitute securities)
in any material respect;
* such successor entity has a purpose substantially
identical to that of the Trust;
* prior to such merger, consolidation, amalgamation,
replacement conveyance transfer or lease, the
Trust has received an opinion from independent
counsel experienced in such matters to the effect
that (1) such merger, consolidation, amalgamation,
replacement conveyance transfer or lease does not
adversely affect your rights, preference and
privileges as a holder of preferred securities (or
substitute securities) in any material respect,
and (2) following such merger, consolidation,
amalgamation, replacement conveyance transfer or
lease, neither the Trust nor such successor entity
will be required to register as an investment
company under the Investment Company Act; and
* we or any permitted transferee to whom we have
transferred the common securities, owns all the
common securities of such successor entity and
guarantee the obligations of such successor entity
and guarantee the obligations of such successor
entity under the successor securities at least to
the extent provided by the guarantee.
Notwithstanding the foregoing, the Trust may not, except with the
consent of holders of 100% in aggregate liquidation amount of the
preferred securities, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties or 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 merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease would
<PAGE 45> cause the Trust or the successor entity to be
classified as other than a grantor trust for United States
federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided above and under "-- Removal of
Trustees; Appointment of Successors" on page __ and "Description
of Guarantee -- Amendments and Assignment" on page __ as provided
below and as otherwise required by law and the trust agreement,
you will have no voting rights.
We, as the holder of the common securities and the
property trustee may amend the trust agreement from time to time,
without your consent, to:
* cure any ambiguity, correct or supplement any
provisions in the trust agreement that may be
inconsistent with any other provision in the trust
agreement, or to make any other provisions with
respect to matters or questions arising under the
trust agreement, provided that any such amendment
does not adversely affect in any material respect
your interests; or
* modify, eliminate or add to any provisions of the
trust agreement to such extent as may be necessary
to ensure that the Trust will not be taxable other
than as a grantor trust for United States federal
income tax purposes at any time that any preferred
securities or common securities are outstanding or
to ensure that the Trust will not be required to
register as an investment company under the
Investment Company Act.
Any such amendments of the trust agreement will become effective
when notice of such amendment is given to the holders of
preferred securities and common securities.
We, as the holder of the common securities, the property
trustee and the administrators may amend the trust agreement from
time to time with:
* the consent of holders representing at least a
majority in aggregate liquidation amount of the
preferred securities; and
* receipt by the trustees of an opinion of counsel
to the effect that such amendment or the exercise
of any power granted to the trustees in accordance
with such amendment will not affect the Trust's
status as a grantor trust for United States
federal income tax purposes or the Trust's
<PAGE 46> exemption from status as an investment
company under the Investment Company Act.
However, without the consent of each holder of preferred
securities or common securities affected thereby, the trust
agreement may not be amended to:
* change the amount or timing of any distribution on
the preferred securities or common securities or
otherwise adversely affect the amount of any
distribution required to be made in respect of the
preferred securities or common securities as of a
specified date; or
* restrict your right or our right, as the holder of
the common 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
property trustee on behalf of the Trust, the property trustee
will not:
* 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;
* waive any past default that is waivable pursuant
to the terms of the indenture;
* exercise any right to rescind or annul a
declaration that the principal of all the junior
subordinated debentures shall be due and payable;
or
* consent to any amendment, modification or
termination of the indenture or the junior
subordinated debentures, where such consent shall
be required,
without, in each case, obtaining the prior approval of the
holders of at least a majority in aggregate liquidation amount of
the preferred securities, or, if a consent under the indenture
would require the consent of each holder of junior subordinated
debentures affected thereby, no such consent will be given by the
property trustee without the prior consent of each holder of the
preferred securities.
The property trustee may not revoke any action previously
authorized or approved by a vote of the holders of the preferred
securities except by subsequent vote of the holders of the
preferred securities. The property trustee will notify you of
<PAGE 47> any notice of default with respect to the junior
subordinated debentures. In addition to obtaining your approval
as described above, before taking any of the actions listed
above, the property trustee will, at our expense, obtain an
opinion of counsel experienced in such matters to the effect that
the action will not cause the Trust to be taxable other than as a
grantor trust for United States federal income tax purposes on
account of such action.
As a holder of preferred securities, your vote or
consent will not be required to redeem and cancel preferred
securities in accordance with the trust agreement.
Notwithstanding that you and other holders of preferred
securities are entitled to vote or consent under any of the
circumstances described above, any of the preferred securities
that are owned by us, the trustees or any of our respective
affiliates will, for purposes of such vote or consent, be treated
as if they were not outstanding.
EXPENSES AND TAXES
We have agreed to pay all debts and other obligations
(other than distributions on the preferred securities) and all
costs and expenses of the Trust (including costs and expenses
relating to the organization of the Trust, the fees and expenses
of the trustees and the costs and expenses relating to the
operation of the Trust) and to pay any and all taxes and all
costs and expenses (other than United States withholding taxes)
to which the Trust might become subject. These obligations of
ours are for the benefit of, and shall be enforceable by, any
creditor of the Trust to whom any of these debts, obligations,
costs, expenses and taxes are owed whether or not such creditor
has received notice thereof. Any such creditor may enforce these
obligations directly against us, and we have irrevocably waived
any right or remedy to require that any creditor take any action
against the Trust or any other person before proceeding against
us. We also have agreed in the indenture to execute such
additional agreements as may be necessary or desirable to give
full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The preferred securities will be issued in the form of
one or more fully registered global securities, which will be
deposited with, or on behalf of, DTC and registered in the name
of a DTC nominee. Unless and until it is exchangeable in whole
or in part for the preferred securities in definitive form, a
global security may not be transferred except as a whole by DTC
to a nominee of DTC or by a nominee of DTC to DTC or to another
nominee of DTC or by DTC or any such nominee to a successor of
DTC or to a nominee of such successor.
<PAGE 48>
Ownership of beneficial interests in a global security
will be limited to participants that have accounts with DTC or
its nominee or persons that may hold interests through such
participants. We expect that upon the issuance of a global
security DTC will credit, on its book-entry registration and
transfer system, the participants' accounts with their respective
principal amounts of preferred securities represented by such
global security. Ownership of beneficial interests in such global
security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by
DTC (with respect to the interests of participants) and on the
records of participants (with respect to your interests). You
will not receive written confirmation from DTC of your purchase,
but you are expected to receive written confirmations from
participants through which you entered into the transaction.
Transfers of ownership interests will be accomplished by entries
on the books of participants acting on your behalf.
So long as DTC, or its nominee, is the registered owner
of a global security, DTC or such nominee, as the case may be,
will be considered the sole owner or holder of the preferred
securities represented by such global security for all purposes
under the trust agreement. Except as provided below, you are the
owner of beneficial interests in a global security and will not
be entitled to receive physical delivery of the preferred
securities in definitive form. You will not be considered an
owner or holder under the trust agreement. Accordingly, you must
rely on the procedures of DTC and, if you are not a participant,
on the procedures of the participant through which you own your
interest to exercise any rights as a holder of preferred
securities under the trust agreement. We understand that under
DTC's existing practices in the event that we request any action
of you, or if you desire to take any action which a holder of
preferred securities is entitled to take under the trust
agreement, DTC would authorize the participants holding your
interests to take such action, and such participants would
authorize you to take such action or would otherwise act upon
your instructions. Redemption and other notices also will be
sent to DTC. If less than all of the preferred securities are
being redeemed, we understand that it is DTC's existing practice
to determine by lot the amount of the interest of each
participant to be redeemed. Therefore, as long as the preferred
securities are held in book-entry form, references in this
prospectus to your rights and benefits mean your indirect
interest held through DTC. You should consider the procedures of
DTC with respect to distributions, redemptions, notice, voting
and similar rights and benefits, as well as those described in
this prospectus.
Distributions on the preferred securities registered in
the name of DTC or its nominee will be made to DTC or its
nominee, as the case may be, as the registered owner of the
global security representing such preferred securities. Neither
the trustees, nor the administrators, any paying agent or any
<PAGE 49> other agent of ours or the trustees 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 security for such preferred securities or
for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. Disbursements of
distributions to participants shall be the responsibility of DTC.
DTC's practice is to credit participants' accounts on a payable
date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by participants to you
will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name," and
will be the responsibility of such participant and not of DTC,
us, the trustees, the paying agent or any other agent of ours,
subject to any statutory or regulatory requirements as may be in
effect from time to time. The laws of some states require that
certain purchasers of securities take physical delivery of their
purchased securities in definitive form. Such limits and laws
may impair the ability to transfer beneficial interests in the
global security.
DTC may discontinue providing its services as
securities depository with respect to the preferred securities at
any time by giving reasonable notice to us or the trustees. If
DTC notifies us that it is unwilling to continue as such, or if
it is unable to continue or ceases to be a clearing agency
registered under the Exchange Act, and a successor depository is
not appointed by us within 90 days after receiving such notice or
becoming aware that DTC is no longer so registered, we will issue
the preferred securities in definitive form upon registration of,
transfer of, or in exchange for, such global security. In
addition, we may at any time and in our sole discretion determine
not to have the preferred securities represented by one or more
global securities and, in such event, will issue preferred
securities in definitive form in exchange for all of the global
securities representing such preferred securities. Finally,
holders of a majority in liquidation amount of preferred
securities may determine to discontinue the system of book-entry
transfers through DTC following an event of default with respect
to the preferred securities.
DTC has advised the Trust and us as follows:
* DTC is a limited purpose trust company organized
under the laws of the State of New York, a
"banking organization" within the meaning of New
York banking law, a member of the Federal Reserve
Board, a "clearing corporation" within the meaning
of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of
Section 17A of the Exchange Act;
<PAGE 50>
* 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 (such as the underwriters), banks, trust
companies and clearing corporations and may
include certain other organizations;
* certain of such participants (or their
representatives), together with other entities,
own DTC; and
* 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.
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities will be
made to DTC, which will credit the relevant accounts at DTC on
the applicable distribution dates or, if the preferred securities
are not held by DTC, such payments will be made by check mailed
to the address of the holder entitled thereto to such address as
appears on the securities register for the preferred securities.
The paying agent will initially be the property trustee. The
paying agent will be permitted to resign as paying agent upon
30 days' written notice to the property trustee and the
administrators. If the property trustee is no longer the paying
agent, the property trustee is to appoint a successor (which must
be a bank or trust company reasonably acceptable to the
administrators) to act as paying agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer
agent for the preferred securities.
Registration of transfers of preferred securities will
be effected without charge by or on behalf of the Trust, but only
upon payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange. The Trust
will not be required to register or cause to be registered the
transfer of the preferred securities after the preferred
securities have been called for redemption.
<PAGE 51>
OBLIGATIONS AND DUTIES OF 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. If an event of default has occurred and is
continuing, the property trustee must enforce the trust agreement
for your benefit and must exercise the powers vested in it by the
trust agreement and use the same degree of care and skill as a
prudent person would exercise or use under the circumstances 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
your request, unless offered by you reasonable indemnity against
the costs, expenses and liabilities that might be incurred by the
exercise of these powers. The property trustee is not required
to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties if it has reasonable
grounds to believe that repayment or adequate indemnity is not
assured to it.
The property trustee may rely upon any certificates or
opinions furnished to it and conforming to the requirements of
the trust agreement.
For information concerning the relationships between
The Bank of New York, the property trustee, and us, see
"Description of Junior Subordinated Debentures -- Information
Concerning the Debenture Trustee" on page __.
MISCELLANEOUS
The administrators and the property trustee are
authorized and directed to conduct the affairs of and to operate
the Trust in such a way that (1) the Trust will not be deemed to
be an "investment company" required to be registered under the
Investment Company Act or be taxable as other than a grantor
trust taxable as a corporation for United States federal income
tax purposes and (2) the junior subordinated debentures will be
treated as our indebtedness for United States federal income tax
purposes. In this connection, the property trustee and we, as the
holder of the common securities, and the administrators are
authorized to take any action not inconsistent with applicable
law, the certificate of trust of the Trust or the trust agreement
that the property trustee and we, as the holder of the common
securities, and the administrators, determine in our discretion
to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect your interests.
You will not have preemptive or similar rights.
The Trust may not borrow money or issue debt or
mortgage or pledge its assets.
<PAGE 52>
GOVERNING LAW
The trust agreement will be governed by and construed
in accordance with the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
We will issue the junior subordinated debentures under
the indenture between Bank of New York, the debenture trustee,
and us. This summary of certain terms and provisions of the
junior subordinated debentures and the indenture is not complete.
You should read the form of the indenture that is filed as an
exhibit to the registration statement of which this prospectus is
a part. Whenever particular defined terms of the indenture are
referred to in this prospectus, such defined terms are
incorporated herein by reference. A copy of the form of
indenture is available from the debenture trustee upon request.
In addition, the indenture will be qualified under the Trust
Indenture Act of 1939. The terms of the junior subordinated
debentures include those made a part of the indenture by the
Trust Indenture Act. This summary is qualified by reference to
the Trust Indenture Act and you should be familiar with its
provisions.
GENERAL
Concurrently with the issuance of the preferred
securities, the Trust will invest the proceeds, together with the
consideration paid by us for the common securities, in the junior
subordinated debentures issued by us. The aggregate principal
amount of the junior subordinated debentures will be limited to
the aggregate liquidation amount of the preferred securities and
common securities. The junior subordinated debentures will be
unsecured and will rank junior and be subordinate in right of
payment to all of our senior indebtedness and other subordinated
indebtedness. The junior subordinated debentures will not be
subject to a sinking fund. The indenture does not limit our
ability to incur or issue other secured or unsecured debt,
including senior indebtedness and other subordinated
indebtedness, whether under any existing or other indenture that
we may enter into in the future or otherwise. See
"-- Subordination" on page __. We are a holding company and
almost all of our operating assets and the operating assets of
our consolidated subsidiaries are held by such subsidiaries.
Accordingly, we rely primarily on dividends from our subsidiaries
to meet debt service obligations and pay operating expenses. The
inability of our direct or indirect subsidiaries to pay us
dividends in an amount sufficient to meet our debt service
obligations and pay our operating expenses would have a material
adverse effect on us and the Trust. In addition, because we are
a holding company, our right to participate in any distribution
of assets by any of our subsidiaries upon a subsidiary's
liquidation or similar event is subject to the prior claims of
creditors of that subsidiary, except to the extent we are
<PAGE 53> recognized as a creditor of that subsidiary. Our
obligations under the junior subordinated debentures are
effectively subordinated to all existing and future liabilities
of our subsidiaries. The junior subordinated debentures will bear
interest, accruing from ___________, 1999, at the annual rate of
_____% of the principal amount thereof, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of
each year, commencing December 31, 1999, to the person in whose
name each junior subordinated debenture is registered at the
close of business on the 15th day of the month of such interest
payment date, even if the day is not a business day. It is
anticipated that unless the Trust is liquidated each junior
subordinated debenture will be registered in the name of the
Trust and held by the property trustee in trust for you and the
holders of the common securities.
The amount of interest payable for any full interest
period will be computed by dividing the annual rate by four. 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. 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 business day (without any interest or other payment in
respect of any such delay), or, if such business day falls in the
next calendar year, such payment will be made on the immediately
preceding business day, in each case with the same force and
effect as if made on the date such payment was originally
payable.
Accrued interest that is not paid on the applicable
interest payment date will bear additional interest on the amount
thereof (to the extent permitted by law) at the annual rate of
_____%, compounded quarterly.
The term "interest" includes quarterly interest
payments, interest on quarterly interest payments not paid on the
applicable interest payment date and, if applicable, any
additional sums we pay on the junior subordinated debentures
following a tax event (as defined under "Description of Preferred
Securities -- Redemption" on page __) that may be required so
that distributions payable by the Trust will not be reduced by
any additional taxes, duties or other governmental changes.
The junior subordinated debentures will mature on
September 30, 2029, subject to our right to shorten the maturity
date at any time to any date not earlier than September 30, 2004,
if we have received prior approval of the Federal Reserve Board
if then required under applicable capital guidelines or policies
of the Federal Reserve Board. In the event we elect to shorten
the maturity of the junior subordinated debentures, we will give
notice to the registered holders of the junior subordinated
debentures, the debenture trustee and the Trust of such
<PAGE 54> shortening no less than 90 days prior to the
effectiveness thereof.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no event of default under the indenture has
occurred and is continuing, we have the right at any time during
the term of the junior subordinated debentures to defer the
payment of interest at any time for a period (a) not exceeding
20 consecutive quarterly periods with respect to each extension
period, (b) that does not extend beyond the stated maturity of
the junior subordinated debentures, and (c) that does not end on
a date other than an interest payment date. During any extension
period we have the right to make partial payments of interest on
any interest payment date. At the end of an extension period we
must pay all interest then accrued and unpaid. During an
extension period interest will continue to accrue and holders of
junior subordinated debentures (and holders of preferred
securities while outstanding) will be required to accrue and
recognize original issue discount income for United States
federal income tax purposes. See "Certain United States Federal
Income Tax Consequences -- Interest Income and Original Issue
Discount" on page __.
During any extension period, we may not:
* declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation
payment with respect to, any of our capital stock;
or
* make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem
any of our debt securities that rank equally with
in all respects or junior in interest to the
junior subordinated debentures; except that we
may:
(a) repurchase, redeem or make other acquisitions of
shares of our capital stock in connection with any
employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or
more of our employees, officers, directors or
consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan,
or in connection with the issuance of our capital
stock (or securities convertible into or
exercisable for such capital stock) as
consideration in any acquisition transactions
entered into prior to the applicable extension
period;
(b) take any necessary action in connection with any
reclassification, exchange or conversion of any
<PAGE 55> class or series of our capital stock (or
any capital stock of a subsidiary of ours) for any
class or series of our capital stock or any class
or series of our indebtedness for any class or
series of our capital stock;
(c) purchase fractional interests in shares of our
capital stock pursuant to the conversion or
exchange provisions of such capital stock or the
security being converted or exchanged;
(d) declare a dividend in connection with any
shareholders' rights plan, or issue rights, stock
or other property under any shareholders' rights
plan, or redeem or repurchase rights pursuant
thereto; or
(e) declare a 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 equally with or junior to such stock.
So long as no event of default under the indenture has
occurred and is continuing before the end of an extension period,
we may extend the extension period (subject to the limits imposed
on the duration and ending date of an extension period) further
deferring the payment of interest. Upon the termination of any
extension period and the payment of all amounts then due, we may
elect to begin a new extension period subject to the above
conditions. No interest or additional interest will be due on
the junior subordinated debentures during an extension period,
except at its end. We must give you and the debenture trustee
notice of our election of such extension period at least one
business day prior to the next succeeding interest payment date
on which interest on the junior subordinated debentures would be
payable but for such deferral for so long as the preferred
securities are held by the Trust, or at least one business day
prior to the earlier of (1) the next succeeding date the
distribution on the preferred securities would have been payable
but for the election to begin an extension period and (2) the
date the property trustee is required to give you notice of the
record date or the date such distribution is payable, but in any
event not less than one business day prior to such record date.
The debenture trustee will give you prompt notice of our election
to begin an extension period. Subject to the foregoing, there is
no limitation on the number of times that we may elect to begin
an extension period.
<PAGE 56>
REDEMPTION
We may redeem the junior subordinated debentures prior
to maturity at our option (1) on or after September 30, 2004, in
whole at any time or in part from time to time, or (2) 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 Preferred Securities -- Redemption"), in each
case at a redemption price equal to the outstanding principal
amount of the junior subordinated debentures plus accrued
interest (including any additional interest) to the redemption
date. The proceeds of any such redemption will be used by the
Trust to redeem the preferred securities.
The Federal Reserve Board's risk-based capital
guidelines, which are subject to change, 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 Board 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. Consultation may not be necessary if the equity or
capital instrument was redeemed with the proceeds of, or replaced
by, a like amount of a similar or higher quality capital
instrument and the Federal Reserve Board considers the
organization's capital position to be fully adequate after the
redemption.
If we redeem the junior subordinated debentures prior
to their stated maturity, such redemption would constitute the
redemption of capital instruments under the Federal Reserve
Board's current risk-based capital guidelines and may be subject
to the prior approval of the Federal Reserve Board. The
redemption of the junior subordinated debentures also could be
subject to the additional prior approval of the Federal Reserve
Board under its current risk-based capital guidelines.
ADDITIONAL SUMS
We have covenanted in the indenture that, so long as no
event of default has occurred and is continuing and except as
otherwise specified in the indenture if and for so long as the
Trust is the holder of all junior subordinated debentures and the
Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a tax event, we will pay as
additional sums on the junior subordinated debentures such
amounts as may be required so that the distributions payable by
the Trust will not be reduced as a result of any such additional
taxes, duties or other governmental charges. See "Description of
Preferred Securities -- Redemption" on page __.
<PAGE 57>
REGISTRATION, DENOMINATION AND TRANSFER
The junior subordinated debentures will initially be
registered in the name of the Trust. If the junior subordinated
debentures are distributed to you, it is anticipated that the
depositary arrangements for the junior subordinated debentures
will be substantially identical to those in effect for the
preferred securities. See "Description of Preferred
Securities -- Book Entry, Delivery and Form" on page __.
Although DTC has agreed to the procedures described in
"Description of Preferred Securities -- Book Entry, Delivery and
Form" on page __, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be
discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and we do not appoint a
successor depositary within 90 days of receipt of notice from DTC
to such effect, we will cause the junior subordinated debentures
to be issued in definitive form.
Payments on junior subordinated debentures represented
by a global security will be made to Cede & Co., the nominee for
DTC, as the registered holder of the junior subordinated
debentures, described under "Description of Preferred
Securities -- Book Entry, Delivery and Form" on page __. If
junior subordinated debentures are issued in certificated form,
principal and interest will be payable, the transfer of the
junior subordinated debentures will be registerable, 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 in New York, New York, or at the offices of
any paying agent or transfer agent we appoint, provided that
payment of interest may be made at our option by check mailed to
the address of the persons entitled thereto. However, a holder
of $1.00 million or more in aggregate principal amount of junior
subordinated debentures may receive payments of interest (other
than interest payable at the stated maturity) by wire transfer of
immediately available funds upon written request to the debenture
trustee not later than 15 calendar days prior to the date on
which the interest is payable.
Junior subordinated debentures are issuable only in
registered form without coupons in integral multiples of $10.00.
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.
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
indenture or at the office of any transfer agent we designate for
<PAGE 58> such purpose without service charge and upon payment of
any taxes and other governmental charges as described in the
indenture. We will appoint the debenture trustee as securities
registrar under the indenture.
In the event of any redemption, we will not, nor will
the debenture trustee be required to:
* 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
* register the transfer of 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 of the debenture not to be redeemed.
Any monies deposited with the debenture trustee or any
paying agent, or then held by us 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 this principal (and premium, if any) or interest has become
due and payable shall, at our request, be repaid to us and the
holder of such junior subordinated debenture must look, as a
general unsecured creditor, only to us for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS
We have covenanted that at any time (1) there has
occurred any event (a) of which we have actual knowledge that
with the giving of notice or the lapse of time, or both, would
constitute an event of default under the indenture and (b) that
we have not taken reasonable steps to cure, (2) if the junior
subordinated debentures are held by the Trust, we are in default
with respect to our payment of any obligations under the
guarantee, or (3) we have given notice of our election of an
extension period as provided in the indenture and have not
rescinded such notice, or such extension period, or any extension
thereof, is continuing, then we will not:
* make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem
any of our debt securities that rank equally in
all respects with, or junior in interest to, the
junior subordinated debentures; or
* declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation
<PAGE 59> payment with respect to, any of our
capital stock, except that we may:
(a) repurchase, redeem or make other acquisitions
of shares of our capital stock 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
shareholder stock purchase plan or in
connection with the issuance of our capital
stock (or securities convertible into or
exercisable for such capital stock) as
consideration in any acquisition transactions
entered into prior to any extension period;
(b) take any necessary action in connection with
any reclassification, exchange or conversion
of any class or series of our capital stock
(or any capital stock of any subsidiary of
ours) for any class or series of our capital
stock or of any class or series of our
indebtedness for any class or series of our
capital stock;
(c) purchase fractional interests in shares of
our capital stock pursuant to the conversion
or exchange provisions of such capital stock
or the security being converted or exchanged;
(d) declare a dividend in connection with any
shareholders' rights plan, or issue rights,
stock or other property under any
shareholders' rights plan, or redeem or
repurchase rights pursuant thereto; or
(e) declare a 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 equally with
or junior to such stock.
We have covenanted in the indenture:
* to continue to hold, directly or indirectly, 100%
of the common securities, provided that certain
successors that are permitted pursuant to the
indenture may succeed to our ownership of the
common securities;
<PAGE 60>
* as holder of the common securities, not to
voluntarily terminate, windup or liquidate the
Trust, other than:
(a) in connection with a distribution of junior
subordinated debentures to the holders of the
preferred securities in liquidation of the
Trust; or
(b) in connection with certain mergers,
consolidations or amalgamations permitted by
the trust agreement; and
* to use reasonable efforts, consistent with the
terms and provisions of the trust agreement, to
cause the Trust to continue to be classified as a
grantor trust for United States federal income tax
purposes.
MODIFICATION OF INDENTURE
From time to time, we as well as the debenture trustee
may, without the consent of any of the holders of the outstanding
junior subordinated debentures, amend, waive or supplement the
provisions of the indenture to:
* evidence the succession of another corporation or
association and the assumption by such person of
our obligations under the indenture and the junior
subordinated debentures;
* convey, transfer, assign, mortgage, pledge any
property to or with the debenture trustee or to
surrender any right or power conferred upon us by
the indenture;
* add further covenants, restrictions or conditions
for the protection of holders of the junior
subordinated debentures or to surrender any right
or power conferred upon us under the indenture;
* change or eliminate any of the provisions of the
indenture, so long as at the time of the change or
elimination there are no outstanding junior
subordinated debentures entitled to the benefit of
such provision or such change or elimination does
not apply to any outstanding securities;
* add any events of default under the indenture for
the holders of the junior subordinated debentures.
* add any additional events of default under the
indenture for the benefit of the holders of the
preferred securities and the common securities;
<PAGE 61>
* cure any ambiguity, to correct or supplement any
provision in the indenture that may be defective
or inconsistent with any other provision in the
indenture, provided that such action shall not
adversely affect the interest of the holders of
the junior subordinated debentures, or so long as
they are outstanding the preferred securities in
any material respect;
* change the terms of the junior subordinated
debentures to facilitate the issuance of the
junior subordinated debentures in certificated or
other definitive form;
* evidence or provide for the appointment of a
successor debenture trustee;
* qualify, or maintain the qualification of, the
indenture under the Trust Indenture Act;
* establish the form or terms of any series of the
junior subordinated debentures as permitted by the
indenture; or
change or eliminate any of the provisions of this indenture,
provided that any such change or elimination may (a) become
effective only when there is no security outstanding of any
series created prior to the execution of such supplemental
indenture that is entitled to the benefit of such provision or
(b) not apply to any outstanding securities.
The indenture contains provisions permitting the
debenture trustee and us, with the consent of the holders of a
majority in principal amount of the junior subordinated
debentures, to modify the indenture in a manner affecting the
rights of the holders of the junior subordinated debentures.
However, none of these modifications may be made, without the
consent of the holder of each outstanding junior subordinated
debenture so affected, that would:
* change the stated maturity or the principal of, or
any installment of interest on, any of the junior
subordinated debentures, or reduce the principal
amount, the rate of interest or any premium
payable upon its redemption, 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 payment
on the junior subordinated debentures;
<PAGE 62>
* reduce the percentage of principal amount of
junior subordinated debentures, the holders of
which are required to consent to any modification
of, or waiver of rights under, the indenture; or
* modify any of the relevant provisions of the
indenture, except to increase any such percentage
or to provide that certain other provisions of the
indenture cannot be modified or waived without the
consent of the holder of each junior subordinated
debenture affected.
Furthermore, so long as any of the preferred securities
remain outstanding,
* no modification may be made that adversely affects
you in any material respect, and no termination of
the indenture may occur, and no waiver of any
event of default or compliance with any covenant
under the indenture may be effective, without the
prior consent of the holders of at least a
majority of the aggregate liquidation amount of
the outstanding preferred securities unless and
until the principal of (and premium, if any, on)
the junior subordinated debentures and all accrued
and unpaid interest have been paid in full and
certain other conditions are satisfied; and
* no amendment may be made affecting interest or
principal payments under the indenture that would
impair the rights of the holders of the preferred
securities provided therein without the prior
consent of the holders of each preferred security
then outstanding 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.
DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the
following described events with respect to the junior
subordinated debentures that has occurred and is continuing
constitute an "event of default" with respect to the junior
subordinated debentures:
* failure to pay any interest on the junior
subordinated debentures when due and payable and
continuance of this default for a period of
30 days (subject to the deferral of any due date
in the case of an extension period);
* failure to pay any principal of or premium, if
any, on the junior subordinated debentures when
<PAGE 63> due and payable whether at the stated
maturity upon redemption, by declaration of
acceleration or otherwise;
* failure to observe or perform in any material
respect certain of the other covenants contained
in the indenture for 90 days after written notice
of such failure to us from the debenture trustee
or the holders of at least 25% in aggregate
outstanding principal amount of the outstanding
junior subordinated debentures; or
* the occurrence of the appointment of a receiver or
other similar official in any liquidation,
insolvency or similar proceeding with respect to
us or all or substantially all of our property; or
a court or other governmental agency enters a
decree or order appointing a receiver or similar
official and such decree or order remains unstayed
and undischarged for a period of 60 days.
As described in "Description of Preferred Securities --
Events of Default; Notice" on page __, the occurrence of an event
of default in respect of the junior subordinated debentures also
will constitute an event of default in respect of the preferred
securities and common securities.
Subject to certain limitations, 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 an event of default which is continuing,
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 preferred 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 and all sums
paid or advanced by the debenture trustee and the reasonable
compensation, expenses, disbursements and advances of the
debenture trustee, its agent and its counsel 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 preferred securities shall have such
right. <PAGE 64>
We are required to certify annually to the debenture
trustee as to whether or not we are in compliance with all the
conditions and covenants applicable to us under the indenture.
If an event of default has occurred and is continuing,
the debenture 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 indenture to
be due and payable and to enforce its other rights as a creditor
of ours with respect to the junior subordinated debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an event of default has occurred and is continuing
and such event is attributable to our failure to pay any amounts
payable in respect of the junior subordinated debentures on the
date such amounts are otherwise payable, you may institute a
legal action against us to enforce the payment to you 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 preferred securities you
hold. We may not amend the indenture to remove the foregoing
right to bring such legal action without your prior written
consent. We will have the right under the indenture to set-off
against the amount owed to the Trust any payment we make to you
in connection with such a legal action.
With certain exceptions, as a holder of preferred
securities, you will 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 unless there has been an event of default
under the trust agreement. See "Description of Preferred
Securities -- Events of Default; Notice" on page __.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The indenture provides that we may not consolidate with
or merge into any other entity or convey, transfer or lease our
properties and assets substantially as an entirety to any entity,
and no entity may consolidate with or merge into us or convey,
transfer or lease its properties and assets substantially as an
entirety to us, unless:
* in the event we consolidate with or merge into
another entity or convey or transfer our
properties and assets substantially as an entirety
to any entity, the successor entity is organized
under the laws of the United States or any state
or the District of Columbia, and such successor
entity expressly assumes our obligations in
respect of the junior subordinated debentures;
provided, however, that nothing in the indenture
shall be deemed to restrict or prohibit, and no
<PAGE 65> supplemental indenture shall be required
in the case of the merger of a bank (as defined
below) with and into a bank or us, the
consolidation of banks into a bank or us, or the
sale or other disposition of all or substantially
all of the assets of any bank to another bank or
us, if, in any such case in which we are not the
surviving, resulting or acquiring entity, we would
own, directly or indirectly, at least 80% of the
voting securities of the bank (and of any other
bank any voting securities of which are owned,
directly or indirectly, by such bank) surviving
such merger, resulting from such consolidation or
acquiring such assets;
* immediately after giving effect thereto, no event
of default with respect to the junior
subordinated debentures, and no event which, after
notice or lapse of time or both, would constitute
an event of default with respect to the junior
subordinated debentures, has occurred and is
continuing; and
* certain other conditions as prescribed in the
indenture are satisfied.
For purposes of the first bullet point above, the term
"bank" means each of:
* any banking subsidiary of ours the consolidated
assets of which constitute 20% or more of our
consolidated assets;
* any other banking subsidiary designated as a bank
pursuant to a board resolution and set forth in an
officers' certificate delivered to the trustee;
and
* any subsidiary of ours that owns, directly or
indirectly, any voting securities, or options,
warrants or rights to subscribe for or purchase
voting securities, of any bank under the first and
second bullet points above and in the case of all
three bullet points above their respective
successors (whether by consolidation, merger,
conversion, transfer of substantially all their
assets and business, or otherwise) so long as any
such successor is a banking subsidiary (in the
case of the first and second bullet point or a
subsidiary (in the case of the third bullet
point) of ours.
The provisions of the indenture do not afford holders
of the junior subordinated debentures protection in the event we
<PAGE 66> are involved in a highly leveraged or other transaction
that may adversely affect holders of the junior subordinated
debentures.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect and we
will be deemed to have satisfied and discharged the indenture
when:
* all junior subordinated debentures have been
delivered to the debenture trustee for
cancellation, or all junior subordinated
debentures not previously delivered to the
debenture trustee for cancellation (1) have become
due and payable, or (2) will become due and
payable at the stated maturity within one year or
(3) are to be called for redemption within one
year under arrangements satisfactory to the
debenture trustee;
* we deposit or cause 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
or redemption date; and
* we have paid all other sums payable by us under
the indenture and we have delivered applicable
certificates and opinions of counsel that indicate
we have complied with all of our obligations.
SUBORDINATION
The junior subordinated debentures generally will be
subordinate and junior in right of payment, to the extent set
forth in the indenture, to all of our senior indebtedness or
other subordinated indebtedness (as defined below). If we
default in the payment of any principal, premium, if any, or
interest, if any, or any other amount payable on any senior or
other subordinated 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. <PAGE 67>
As used herein, "senior indebtedness or other
subordinated indebtedness" means, whether recourse is to all or a
portion of our assets and whether or not contingent:
* every obligation of ours for money borrowed;
* every obligation of ours evidenced by bonds,
debentures, notes or other similar instruments,
including obligations incurred in connection with
the acquisition of property, assets or businesses;
* every reimbursement obligation of ours with
respect to letters of credit, bankers' acceptances
or similar facilities issued for our account;
* every obligation of ours issued or assumed as the
deferred purchase price of property or services
(but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of
business);
* every capital lease obligation of ours;
* every obligation of ours for claims (as defined in
Section 101(4) of the United States Bankruptcy
Code of 1978, as amended) in respect of derivative
products such as interest, foreign exchange rate
contracts, commodity contracts and similar
arrangements; and
* every obligation of the type referred to above of
another person and all dividends of another person
the payment of which, in either case, we have
guaranteed or for which we are responsible or
liable, directly or indirectly, as obligor or
otherwise.
However, senior indebtedness and other subordinated indebtedness
shall not include any of the following:
* any obligations which, by their terms, are
expressly stated to rank equally in right of
payment with, or to not be superior in right of
payment to, the junior subordinated debentures;
* any of our indebtedness and other subordinated
indebtedness which when incurred and without
respect to any election under Section 1111(b) of
the United States Bankruptcy Code of 1978, as
amended, was without recourse to us;
* any indebtedness of ours to any of our
subsidiaries;
<PAGE 68>
* indebtedness, other than indebtedness for wages or
bank deposits, payable to executive officers,
directors or employees; and
* any indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust,
partnership or other entity affiliated with us
that is a financing entity of ours in connection
with the issuance by such financing entity of
securities that are similar to the preferred
securities.
As of June 30, 1999, our senior indebtedness and other
subordinated indebtedness was approximately $303.7 million. All
senior indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) must first be
paid in full before any payment or distribution, whether in cash,
securities or other property, is made on account of the junior
subordinated debentures in the event of:
* any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment,
imposition or other similar proceedings relating
to us, our creditors or our property;
* any proceeding for our liquidation, dissolution or
other winding up, voluntary or involuntary,
whether or not involving insolvency or bankruptcy
proceedings;
* any assignment by us for the benefit of creditors;
or
* any other marshaling of our assets.
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 as described above directly
to the holders of senior indebtedness in accordance with the
priorities then existing among such holders until all senior
indebtedness and other subordinated indebtedness (including any
interest accruing after the commencement of any such proceedings)
has been paid in full.
In the event of any proceeding described above, after
payment in full of all sums owing with respect to our senior
indebtedness and other subordinated indebtedness, the holders of
junior subordinated debentures, together with the holders of our
obligations ranking on a parity with the junior subordinated
debentures, will be entitled to be paid from our remaining assets
the amounts at the time due and owing on the junior subordinated
<PAGE 69> debentures and such other obligations. This payment
will be made before any payment or other distribution, whether in
cash, property or otherwise, will be made on account of any
capital stock or obligations ranking junior to the junior
subordinated debentures and such other obligations. If payment
or distribution on account of the junior subordinated debentures
of any character or 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 of
the indenture and before all our 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 our 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 our
insolvency, holders of senior indebtedness and other subordinated
indebtedness may receive more, ratably, and holders of the junior
subordinated debentures may receive less, ratably, than our other
creditors. Such subordination will not prevent the occurrence of
any event of default in respect of the junior subordinated
debentures.
The indenture places no limitation on the amount of
additional senior indebtedness and other subordinated
indebtedness that we may incur. We expect from time to time to
incur additional senior indebtedness and other subordinated
indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee, other than during the occurrence
and continuance of a default undertakes to only perform such
duties as are specifically contained in the indenture, is under
no obligation to exercise any of the powers vested in it by the
indenture and after an event of default, must exercise the same
degree of care and skill as a prudent person would in the conduct
of his or her own affairs. The debenture trustee is not required
to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the
debenture trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
The debenture trustee may rely and shall be protected
in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, security or
other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties. The
debenture trustee may consult with counsel of its choice and the
advice of such counsel or any opinion of such counsel shall be
<PAGE 70> full and complete authorization and protection in
respect of any action taken in reliance thereon.
The Bank of New York, the debenture trustee, may serve
from time to time as trustee under other indentures or trust
agreements with us or our subsidiaries relating to other issues
of our securities. In addition, we as well as certain of our
affiliates may have other banking relationships with the Bank of
New York and its affiliates.
GOVERNING LAW
The indenture and the junior subordinated debentures
will be governed by and construed in accordance with the laws of
the State of New York.
DESCRIPTION OF GUARANTEE
We will execute and deliver the guarantee concurrently
with the issuance of preferred securities by the Trust for your
benefit. The Bank of New York will act as guarantee trustee
under the guarantee and will hold the guarantee for your benefit.
This summary of certain provisions of the guarantee is not
complete. You should read the form of the guarantee, which is
filed as an exhibit to the registration statement of which this
prospectus is a part. Whenever particular defined terms of the
guarantee are referred to in this prospectus, such terms are
incorporated herein by reference. A copy of the form of
guarantee is available upon request from the guarantee trustee.
The guarantee will be qualified as an indenture under the Trust
Indenture Act. This summary is qualified by reference to the
Trust Indenture Act and you should be familiar with its
provisions.
GENERAL
We will irrevocably agree to pay in full on a
subordinated basis, to the extent set forth in the guarantee and
described herein, the payments described below to you, as and
when due, regardless of any defense, right of set-off or
counterclaim which the Trust may have or assert other than the
defense of payment. The following payments with respect to the
preferred securities, to the extent not paid or made by or on
behalf of the Trust, will be subject to the guarantee without
duplication:
* any accumulated and unpaid distributions required
to be paid on the preferred securities, to the
extent that the Trust has funds available for
their payment at such time;
* the redemption price with respect to any preferred
securities called for redemption by the Trust, to
<PAGE 71> the extent that the Trust has funds
available for its payment at such time; and
* upon a voluntary or involuntary termination,
winding up or liquidation of the Trust (unless the
junior subordinated debentures are distributed to
you and the other holders of the preferred
securities), the lesser of:
(a) the aggregate of the liquidation amount and
all accumulated and unpaid distributions to
the date of payment, to the extent that the
Trust has funds available for their payment;
and
(b) the amount of assets of the Trust remaining
available for distribution to you on
liquidation of the Trust.
Our obligation to make a guarantee payment may be
satisfied by directly paying you or by causing the Trust to pay
you.
The guarantee will be an irrevocable, subordinated
guarantee of payment on a subordinated basis of the Trust's
obligations under the preferred securities. The guarantee will
apply only to the extent that the Trust has funds sufficient to
make such payments. If we do not make payments on the junior
subordinated debentures held by the Trust, the Trust will not be
able to pay any amounts payable in respect of the preferred
securities and will not have funds available for these payments.
The guarantee will rank subordinate and junior in right of
payment to all of our senior indebtedness and all of our other
subordinated indebtedness. See "-- Status of the Guarantee" on
page __.
We will, through the guarantee, the trust agreement,
the subordinated debentures and the indenture, taken together,
fully and unconditionally guarantee all of the Trust's
obligations under the preferred securities. No single document
standing alone or operating in conjunction with fewer than all
other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the preferred securities. See
"Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee" on page __.
<PAGE 72>
STATUS OF THE GUARANTEE
The guarantee will constitute our unsecured obligation
and will rank subordinate and junior in right of payment to all
of our senior indebtedness and subordinated indebtedness in the
same manner as the junior subordinated debentures. The guarantee
does not limit our ability to incur or issue other secured or
unsecured senior or subordinated indebtedness and we expect to
incur, from time to time, additional senior and subordinated
indebtedness. In addition, because we are a holding company, our
right to participate in any distribution of assets by any of our
subsidiaries upon a subsidiary's liquidation or similar event is
subject to the prior claims of the creditors of the subsidiary
except to the extent we are recognized as a creditor of that
subsidiary. Our obligations under the guarantee are effectively
subordinated to all existing and future liabilities of any of our
subsidiaries and their respective subsidiaries.
The guarantee will constitute a guarantee of payment
and not of collection. A guarantee of payment entitles the
guarantee trustee or you to institute a legal proceeding directly
against us as the guarantor to enforce your rights under the
guarantee without first instituting a legal proceeding against
the Trust or any other person or entity. The guarantee will be
held by the guarantee trustee for your benefit. The guarantee
will not be discharged except by paying the amounts required
under the guarantee in full to the extent not paid by the Trust
or distributing the junior subordinated debentures to you.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not
materially adversely affect your rights (in which case no consent
will be required), the guarantee may not be amended without the
prior approval of the holders of a majority of the aggregate
liquidation amount of the outstanding preferred securities. The
manner of obtaining any such approval is set forth under
"Description of Preferred Securities -- Voting Rights; Amendment
of Trust Agreement" on page __. All guarantees and agreements
contained in the guarantee will bind our successors, assigns,
receivers, trustees and representatives and will inure to your
benefit and the benefit of all of the holders of the preferred
securities then outstanding. Except in connection with a
consolidation, merger or sale involving us that is permitted
under the indenture and pursuant to which the assignee agrees in
writing to perform our obligations under the guarantee, we may
not assign our obligations under the guarantee.
<PAGE 73>
EVENTS OF DEFAULT
An event of default under the guarantee will occur if
we fail to perform any of our payment or other obligations under
the guarantee, or fail to perform any non-payment obligation if
our failure remains unremedied for 30 days. The holders of a
majority in aggregate liquidation amount of the outstanding
preferred securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the guarantee trustee under the guarantee or to direct the
guarantee trustee to exercise any trust or power conferred upon
the guarantee trustee under the guarantee.
In addition to acts taken by the guarantee trustee, you
may institute a legal proceeding directly against us to enforce
your rights under the guarantee without first instituting a legal
proceeding against the Trust, the guarantee trustee or any other
person or entity. Since you will not be the record holder of the
preferred securities while they are in book-entry form, you will
have to observe the procedures of DTC to take such action. See
"Description of Preferred Securities -- Book Entry, Delivery and
Form" on page __.
We are required, as guarantor, to certify annually to
the guarantee trustee whether or not we are in compliance with
all the conditions and covenants applicable to us under the
guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during a default by
us in performance of the guarantee, undertakes to perform only
duties that are set forth in the guarantee. After the occurrence
of an event of default with respect to the guarantee, the
guarantee trustee must exercise such rights and powers vested in
it by the guarantee and must exercise the same degree of care and
skill as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. The
guarantee trustee is under no obligation to expend or risk its
own funds or otherwise incur any personal financial liability in
the performance of its duties or in the exercise of any of its
rights or powers if it has reasonable grounds to believe that
repayment or adequate indemnity is not assured.
For information concerning our relationship with The
Bank of New York Company, as guarantee trustee, see "Description
of Junior Subordinated Debentures -- Information Concerning the
Debenture Trustee" on page __.
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
preferred securities, upon full payment of the amounts payable
<PAGE 74> with respect to the preferred securities upon
liquidation of the Trust, or upon distribution of junior
subordinated debentures to you and the other holders of the
preferred securities in exchange for all of the preferred
securities. The guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time you must return
payment of any sums paid to you under the preferred securities or
the guarantee.
GOVERNING LAW
The guarantee will be governed by and construed in
accordance with the laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We have irrevocably guaranteed, on a subordinate basis,
payments of distributions and other amounts due on the preferred
securities (to the extent that the Trust has funds available for
such payment) to the extent set forth under "Description of
Guarantee" on page __. Taken together, our obligations under the
junior subordinated debentures, the indenture, the trust
agreement and the guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the preferred securities.
No single document standing alone or operating in conjunction
with fewer than all the other documents constitutes such
guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations in respect of
the preferred securities.
If and to the extent that we do not make payments on
the junior subordinated debentures, the Trust will not have
sufficient funds to pay distributions or other amounts due on the
preferred securities. The guarantee does not cover payment of
amounts payable with respect to the preferred securities when the
Trust does not have sufficient funds to pay such amounts. In such
event, your remedy is to institute a legal proceeding directly
against us for enforcement of our payment obligations under the
junior subordinated debentures having a principal amount equal to
the liquidation amount of the preferred securities you hold.
Our obligations under the junior subordinated
debentures and the guarantee are subordinate and junior in right
of payment to all of our senior indebtedness and other
subordinated indebtedness. An event of default under any of our
senior indebtedness or other subordinated indebtedness would not
constitute an event of default in respect of the preferred
securities. However, in the event of payment defaults under, or
acceleration of, our senior indebtedness or other subordinated
<PAGE 75> indebtedness, the subordination provisions of the
indenture provide that no payments may be made in respect of the
junior subordinated debentures until such senior indebtedness or
other subordinated indebtedness has been paid in full or any
payment default on senior indebtedness or other subordinated
indebtedness has been cured or waived. See "Description of Junior
Subordinated Debentures -- Subordination" on page __. Failure to
make required payments on the junior subordinated debentures
would constitute an event of default in respect of the preferred
securities.
SUFFICIENCY OF PAYMENTS
As long as we make the payments on the junior
subordinated debentures when they are due, such payments will be
sufficient to cover distributions and other payments
distributable on the preferred securities, primarily because:
* the aggregate principal amount of the junior
subordinated debentures will be equal to the sum
of the aggregate stated liquidation amount of the
preferred securities and common securities;
* 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 preferred
securities;
* we will pay for any and all costs, expenses and
liabilities of the Trust except the Trust's
obligations to you and to us, as the holder of the
common securities, to pay amounts due under the
preferred securities and the common securities,
respectively; and
* the trust agreement further provides that the
Trust will not engage in any activity that is not
consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the
indenture, we have the right to set-off any payment we are
otherwise required to make thereunder against and to the extent
we have previously made, or are concurrently making, a payment
under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
You may institute a legal proceeding directly against
us to enforce your rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the
Trust or any other person or entity. See "Description of
Guarantee" on page __.
<PAGE 76>
RIGHTS TO DISTRIBUTIONS
The preferred securities represent preferred undivided
beneficial interests in the assets of the Trust, and the Trust
exists for the sole purposes of issuing the preferred securities
and common securities and investing the proceeds from their
issuance in the junior subordinated debentures and engaging in
other activities necessary, convenient or incidental thereto. A
principal difference between your rights as a holder of preferred
securities and a holder of a junior subordinated debenture is
that a holder of a junior subordinated debenture is entitled to
receive from us payments on the junior subordinated debentures
held, while you are entitled to receive distributions or other
amounts distributable with respect to the preferred securities
from the Trust (or from us under the guarantee) only if and to
the extent the Trust has funds available for the payment of such
distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the
Trust, other than any dissolution involving the distribution of
the junior subordinated debentures to you and the other holders
of the preferred securities, and after satisfaction of
liabilities to creditors of the Trust as required by applicable
law, you will be entitled to receive, out of assets held by the
Trust, the liquidation distribution in cash. See "Description of
Preferred Securities -- Liquidation Distribution Upon
Dissolution" on page __. If we are voluntarily or involuntarily
liquidated or declare bankruptcy, the Trust, as registered holder
of the junior subordinated debentures, will be our subordinated
creditor, subordinated and junior in right of payment to all our
senior indebtedness or other subordinated indebtedness as set
forth in the indenture, but entitled to receive payment in full
of all amounts payable with respect to the junior subordinated
debentures before any of our shareholders receive payments or
distributions. Since we are the guarantor under the guarantee and
have agreed under the indenture to pay for all costs, expenses
and liabilities of the Trust (other than the Trust's obligations
to you and the holders of the common securities), your position
as a holder of the preferred securities and the position of a
holder of such junior subordinated debentures relative to other
creditors and to our shareholders in the event of our liquidation
or bankruptcy are expected to be substantially the same.
<PAGE 77>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Stevens & Lee, P.C., Reading,
Pennsylvania, our counsel, the following discussion fairly
summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of the
preferred securities.
Except where we state otherwise, this summary deals
only with preferred securities held as capital assets (within the
meaning of the Internal Revenue Code of 1986, as amended (the
"Code")) by a holder who:
* is a United States Person (as defined below), and
* purchases the preferred securities upon original
issuance at their original issue price.
"United States Person" means a beneficial owner of
preferred securities that, for United States federal income tax
purposes, is:
* a citizen or resident of the United States;
* a corporation or partnership created or organized
in or under the laws of the United States or any
political subdivision thereof;
* an estate the income of which is subject to United
States federal income taxation without regard to
its source; or
* a trust that (y) is subject to the supervision of
a court within the United States and the control
of one or more United States Persons or (z) has a
valid election in effect under the applicable
United States Treasury regulations to be treated
as a United States Person.
This summary does not discuss all of the tax
consequences that may be relevant to beneficial owners who are
subject to special rules, such as:
* banks,
* thrift institutions,
* real estate investment trusts,
* regulated investment companies,
* insurance companies, <PAGE 78>
* dealers in securities or currencies,
* securities traders that elect to mark to market,
* tax-exempt organizations,
* individual retirement and certain tax-deferred
accounts,
* persons holding a preferred security as a position
in a straddle, or as part of a hedging, conversion
or other integrated investment; and
* except with respect to the discussion under the
caption "Non-United States Holders," persons who
are not United States Persons.
In addition, this summary does not address:
* the income tax consequences to stockholders in, or
partners or beneficiaries or, a holder of
preferred securities;
* the United States alternative minimum tax
consequences of purchasing, owning and disposing
of preferred securities; or
* any state, local or foreign tax consequences of
purchasing, owning and disposing of preferred
securities.
This summary is based on United States federal income
tax laws in effect as of the date of this prospectus, including
applicable regulations and administrative and judicial
interpretations. Changes to any of these laws, regulations or
interpretations after this date may affect the tax consequences
described below, possibly on a retroactive basis.
The authorities on which this summary is based are
subject to various interpretations, and the opinions of Stevens &
Lee, P.C., are not binding on the Internal Revenue Service (the
"Service"), or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from
the Service with respect to the transactions described herein.
Accordingly, we cannot assure you that the Service will not
challenge the opinions expressed herein or that a court would not
sustain such a challenge.
We advise you to consult your tax advisor regarding the
tax consequences of purchasing, owning and disposing of the
preferred securities based on your particular circumstances and
the relevant taxing jurisdictions.
<PAGE 79>
CLASSIFICATION OF THE TRUST. Stevens & Lee is of the opinion
that (1) under current law and based on the representations,
facts and assumptions set forth in this prospectus, (2) assuming
full compliance with the terms of the trust agreement, and
(3) based on certain assumptions and qualifications referred to
in the opinion, the Trust will be classified for United States
federal income tax purposes as a grantor trust and not an
association taxable as a corporation. Accordingly, for United
States federal income tax purposes, you generally will be
considered the owner of an undivided interest in the junior
subordinated debentures owned by the Trust, and you will be
required to include all income or gain recognized for United
States federal income tax purposes with respect to your share of
the junior subordinated debentures on your United States federal
income tax return.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES. We intend
to take the position that the junior subordinated debentures will
be classified for United States federal income tax purposes as
indebtedness of Main Street Bancorp, Inc. under current law and,
by acceptance of preferred securities, each holder covenants to
treat the junior subordinated debentures as indebtedness and the
preferred securities as evidence of an indirect beneficial
ownership interest in the junior subordinated debentures. No
assurance can be given, however, that the Service will not
challenge such position or, if challenged, that such a challenge
will not be successful. The remainder of this discussion assumes
that the junior subordinated debentures will be treated as
indebtedness of Main Street Bancorp, Inc. for United States
federal income tax purposes.
To the extent the junior subordinated debentures are
classified as indebtedness for United States federal income tax
purposes, a corporate holder of the preferred securities will not
be entitled to claim a dividends-received deduction for any
income recognized with respect to such securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under Treasury
Regulations, a "remote" contingency that stated interest will not
be timely paid will be ignored in determining whether a debt
instrument is issued with original issue discount ("OID"). We
believe that the likelihood of our exercising our option to defer
payments is remote, based in part on the fact that exercising
that option would prevent us from declaring dividends on our
common stock and would prevent us from making any payments with
respect to debt securities that rank equally with or junior to
the junior subordinated debentures. Based on the foregoing, we
intend to take the position that the junior subordinated
debentures will not be considered to be issued with OID at the
time of their original issuance. Accordingly, you will be taxed
on stated interest on the junior subordinated debentures when
such interest is paid or accrued in accordance with your regular
method of tax accounting.
<PAGE 80>
In the event that we exercise our option to defer the
payment of stated interest on the junior subordinated debentures,
the junior subordinated debentures would be treated, solely for
purpose of the OID rules, as being "re-issued" at such time with
OID. Under these rules, a holder of the junior subordinated
debentures or preferred securities would be required to include
OID in ordinary income, on a current basis, over the period that
the instrument is held even though there would be no actual cash
payments of interest during the extended interest payment period.
The amount of OID income includible in the taxable income of a
holder of the junior subordinated debentures or preferred
securities would be determined on the basis of a constant yield
method over the remaining term of the instrument and the actual
receipt of future payments of stated interest on the junior
subordinated debentures or preferred securities would no longer
be separately reported as taxable income. The amount of OID that
would accrue, in the aggregate, during the extended interest
payment period would be approximately equal to the amount of the
cash payment due at the end of such period. Any OID included in
income would increase the holder's adjusted tax basis in the
junior subordinated debentures or preferred securities and the
holder's actual receipt of payments would reduce such basis.
The Treasury regulations dealing with OID and the
deferral of interest have not yet been addressed in any rulings
or other interpretations by the Service. If our power or right
to exercise our option to defer payments of interest is not
treated by the Service as remote, the junior subordinated
debentures would be treated as initially issued with OID. In
such event, you would be required to include OID in your taxable
income over the term of the junior subordinated debentures on a
daily accrual basis, as described above.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON
LIQUIDATION OF THE TRUST. Under certain circumstances described
above (see "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution"), the Trust may distribute the
junior subordinated debentures to you in exchange for your
preferred securities in liquidation of the Trust. Except as
discussed below, such a distribution would not be a taxable event
for United States federal income tax purposes, and you would have
an aggregate adjusted basis in the junior subordinated debentures
you receive for United States federal income tax purposes equal
to your aggregate adjusted basis in your preferred securities.
For United States federal income tax purposes, your holding
period in the junior subordinated debentures you receive in such
a liquidation of the Trust would include the period during which
you held the preferred securities. If, however, the relevant
event is a tax event as described in "Description of Preferred
Securities -- Redemption," which results in the Trust being
treated as an association taxable as a corporation, the
distribution would likely constitute a taxable event to you for
United States federal income tax purposes.
<PAGE 81>
Under certain circumstances described herein (see
"Description of Preferred Securities"), we may redeem junior
subordinated debentures for cash and distribute the proceeds of
such redemption to you in redemption of your preferred
securities. Such a redemption would be taxable for United States
federal income tax purposes, and you would recognize gain or loss
as if you had sold the preferred securities for cash. See
"-- Sales of Preferred Securities" below.
SALES OF PREFERRED SECURITIES. If you sell or exchange your
preferred securities (including a redemption for cash), you will
recognize gain or loss equal to the difference between your
adjusted tax basis in the preferred securities and the amount
realized on the sale of such preferred securities. If you
dispose of a preferred security prior to an extended interest
payment period, any portion of the amount you receive that is
attributable to accrued interest will be treated as interest
income and will not be treated as part of the amount realized for
purposes of determining your gain or loss on the disposition of
preferred securities. Your adjusted tax basis in the preferred
securities generally will be the initial purchase price,
increased by OID previously included (or currently includible) in
your gross income to the date of disposition, and decreased by
payments received on the preferred securities (other than any
interest received with respect to the period prior to the date
that preferred securities are treated as issued with OID). Any
such gain or loss generally will be capital gain or loss, and
generally will be a long-term capital gain or loss if you have
held the preferred securities as a capital asset for more than
one year prior to the date of disposition. In the case of
individuals, trusts and estates, long-term capital gains
generally are taxed at reduced rates. Subject to certain limited
exceptions, capital losses generally cannot be applied to offset
ordinary income for United States federal income tax purposes.
NON-UNITED STATES HOLDERS
The following discussion applies to you only if you are
beneficial owner of preferred securities and are not a United
States Person as defined above. Under present United States
federal income tax law:
(a) No withholding of United States federal income tax
will be required with respect to the payment by us, the Trust or
any paying agent of principal or interest (which for purposes of
this discussion includes any OID) on the preferred securities (or
the junior subordinated debentures) provided that (i) you do not
actually or constructively own 10% or more of the total combined
voting power of all classes of our stock entitled to vote within
the meaning of Section 871(h)(3) of the Code and the regulations
thereunder, (ii) you are not a controlled foreign corporation
that is related to us through stock ownership, (iii) you are not
a bank whose receipt of interest on a junior subordinated
debenture or preferred security is described in <PAGE 82>
Section 881(c)(3)(A) of the Code and (iv) either (a) you provide
your name and address on a Form W-8 and certify, under penalties
of perjury, that you are not a United States Person, or (b) a
financial institution holding the preferred security (or the
junior subordinated debenture) on your behalf certifies, under
penalties of perjury, that it has received an IRS Form W-8 from
you and provides us with a copy.
(b) No withholding of United States federal income tax
will be required with respect to any gain realized by you upon
the sale or other disposition of the preferred securities (or the
junior subordinated debentures).
If you cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments
of interest made to you will be subject to a 30% United States
federal withholding tax unless you provide us or our paying
agent, as the case may be, with a properly executed (1) IRS Form
W-8BEN claiming an exemption from, or a reduction of, such
withholding tax under the benefit of a tax treaty or (2) IRS Form
W-8ECI stating that interest paid on the preferred securities (or
the junior subordinated debentures) is not subject to such
withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
If you are engaged in a trade or business in the United
States and interest on the preferred securities (or the junior
subordinated debentures) is effectively connected with the
conduct of such trade or business, you will be subject to United
States federal income tax on such interest on a net income basis
in the same manner as if it were a United States Person. In
addition, if you are a foreign corporation, you may be subject to
a 30% branch profits tax.
Any gain realized upon the sale or other disposition of
the preferred securities (or the junior subordinated debentures)
generally will not be subject to United States federal income tax
unless (i) such gain is effectively connected with a United
States trade or business conducted by you, (ii) in the case of a
Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable
year of such sale, exchange or retirement, and certain other
conditions are met, or (iii) in the case of any gain representing
accrued interest on the junior subordinated debentures, the
requirements described for exemption for withholding above are
not satisfied.
Your estate will not be subject to U.S. federal estate
tax on the preferred securities (or the junior subordinated
debentures) beneficially owned by you at the time of your death,
provided that (1) you do not own (within the meaning of the
Internal Revenue Code and Treasury Regulations) 10% or more of
the total combined voting power of all classes of our voting
stock, and (2) interest on the preferred securities (or junior
<PAGE 83> subordinated debentures) would not have been, if
received at the time of your death, effectively connected with
the conduct by you of a trade or business in the United States.
NON-UNITED STATES HOLDERS SHOULD CONSULT THEIR TAX ADVISORS ABOUT
THE NEW RULES CONCERNING WITHHOLDING ON NON-UNITED STATES HOLDERS
AND THE RELATED TRANSITION RULES.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid and OID accrued on the
preferred securities to United States Persons (other than
corporations and other exempt recipients) will be reported to the
IRS. It is anticipated that income on the preferred securities
will be reported to holders on Form 1099 and mailed to holders of
the preferred securities by January 31 following each calendar
year.
"Backup" withholding at a rate of 31% will apply to
payments of interest and payments of disposition (including
redemption) proceeds to you if you are a non-exempt United States
Person unless you furnish your taxpayer identification number in
the manner prescribed in applicable Treasury regulations, certify
that such number is correct, certify as to no loss of exemption
from backup withholding, and meet certain other conditions. Any
amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your United States
federal income tax liability, provided the required information
is furnished to the Service.
ERISA CONSIDERATIONS
Before authorizing an investment in the preferred
securities, fiduciaries of pension, profit sharing or other
employee benefit plans subject to the Employee Retirement Income
Security Act of 1974 or ERISA should consider, among other
matters:
- ERISA's fiduciary standards (including its prudence and
diversification requirements);
- whether such fiduciaries have authority to make such
investment in the preferred securities under the
applicable plan investment policies and governing
instruments; and
- rules under ERISA and the Internal Revenue Code that
prohibit plan fiduciaries from causing a plan to engage
in a "prohibited transaction."
Section 406 of ERISA and Section 4975 of the Internal
Revenue Code prohibit plans, as well as individual retirement
accounts and Keogh plans subject to Section 4975 of the Internal
Revenue Code, from, among other things, engaging in certain
<PAGE 84> transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons"
under the Internal Revenue Code 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 Internal Revenue Code for such persons, unless
exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of ERISA) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not
subject to the requirements of ERISA or Section 4975 of the
Internal Revenue Code.
The Department of Labor has issued a regulation, the
plan assets regulation concerning the definition of what
constitutes the assets of a plan. The plan assets regulation
provides that, as a general rule, the underlying assets and
properties of corporations, partnerships, trusts and certain
other entities in which a plan makes an "equity" investment will
be deemed, for purposes of ERISA, to be assets of the investing
plan unless certain exceptions apply.
Pursuant to an exception contained in the plan assets
regulation, the assets of the Trust would not be deemed to be
"plan assets" of investing plans if, immediately after the most
recent acquisition of any equity interest in the Trust, less than
25% of the value of each class of equity interests in the Trust
were held by plans, other employee benefit plans not subject to
ERISA or Section 4975 of the Internal Revenue Code (such as
governmental, church and foreign plans), and entities holding
assets deemed to be "plan assets," or benefit plan investors. No
assurance can be given that the value of the preferred securities
held by benefit plan investors will be less than 25% of the total
value of such preferred securities at the completion of the
offering or thereafter, and no monitoring or other measures will
be taken with respect to the satisfaction of the conditions to
this exception. We will purchase and hold all of the common
securities.
There can be no assurance that any of the exceptions
set forth in the plan assets regulation will apply to the
purchase of preferred securities offered hereby and, as a result,
an investing plan's assets could be considered to include an
undivided interest in the junior subordinated debentures held by
the Trust. In the event that assets of the Trust are considered
assets of an investing plan, the Property Trustee, we and/or
others, in providing services with respect to the junior
subordinated debentures, could be considered fiduciaries to such
plan and subject to the fiduciary responsibility provisions of
Title I of ERISA. In addition, certain transactions involving
the Trust and/or the preferred securities could be deemed to
constitute direct or indirect prohibited transactions under ERISA
and Section 4975 of the Internal Revenue Code with respect to a
<PAGE 85> plan. For example, if we are a party in interest with
respect to an investing plan, extensions of credit between us and
the 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 Internal
Revenue Code.
The Department of Labor has issued five prohibited
transaction class exemptions, or PTCEs, that may provide
exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the preferred
securities, assuming that assets of the Trust were deemed to be
plan assets of plans investing in the Trust (see above). Those
class exemptions are:
- PTCE 96-23 (for certain transactions determined by in-
house asset, managers);
- PTCE 91-38 (for certain transactions involving bank
collective investment funds);
- PTCE 95-60 (for certain transactions involving
insurance company general accounts);
- PTCE 90-1 (for certain transactions involving insurance
company pooled separate accounts); and
- PTCE 84-14 (for certain transactions determined by
independent qualified asset managers).
Because of ERISA's prohibitions and those of Section
4975, of the Internal Revenue Code, the preferred 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, or a plan asset entity, or any other person investing
plan assets of any plan, unless such purchase or holding is
covered by the exemptive relief provided by PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 or another applicable exemption. If a
purchaser or holder of the preferred 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, we and the Trust may
require a satisfactory opinion of counsel or other evidence with
respect to the availability of such exemption for such, purchase
and holding. Any purchaser or holder of the preferred securities
that is a plan or a plan asset entity or is purchasing such
securities on behalf of or with plan assets will be deemed to
have represented by its purchase and holding thereof that:
- the purchase and holding of the preferred securities is
covered by the exemptive relief provided by PTCE 96-23,
95-60, 91-38, 90-1 or 84-14 or another applicable
exemption;
<PAGE 86>
- Main Street and the administrators are not
"fiduciaries," within the meaning of Section 3(21) of
ERISA and the regulations thereunder, with respect to
such person's interest in the preferred securities or
the junior subordinated debentures; and
- in purchasing the preferred securities, such person
approves the purchase of the junior subordinated
debentures and the appointment of the Trustee.
Insurance companies considering an investment in the
preferred securities should note that the Small Business Job
Protection Act of 1996 added new Section 401(c) of ERISA relating
to the status of the assets of insurance company general accounts
under ERISA and Section 4975 of the Internal Revenue Code.
Pursuant to Section 401(c) of ERISA, the Department of Labor
issued the proposed general account regulations in December 1997
with respect to insurance policies that are supported by an
insurer's general account. The proposed general account
regulations are intended to provide guidance on which assets held
by the insurer constitute plan assets of a plan for purposes of
the fiduciary responsibility provisions of ERISA and Section 4975
of the Internal Revenue Code.
Any plans or other entities whose assets include plan
assets subject to ERISA or Section 4975 of the Internal Revenue
Code proposing to acquire preferred securities should consult
with their own counsel.
Governmental plans and certain church plans are not
subject to ERISA, and are also not subject to the prohibited
transaction provisions of Section 4975 of the Internal Revenue
Code. However, state laws or regulations governing the
investment and management of the assets of such plans may contain
fiduciary and prohibited transaction provisions similar to those
under ERISA and the Internal Revenue Code discussed above.
Accordingly, fiduciaries of governmental and church plans, in
consultation with the advisers, should consider the impact of
their respective state laws on investments in the preferred
securities and the considerations discussed above to the extent
applicable.
UNDERWRITING
Subject to the terms and conditions of an underwriting
agreement, the underwriters named below, for whom Wheat First
Securities, a division of First Union Capital Markets Corp., and
Janney Montgomery Scott LLC, are acting as representatives, have
severally agreed to purchase from us, and we have agreed to sell
to them, the respective number of preferred securities set forth
opposite each underwriter's name below:
Principal Amount of
Underwriter Preferred Securities
<PAGE 87>
Wheat First Securities $__________
Janney Montgomery Scott LLC $__________
The underwriting agreement provides that the
obligations of the several underwriters thereunder are subject to
approval of certain legal matters by their counsel and to various
conditions. The nature of the underwriters' obligation is such
that they are committed to purchase and pay for all the preferred
securities (other than those covered by the over-allotment option
discussed below) if any are purchased.
The underwriters will initially offer the preferred
securities to the public at the price stated on the cover page.
The underwriters may offer preferred securities to selected
dealers at the public offering price less a concession of up to
$_____ per preferred security. Those dealers may reallow a
discount not in excess of $_____ per preferred security to other
brokers and dealers. After the initial offering of the preferred
securities, the underwriters may change the offering price,
concession, discount and other selling terms.
In connection with the offering of the preferred
securities, the underwriters and any selling group members and
their respective affiliates may engage in transactions effected
in accordance with Rule 104 of the SEC's Regulation M that are
intended to stabilize, maintain or otherwise affect the market
price of the preferred securities. Such transactions may include
transactions in which the underwriters create a short position
for their own account by selling more preferred securities than
they are committed to purchase from the Trust. In such a case,
to cover all or part of the short position, the underwriters may
purchase preferred securities in the open market following
completion of the initial offering of preferred securities. The
underwriters also may engage in stabilizing transactions in which
it bids for, and purchases, the preferred securities at a level
above that which might otherwise prevail in the open market for
the purpose of preventing or retarding a decline in the market
price of the preferred securities. The underwriters also may
reclaim any selling concessions allowed to a dealer if the
underwriters repurchase preferred securities distributed by that
dealer. Any of the foregoing transactions may result in the
maintenance of a price for the preferred securities at a level
above that which might otherwise prevail in the open market.
Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the
preferred securities. The underwriters are not required to
engage in any of the foregoing transactions and, if commenced,
such transactions may be discontinued at any time without notice.
The underwriters agreed to purchase the preferred
securities at the price stated on the cover page of this
<PAGE 88> prospectus. Because the Trust will use the proceeds
from the sale of the preferred securities to purchase the junior
subordinated debentures from us, we have agreed to pay the
underwriters compensation in the amount of $_______ per preferred
security:
We estimate that we will spend approximately $250,000
for printing, depository and trustees' fees, legal and accounting
fees, and other expenses of the offering in addition to
underwriting compensation.
We and the Trust have agreed that, during the period
beginning from the date of the underwriting agreement and
continuing to and including the earlier of (1) the termination of
trading restrictions on the preferred securities, as communicated
to us by the underwriters, and (2) 180 days following the closing
of the offering, we will not offer, sell, contract to sell or
otherwise dispose of any additional securities of the Trust or of
ours substantially similar to the preferred securities or any
securities convertible into or exchangeable for or that represent
the right to receive any such similar securities, without the
consent of the underwriters, which consent shall not be
unreasonably withheld.
Prior to this offering, there has been no public market
for the preferred securities. An application will be made to
have the preferred securities approved for listing on the
Amercian Stock Exchange under the symbol "_____," subject to
notice of issuance. Trading of the preferred securities on the
Amercian Stock Exchange is expected to commence at the time of
the initial delivery of the preferred securities. No assurance
can be given as to the liquidity of or the existence of the
trading market for the preferred securities.
We and the Trust have agreed to indemnify the
underwriters against liabilities arising from the offering of the
preferred securities, including civil liabilities under the
Securities Act of 1933, or to contribute to payments that the
underwriters may be required to make in connection with those
liabilities.
The underwriters and their affiliates may provide
investment banking services for us or our affiliates in the
future for which they would expect to receive customary fees and
commissions.
VALIDITY OF SECURITIES
The validity of the guarantee and the junior
subordinated debentures and certain tax matters will be passed
upon for us by Stevens & Lee, P.C., our counsel, and certain
legal matters will be passed upon for the underwriters by
Alston & Bird. Certain matters of Delaware law relating to the
validity of the preferred securities, the enforceability of the
<PAGE 89> trust agreement and the creation of the Trust will be
passed upon by Richards, Layton & Finger, P.A. as special
Delaware counsel to us and the Trust. Stevens & Lee will rely as
to certain matters of Delaware law on the opinion of Richards,
Layton & Finger, P.A.
EXPERTS
Beard & Company, Inc., independent auditors, have
audited our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 1998
as set forth in their report, which is included and incorporated
by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are included and incorporated
by reference in reliance on Beard & Company, Inc.'s report, given
on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934. Accordingly, we file annual,
quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may
read and copy any document we file with the Securities and
Exchange Commission at the public reference facilities maintained
by the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Our filings with the Securities and
Exchange Commission also are available to the public from the
Securities and Exchange Commission's website at
http://www.sec.gov. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information. Our common
stock is listed on the Nasdaq National Market under the symbol
"MBNK".
This prospectus is part of a registration statement we
filed with the Securities and Exchange Commission and does not
contain all of the information set forth in the registration
statement. You should consult the registration statement for
further information with respect to our company and these
securities.
The Securities and Exchange Commission allows us to
"incorporate by reference" the information we file with them,
which means that we can disclose important information to you by
referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later
information that we file with the Securities and Exchange
Commission will automatically update and supersede this
information and information in this prospectus. We incorporate by
reference the documents listed below and any future filings made
with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the securities are sold.
<PAGE 90>
* Annual Report on Form 10-K for the year ended
December 31, 1998;
* Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999; and
* Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999.
You may request a copy of these filings, at no cost, by
writing or calling us at the following address: Secretary, Main
Street Bancorp, Inc., 601 Penn Street, Box 1097, Reading,
Pennsylvania 19603, telephone (610) 685-1400.
No separate financial statements of the Trust have been
included or incorporated by reference in this document. We do
not, nor does the Trust, consider that such financial statements
would be material to holders of the preferred securities because
the Trust is a newly formed special purpose entity, has no
operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding
as trust assets the junior subordinated debentures and issuing
the preferred securities and common securities. See "MBNK Capital
Trust I" on page __, "Description of Preferred Securities" on
page __, "Description of Junior Subordinated Debentures" on
page __, and "Description of Guarantee" on page __. In addition,
we do not expect that the Trust will be filing reports under the
Securities Exchange Act of 1934 with the SEC.
<PAGE 91>
TABLE OF CONTENTS
Page
Cautionary Statement Regarding Forward-
Looking Statements.......................
Prospectus Summary.........................
Selected Consolidated Financial Data.......
Risk Factors...............................
Use of Proceeds............................
Consolidated Ratios of Earnings to Fixed
Charges
Capitalization.............................
Accounting Treatment.......................
MBNK Capital Trust I.......................
Description of Trust Preferred
Securities...............................
Description of Junior Subordinated
Debentures...............................
Description of Guarantee...................
Relationship Among the Trust Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee.............
Certain United States Federal Income Tax
Consequences.............................
Certain ERISA Considerations...............
Underwriting...............................
Validity of Securities.....................
Experts....................................
Where You Can Find Additional Information..
PROSPECTUS
__________, 1999
__________ PREFERRED SECURITIES
MBNK CAPITAL
TRUST I
_________% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10.00 PER TRUST
PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED AS DESCRIBED HEREIN BY
MAIN STREET BANCORP, INC.
[Main Street Bancorp Logo]
WHEAT FIRST SECURITIES
<PAGE 92>
JANNEY MONTGOMERY SCOTT LLC <PAGE 93>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following expenses, other than the SEC registration fee,
are estimated. All expenses of this offering will be paid by the
Company.
SEC registration fee ................................. $ 11,120
Trustee's fees ....................................... $ 6,000
Blue Sky fees and expenses ........................... 5,000
Transfer agent's and registrar's fees and expenses.... 0
Printing and engraving expenses ...................... 20,000
Accounting fees and expenses.......................... 50,000
Legal fees and expenses (other than Blue Sky fees
and expenses)....................................... 150,000
Miscellaneous......................................... 19,000
Total............................................... $261,120
Item 15. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation
may indemnify directors, officers, employees, and agents of the
corporation against liabilities they may incur in such capacities
for any action taken or any failure to act, whether or not the
corporation would have the power to indemnify the person under
any provision of law, unless such action or failure to act is
determined by a court to have constituted recklessness or willful
misconduct. Pennsylvania law also permits the adoption of a
bylaw amendment, approved by shareholders, providing for the
elimination of a director's liability for monetary damages for
any action taken or any failure to take action unless (1) the
director has breached or failed to perform the duties of his
office and (2) the breach or failure to perform constitutes self-
dealing, willful misconduct or recklessness.
The Bylaws of the Corporation provide for (1)
indemnification of directors, officers, employees, and agents of
the Corporation and its subsidiaries and (2) the elimination of a
director's liability for monetary damages to the fullest extent
permitted by Pennsylvania law.
Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by the Corporation.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
No.
<PAGE 94>
1. Underwriting Agreement*
4.1 Indenture of Main Street Bancorp, Inc. relating to the
Junior Subordinated Debentures*
4.2 Form of Certificate of Junior Subordinated Debentures*
4.3 Certificate of Trust of MBNK Capital Trust I*
4.4 Declaration of Trust of MBNK Capital Trust I*
4.5 Amended and Restated Trust Agreement for MBNK Capital
Trust I*
4.6 Form of Preferred Security Certificate for MBNK Capital
Trust I*
4.7 Form of Guarantee Agreement of Main Street Bancorp,
Inc. relating to the Trust Securities*
5.1 Opinion and consent of Stevens & Lee, P.C. to Main
Street Bancorp, Inc. as to legality of the Junior
Subordinated Debentures and the Guarantee to be issued
by Main Street Bancorp, Inc.*
5.2 Opinion of Richards, Layton & Finger, special Delaware
counsel, as to legality of the Preferred Securities to
be issued by MBNK Capital Trust I*
8 Opinion of Stevens & Lee, P.C., special tax counsel, as
to certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges
(excluding interest on deposits)*
12.2 Computation of ratio of earnings to fixed charges
(including interest on deposits)*
23.1 Consent of Beard & Company, Inc.
23.2 Consent of Stevens & Lee, P.C. (included in Exhibit
5.1)*
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.2)*
24 Power of Attorney of certain officers and directors of
Main Street Bancorp, Inc. (included in signature page
hereto)
25.1 Form T-1 Statement of Eligibility of Bank of New York
to act as trustee under the Amended and Restated
Declaration of Trust of MBNK Capital Trust I*
<PAGE 95>
25.2 Form T-1 Statement of Eligibility of Bank of New York
to act as trustee under the Indenture*
25.3 Form T-1 Statement of Eligibility of Bank of New York
to act as trustee under the Guarantee for the benefit
of the holders of Preferred Securities of MBNK Capital
Trust I*
27.1 Financial Data Schedule
________
*To be filed by amendment.
Item 17. Undertakings.
Each of the undersigned registrants hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of a registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of each undersigned registrant
pursuant to the foregoing provisions, or otherwise, each
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by each undersigned
registrant of expenses incurred or paid by a director, officer of
controlling person of each registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, each registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Each of the undersigned registrants hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
<PAGE 96> filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
<PAGE 97>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, Main Street Bancorp, Inc. certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Reading, in the
Commonwealth of Pennsylvania, on the day of September 10, 1999.
MAIN STREET BANCORP, INC.
By:/s/Nelson R. Oswald
Nelson R. Oswald
Chairman, President and Chief
Executive Officer
MBNK CAPITAL TRUST I
By:/s/Donna L. Rickert
Donna L. Rickert
as Administrator
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated on September 10,
1999.
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Nelson R.
Oswald, Robert D. McHugh, Jr., Donna L. Rickert and Jeffrey P.
Waldron, and each of them, his true and lawful attorney-in-fact,
as agent with full power of substitution and resubstitution for
him and in his name, place and stead, in any and all capacity, to
sign any or all amendments to this Registration Statement and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto such attorney-in-fact and agent full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as they might
or could to in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
SIGNATURE TITLE DATE
/s/Nelson R. Oswald Chairman, September 10, 1999
Nelson R. Oswald President and
Chief Executive
Officer
<PAGE 98>
/s/Robert D. McHugh, Jr Executive Vice September 10, 1999
Robert D. McHugh, Jr. President and
Treasurer (Chief
Financial Officer)
/s/Donna L. Rickert Senior Vice September 10, 1999
Donna L. Rickert President and
Controller
(Principal
Accounting
Officer)
/s/Richard D. Biever Director September 10, 1999
Richard D. Biever
/s/Edward J. Edwards Director September 10, 1999
Edward J. Edwards
/s/Albert L. Evans Director September 10, 1999
Albert L. Evans
/s/Richard T. Fenstermacher Director September 10, 1999
Richard T. Fenstermacher
/s/Ivan H. Gordon Director September 10, 1999
Ivan H. Gordon
/s/Frederick A. Gosch Director September 10, 1999
Frederick A. Gosch
/s/Jeffrey W. Hayes Director September 10, 1999
Jeffrey W. Hayes
/s/Allen E. Kiefer Director September 10, 1999
Allen E. Kiefer
/s/Alfred B. Mast Director September 10, 1999
Alfred B. Mast
/s/Wesley R. Pace Director September 10, 1999
Wesley R. Pace
/s/Joseph P. Schlitzer Director September 10, 1999
Joseph P. Schlitzer
/s/Floyd S. Weber Director September 10, 1999
Floyd S. Weber
<PAGE 99>
Until _____________, 1999, all dealers effecting
transactions in the preferred securities, whether or not
participating in this distribution, may be required to deliver a
prospectus. This delivery requirement is in addition to the
obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE 100>
EXHIBIT 23.1
CONSENT OF BEARD & COMPANY, INC.
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and related
prospectus of Main street Capital Trust I and to the
incorporation by reference therein of our report dated
January 29, 1999, with respect to the consolidated financial
statements of Main Street Bancorp, Inc. included in its annual
Report (Form 10-K) for the year ended December 31, 1998 filed
with the Securities and Exchange Commission.
/s/ BEARD & COMPANY, INC.
Reading, Pennsylvania
September 8, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 33,475
<INT-BEARING-DEPOSITS> 3,437
<FED-FUNDS-SOLD> 470
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 394,551
<INVESTMENTS-CARRYING> 222,364
<INVESTMENTS-MARKET> 210,364
<LOANS> 586,832
<ALLOWANCE> 6,950
<TOTAL-ASSETS> 1,306,896
<DEPOSITS> 905,909
<SHORT-TERM> 218,712
<LIABILITIES-OTHER> 9,739
<LONG-TERM> 85,000
0
0
<COMMON> 10,408
<OTHER-SE> 77,128
<TOTAL-LIABILITIES-AND-EQUITY> 1,306,896
<INTEREST-LOAN> 11,930
<INTEREST-INVEST> 9,192
<INTEREST-OTHER> 9
<INTEREST-TOTAL> 21,131
<INTEREST-DEPOSIT> 8,109
<INTEREST-EXPENSE> 3,739
<INTEREST-INCOME-NET> 9,283
<LOAN-LOSSES> 300
<SECURITIES-GAINS> (76)
<EXPENSE-OTHER> 9,322
<INCOME-PRETAX> 964
<INCOME-PRE-EXTRAORDINARY> 1,652
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,652
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.16
<YIELD-ACTUAL> 3.05
<LOANS-NON> 5,022
<LOANS-PAST> 524
<LOANS-TROUBLED> 105
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 7,252
<CHARGE-OFFS> 773
<RECOVERIES> 171
<ALLOWANCE-CLOSE> 6,950
<ALLOWANCE-DOMESTIC> 6,950
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,273
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