<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1997
REGISTRATION NOS. 333-28917 AND 333-28917-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CENTRAL FIDELITY BANKS, INC. CENTRAL FIDELITY CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
VIRGINIA DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION) INCORPORATION)
6712 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
54-1091649 54-1848917
(I.R.S. EMPLOYER IDENTIFICATION (I.R.S. EMPLOYER IDENTIFICATION
NUMBER) NUMBER)
1021 EAST CARY STREET C/O CENTRAL FIDELITY BANKS, INC.
P.O. BOX 27602 1021 EAST CARY STREET
RICHMOND, VIRGINIA 23261-7602 P.O. BOX 27602
(804) 782-4000 RICHMOND, VIRGINIA 23261-7602
(804) 782-4000
(ADDRESS, INCLUDING ZIP CODE, AND (ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES) EXECUTIVE OFFICES)
---------------
WILLIAM N. STOYKO, ESQ.
CORPORATE EXECUTIVE VICE PRESIDENT
CENTRAL FIDELITY BANKS, INC.
1021 EAST CARY STREET
P.O. BOX 27602
RICHMOND, VIRGINIA 23261-7602
(804) 697-7145
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
ROBERT H. CRAFT, JR., ESQ. WILLIAM H. SCHWARZSCHILD, III, ESQ.
SULLIVAN & CROMWELL WILLIAMS, MULLEN, CHRISTIAN & DOBBINS
1701 PENNSYLVANIA AVE., N.W. 1021 EAST CARY STREET, 16TH FLOOR
WASHINGTON, D.C. 20006 RICHMOND, VIRGINIA 23219
(202) 956-7500 (804) 783-6489
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN THE
PROSPECTUS OF THE RESPONSES TO THE ITEMS OF PART I OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
------------- ----------------------
<C> <S> <C>
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus...... Outside Front Cover Page; Facing Page
2. Inside Front and Outside Back
Cover Pages of Prospectus..... Available Information; Outside Back
Cover Page
3. Risk Factors, Ratio of Earnings
to Fixed Charges, and Other
Information................... Risk Factors; Central Fidelity
4. Terms of the Transaction....... Outside Front Cover Page; Summary;
Central Fidelity; Central Fidelity
Capital Trust I; Use of Proceeds from
Sale of Old Capital Securities;
Capitalization; Accounting Treatment;
The Exchange Offer; Description of New
Capital Securities; Relationship Among
the Capital Securities, the Junior
Subordinated Debt Securities and the
Guarantee; Description of Old
Securities; Certain Federal Income Tax
Consequences; Certain ERISA
Considerations; Plan of Distribution
5. Pro Forma Financial
Information................... Incorporation of Certain Documents by
Reference; Capitalization
6. Material Contracts With the
Company Being Acquired........ *
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters.................. *
8. Interests of Named Experts and
Counsel....................... Validity of New Securities; Experts
9. Disclosure of Commission
Position on Indemnification
For Securities Act
Liabilities................... *
10. Information With Respect to S-3
Registrants................... Available Information; Incorporation of
Certain Documents by Reference; Summary;
Central Fidelity
11. Incorporation of Certain
Information by Reference...... Incorporation of Certain Documents by
Reference
12. Information With Respect to S-2
or S-3 Registrants............ *
13. Incorporation of Certain
Information by Reference...... *
14. Information With Respect to
Registrants Other Than S-3 or
S-2 Registrants............... Available Information; Central Fidelity
Capital Trust I
15. Information With Respect to S-3
Companies..................... *
16. Information With Respect to S-2
or S-3 Companies.............. *
17. Information With Respect to
Companies Other Than S-2 or S-
3 Companies................... *
18. Information if Proxies,
Consents or Authorizations Are
to be Solicited............... *
19. Information if Proxies,
Consents or Authorizations Are
Not to be Solicited, or in an
Exchange Offer................ Incorporation of Certain Documents by
</TABLE> Reference
- --------
* Not Applicable.
<PAGE>
PROSPECTUS
$100,000,000
CENTRAL FIDELITY CAPITAL TRUST I
OFFER TO EXCHANGE ITS FLOATING RATE CAPITAL TRUST PASS-THROUGH SECURITIES,
SERIES A, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR ANY
AND ALL OF THE OUTSTANDING FLOATING RATE CAPITAL TRUST PASS-THROUGH SECURITIES
OF CENTRAL FIDELITY CAPITAL TRUST I (LIQUIDATION AMOUNT $1,000 PER CAPITAL
SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
CENTRAL FIDELITY BANKS, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 2, 1997, UNLESS EXTENDED.
Central Fidelity Banks, Inc., a Virginia corporation ("Central Fidelity" or
the "Corporation"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange up to $100,000,000 aggregate Liquidation Amount (as defined herein)
of the Floating Rate Capital Trust Pass- through Securities, Series A
(Liquidation Amount $1,000 per Capital Trust Pass-through Security) (the "New
Capital Securities") of Central Fidelity Capital Trust I, a statutory business
trust created under the laws of the State of Delaware (the "Trust"), which
have been registered under the Securities Act of 1933 (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of the
outstanding Floating Rate Capital Trust Pass-through Securities (Liquidation
Amount $1,000 per Capital Security) (the "Old Capital Securities") of the
Trust, of which $100,000,000 aggregate Liquidation Amount is outstanding. The
New Capital Securities will have the benefit of the New Guarantee (as defined
herein) of the Corporation, which will be identical in all material respects
(except as described herein) to the Old Guarantee (as defined herein) relating
to the Old Capital Securities (the "Old Guarantee"). The Trust will hold
Floating Rate Junior Subordinated Debt Securities, Series A, of the
Corporation (the "New Junior Subordinated Debt Securities") in an aggregate
principal amount equal to the aggregate Liquidation Amount of the New Capital
Securities issued pursuant to the Exchange Offer and the Common Securities
currently outstanding, which will be identical in all material respects
(except as described herein) to the Corporation's outstanding Floating Rate
Junior Subordinated Debt Securities (the "Old Junior Subordinated Debt
Securities"), of which $103,093,000 aggregate principal amount is outstanding.
The New Guarantee relating to the New Capital Securities and $100,000,000
aggregate principal amount of the New Junior Subordinated Debt Securities also
have been registered under the Securities Act. The Old Capital Securities, the
Old Guarantee and the Old Junior Subordinated Debt Securities are collectively
referred to herein as the "Old Securities" and the New Capital Securities, the
New Guarantee and the New Junior Subordinated Debt Securities are collectively
referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and therefore will not be
subject to certain of the restrictions on transfer applicable to the Old
Securities, (ii) the New Capital Securities will not provide for any increase
in the rate at which Distributions (as defined herein) accumulate thereon and
(iii) the New Junior Subordinated Debt Securities will not provide for any
increase in the interest rate thereon. See "Description of New Capital
Securities," "Description of New Junior Subordinated Debt Securities,"
"Description of New Guarantee" and "Description of Old Securities." The New
Capital Securities are being offered for exchange in order to satisfy certain
obligations of the Corporation and the Trust under the Registration Agreement,
dated as of April 23, 1997 (the "Registration Agreement"), by and among the
Corporation, the Trust and Salomon Brothers Inc and Keefe, Bruyette & Woods,
Inc. (collectively, the "Initial Purchasers").
(continued on next page)
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is July 28, 1997.
<PAGE>
(cover page continued)
The New Capital Securities offered hereby represent beneficial ownership
interests in the Trust. Central Fidelity is the owner of all of the beneficial
ownership interests represented by common securities of the Trust (the "Common
Securities" and, collectively with the Capital Securities, the "Trust
Securities"). The Bank of New York is the Property Trustee of the Trust. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debt Securities issued by the Corporation and
(iii) engaging in only those other activities necessary, advisable or
incidental thereto, which includes engaging in this Exchange Offer. The Junior
Subordinated Debt Securities will mature on April 15, 2027 (the "Stated
Maturity"). The Capital Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of New Capital Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between the Corporation and The
Bank of New York, as trustee (the "Debenture Trustee"), (ii) the "Declaration"
means the Amended and Restated Declaration of Trust, dated as of April 23,
1997, among the Corporation, as Depositor (the "Depositor"), The Bank of New
York, as Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware Trustee (the "Delaware Trustee"), and the individuals
named as Administrative Trustees therein (the "Administrative Trustees," and
collectively with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees"), (iii) the "Old Guarantee Agreement" means the Guarantee Agreement,
dated as of April 23, 1997, between the Corporation and The Bank of New York,
as Trustee (the "Guarantee Trustee"), providing a guarantee, on the terms and
conditions described herein, for the benefit of holders of Old Capital
Securities and the Common Securities (the "Old Guarantee") and (iv) the "New
Guarantee Agreement" means the New Guarantee Agreement between the Corporation
and the Guarantee Trustee, providing a guarantee, on the terms and conditions
described herein, for the benefit of holder of the Capital Securities and the
Common Securities (the "New Guarantee"). In addition, as the context may
require, unless expressly stated otherwise, (i) "Capital Securities" includes
the Old Capital Securities and the New Capital Securities, (ii) "Junior
Subordinated Debt Securities" includes the Old Junior Subordinated Debt
Securities and the New Junior Subordinated Debt Securities and (iii)
"Guarantee" includes the Old Guarantee and the New Guarantee. All share and
per share data have been adjusted to reflect the 3-for-2 stock split in the
form of a dividend paid on June 14, 1996.
Holders of the Trust Securities are entitled to receive cumulative cash
distributions, in each case arising from the payment of interest on the Junior
Subordinated Debt Securities accruing from the date of original issuance of
the Old Capital Securities and payable quarterly in arrears on the 15th day of
January, April, July and October of each year, commencing July 15, 1997 at a
variable annual rate equal to LIBOR (as defined herein) plus 1.00% of the
Liquidation Amount of $1,000 per Trust Security ("Distributions"). Subject to
certain exceptions, the Corporation has the right to defer payments of
interest on the Junior Subordinated Debt Securities at any time or from time
to time for a period not exceeding 20 consecutive quarterly periods with
respect to each deferral period (each, an "Extension Period"); provided,
however, that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debt Securities. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon accumulated at a variable annual rate equal to LIBOR plus
1.00%, compounded quarterly, to the extent permitted by applicable law), the
Corporation may elect to begin a new Extension Period, subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debt Securities are so deferred, during any Extension Period, Distributions on
the Trust Securities will also be deferred and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to, or make purchases of, the
Corporation's capital stock (which includes common and preferred stock) or to
make any payment with respect to debt securities of the Corporation that rank
pari passu in all respects with or junior to the Junior Subordinated Debt
Securities. During an Extension Period, interest on the Junior Subordinated
Debt Securities will continue to accrue (and the amount of Distributions to
which holders of the Capital Securities are entitled will accumulate) at a
variable annual rate equal to LIBOR plus 1.00% per annum, compounded
quarterly, and holders of Capital
ii
<PAGE>
Securities will be required to accrue interest income for United States
Federal income tax purposes. See "Description of New Junior Subordinated Debt
Securities--Option to Extend Interest Payment Date" and "Certain United States
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
Taken together, the Corporation's obligations under the Guarantee, the
Declaration, the Junior Subordinated Debt Securities and the Indenture,
including the Corporation's obligation to pay the costs, expenses and
liabilities of the Trust (other than the Trust's obligations to holders of the
Trust Securities under such Trust Securities), provide, in the aggregate, a
full irrevocable and unconditional guarantee, as described herein, of all of
the payments of Distributions and other amounts due on the Capital Securities.
See "Relationship Among the Capital Securities, the Junior Subordinated Debt
Securities and the Guarantee--Full and Unconditional Guarantee." The
Corporation has agreed to guarantee the payment of Distributions and payments
on liquidation or redemption of the Trust Securities, but only in each case to
the extent of funds held by the Trust, as described herein. See "Description
of New Guarantee." If the Corporation does not make interest payments on the
Junior Subordinated Debt Securities held by the Trust, the Trust will have
insufficient funds to pay Distributions on the Capital Securities. The
Guarantee does not cover the payment of Distributions when the Trust does not
have sufficient funds to pay such Distributions. In such event, a holder of
Capital Securities may institute a legal proceeding directly against the
Corporation for enforcement of payment to such holder of the principal of or
interest on Junior Subordinated Debt Securities having a principal amount
equal to the aggregate Liquidation Amount of the Capital Securities held by
such holder (a "Direct Action"). See "Description of New Junior Subordinated
Debt Securities--Enforcement of Certain Rights by Holders of Capital
Securities." The obligations of the Corporation under the Guarantee and the
Junior Subordinated Debt Securities are subordinate and junior in right of
payment to all Senior Debt (as defined in "Description of New Junior
Subordinated Debt Securities--Subordination") of the Corporation. In addition,
because the Corporation is a holding company, the Junior Subordinated Debt
Securities and the Guarantee are effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, including deposits. See
"Risk Factors--Ranking of Obligations Under the Guarantee and the Junior
Subordinated Debt Securities" and "--Status of the Corporation as a Bank
Holding Company."
The Junior Subordinated Debt Securities are redeemable by the Corporation at
par, plus accrued and unpaid interest to the date of redemption, in whole or
in part, at any time and from time to time, on or after April 15, 2007. In
addition, in certain circumstances described herein, upon the occurrence and
continuation of a Tax Event or a Capital Treatment Event (each as defined
herein), the Junior Subordinated Debt Securities also are redeemable by the
Corporation at any time, within 90 days following the occurrence of such Tax
Event or Capital Treatment Event, as the case may be, in whole but not in
part, at par, plus accrued and unpaid interest thereon to the date of the
redemption. Any redemption prior to maturity is subject to the Corporation
having received prior approval from the Board of Governors of the Federal
Reserve System (the "Federal Reserve"), if then required under applicable
capital guidelines or policies of the Federal Reserve. Upon repayment in full
at maturity or the redemption in whole or in part of the Junior Subordinated
Debt Securities (other than following the distribution of the Junior
Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or payment shall concurrently be applied to
redeem on a pro rata basis Trust Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Junior Subordinated Debt
Securities so redeemed or matured at a redemption price equal to $1,000 per
Trust Security, plus accrued and unpaid Distributions on such Trust Securities
to the date fixed for redemption (the "Redemption Price"). See "Description of
New Capital Securities--Mandatory Redemption." The Capital Securities will be
redeemed upon maturity of the Junior Subordinated Debt Securities, whereupon
the Trust will be dissolved. See "Description of New Junior Subordinated Debt
Securities."
The Corporation, as the holder of the outstanding Common Securities, has the
right at any time (including, without limitation, upon the occurrence of a Tax
Event or a Capital Treatment Event (as defined herein)) to terminate the Trust
and cause a Like Amount (as defined herein) of the Junior Subordinated Debt
Securities to be distributed to the holders of the Trust Securities upon
liquidation of the Trust, subject to prior approval of the Federal Reserve to
do so if then required under applicable capital guidelines or policies of the
Federal Reserve. In the event of such termination of the Trust, after
satisfaction of liabilities to creditors of the Trust as required
iii
<PAGE>
by applicable law, the holders of the Capital Securities generally will be
entitled to receive a Liquidation Amount of $1,000 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of a Like Amount of Junior Subordinated Debt
Securities in certain circumstances. See "Description of New Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debt Securities."
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity
in such interests will therefore settle in immediately available funds. The
Capital Securities will be issued, and may be transferred, only in a block
having a Liquidation Amount of $100,000 (100 Capital Securities) and integral
multiples of $1,000 in excess thereof.
The Corporation and the Trust are making the Exchange Offer of the New
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the
"Commission") as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Corporation nor the Trust
has sought its own interpretive letter, and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Corporation and the Trust believe that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Corporation or the Trust within the
meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends
to participate in the Exchange Offer for the purpose of distributing New
Capital Securities, or any broker-dealer who purchased Old Capital Securities
from the Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (i) will not
be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be entitled to tender such Old Capital
Securities in the Exchange Offer and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of such Old Capital Securities unless such sale or
other transfer is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Old Capital Securities for New Capital
Securities (such broker-dealer referred to herein as a "Participating Broker-
Dealer"), then such Participating Broker-Dealer must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales
of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
In addition, the Corporation and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer,
to
iv
<PAGE>
furnish to the Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) on behalf of whom such holder holds the Capital Securities to
be exchanged in the Exchange Offer. Each Participating Broker-Dealer must
acknowledge that it acquired the Old Capital Securities for its own account as
the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities.
See "Plan of Distribution." The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the Division
of Corporation Finance of the Commission in the interpretive letters referred
to above, the Corporation and the Trust believe that Participating Broker-
Dealers may fulfill their prospectus delivery requirements with respect to the
New Capital Securities received upon exchange of such Old Capital Securities
(other than Old Capital Securities which represent an unsold allotment from
the original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for
an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such New Capital Securities.
Accordingly, this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Agreement, the Corporation
and the Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
on the close of business on the first anniversary following the Expiration
Date (as defined herein) or, if earlier, when all such New Capital Securities
have been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." Any person, including any Participating Broker-Dealer, who is
an Affiliate may not rely on such interpretive letters and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer--Resales of
New Capital Securities."
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal or delivery of an Agent's Message (as defined
herein) that, upon receipt of notice from the Corporation or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any
material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in the light of the circumstances under which they were
made, not misleading, or of the occurrence of certain other events specified
in the Registration Agreement, such Participating Broker-Dealer will suspend
the sale of New Capital Securities pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to such Participating Broker-Dealer, or the
Corporation or the Trust has given notice that the sale of the New Capital
Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
established market. The Initial Purchasers informed the Corporation and the
Trust in connection with the offering of the Old Capital Securities that they
each intended to make a market in the Old Capital Securities and, if issued,
the New Capital Securities. However, the Initial Purchasers are not obligated
to do so, and any such market making may be discontinued at any time without
notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Capital Securities.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will
be subject to the same limitations applicable thereto under the Declaration
(except for those rights which terminate upon consummation of the Exchange
Offer). Following
v
<PAGE>
consummation of the Exchange Offer, the holders of Old Capital Securities will
continue to be subject to all of the existing restrictions upon transfer
thereof and neither the Corporation nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital
Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on September 2, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Corporation and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Corporation or the Trust and to the
terms and provisions of the Registration Agreement. Holders may tender their
Old Capital Securities in whole or in part in a Liquidation Amount of not less
than $100,000 (100 Old Capital Securities) and any integral multiple of $1,000
Liquidation Amount (1 Old Capital Security) in excess thereof. The Corporation
has agreed to pay all expenses of the Exchange Offer, except as otherwise
specified herein. See "The Exchange Offer--Fees and Expenses." Each New
Capital Security will pay cumulative Distributions from the most recent
Distribution Date (as defined herein) on the Old Capital Securities
surrendered in exchange for such New Capital Securities or, if no
Distributions have been paid on such Old Capital Securities, from April 23,
1997. Holders of the Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last Distribution Date
with respect to such Old Capital Securities prior to the original issue date
of the New Capital Securities or, if no such Distributions have been paid,
will not receive any accumulated Distributions on such Old Capital Securities,
and will be deemed to have waived the right to receive any Distributions on
such Old Capital Securities accumulated from and after such Distribution Date
or, if no such Distributions have been paid or duly provided for, from and
after April 23, 1997. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Capital Securities
as of July 21, 1997.
Neither the Corporation nor the Trust will receive any proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds From
Sale of Old Capital Securities" and "Plan of Distribution."
----------------
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
SUSAN LAWRENCE MISTR, PUBLIC RELATIONS MANAGER, CENTRAL FIDELITY BANKS, INC.,
1021 EAST CARY STREET, P.O. BOX 27602, RICHMOND, VIRGINIA 23261-7602,
TELEPHONE NUMBER (804) 697-7261. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST 26, 1997.
----------------
THE JUNIOR SUBORDINATED DEBT SECURITIES ARE DIRECT AND UNSECURED OBLIGATIONS
OF THE CORPORATION, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY
vi
<PAGE>
THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER INSURER OR
GOVERNMENTAL AGENCY. THE JUNIOR SUBORDINATED DEBT SECURITIES ARE SUBORDINATE
TO THE CLAIMS OF DEPOSITORS AND GENERAL CREDITORS OF THE CORPORATION.
----------------
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"), NO ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING
"PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY
INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH
RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET
ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN
ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR
HOLDING.
----------------
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF $100,000 AND INTEGRAL MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY TRANSFER, SALE OR OTHER DISPOSITION OF NEW
CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN
$100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY
SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH NEW CAPITAL
SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS ON SUCH NEW CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH NEW CAPITAL SECURITIES.
vii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 1
Incorporation of Certain Documents by Reference.......................... 2
Summary.................................................................. 3
Risk Factors............................................................. 11
Use of Proceeds from Sale of Old Capital Securities...................... 17
Central Fidelity Capital Trust I......................................... 17
Central Fidelity......................................................... 18
Recent Developments...................................................... 20
Ratio of Earnings to Fixed Charges for the Corporation................... 21
Selected Historical Financial Information................................ 22
Capitalization........................................................... 23
Accounting Treatment..................................................... 24
Regulatory Treatment..................................................... 24
The Exchange Offer....................................................... 24
Description of New Capital Securities.................................... 34
Description of New Junior Subordinated Debt Securities................... 47
Description of New Guarantee............................................. 56
Description of Old Securities............................................ 58
Relationship Among the Capital Securities, the Junior Subordinated Debt
Securities and the Guarantee............................................ 59
Certain United States Federal Income Tax Consequences.................... 60
Certain ERISA Considerations............................................. 64
Plan of Distribution..................................................... 65
Validity of New Securities............................................... 66
Accountants.............................................................. 66
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE HEREBY EXCEPT AS CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, NO SUCH INFORMATION OR
REPRESENTATIONS SHOULD BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION, THE TRUST OR ANY OF THEIR RESPECTIVE AGENTS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH HEREIN OR IN THE AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE CAPITAL SECURITIES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can also be obtained at prescribed rates by writing to the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed electronically
by means of the Commission's home page on the Internet (http://www.sec.gov.).
The Corporation and the Trust have filed with the Commission a Registration
Statement on Form S-4 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby,
1
<PAGE>
reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as
an exhibit to the Registration Statement.
No separate financial statements of the Trust have been included herein. The
Corporation and the Trust do not consider that such financial statements would
be material to holders of the Capital Securities because the Trust is a newly
formed special purpose entity, has no operating history or independent
operations and exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debt Securities issued by the
Corporation and (iii) engaging in only those other activities necessary,
advisable or incidental thereto, which includes engaging in this Exchange
Offer. See "Central Fidelity Capital Trust I," "Description of New Capital
Securities," "Description of New Junior Subordinated Debt Securities,"
"Description of New Guarantee" and "Description of Old Securities." In
addition, the Corporation does not expect that the Trust will file reports
under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
pursuant to Section 13(a) or Section 15(d) of the Exchange Act are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. The Corporation's Current Report on Form 8-K dated as of March 6,
1997.
4. The Corporation's Current Report on Form 8-K dated as of April 23,
1997.
5. The Corporation's Current Report on Form 8-K dated as of June 23,
1997.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part
of this Prospectus from the date of filing of such document. Any statement
contained herein or, in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein do not purport to be
complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document. The
Corporation will provide without charge to any person to whom this Prospectus
is delivered, on the written or oral request of such person, a copy of any or
all of the foregoing documents incorporated by reference herein (other than
exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to:
Central Fidelity Banks, Inc.
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 23261-7602
Telephone: (804) 697-7261
Susan Lawrence Mistr
Public Relations Manager
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the documents
incorporated by reference in this Prospectus.
CENTRAL FIDELITY CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant to
(i) the Declaration and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on April 2, 1997. The Trust's business and affairs
are conducted by the Issuer Trustees: The Bank of New York, as Property
Trustee, The Bank of New York (Delaware), as Delaware Trustee, and three
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debt Securities
issued by the Corporation and (iii) engaging in only those other activities
necessary, advisable or incidental thereto, which includes engaging in this
Exchange Offer. The Junior Subordinated Debt Securities will be the sole assets
of the Trust, and payments under the Junior Subordinated Debt Securities will
be the sole revenues of the Trust. All of the Common Securities are owned by
the Corporation. The Trust's executive offices are located at 1021 East Cary
Street, Richmond, Virginia 23219. Its mailing address is c/o Central Fidelity
Banks, Inc., Post Office Box 27602, Richmond, Virginia 23261-7602, and its
telephone number is (804) 782-4000.
CENTRAL FIDELITY BANKS, INC.
Central Fidelity, the third largest banking company headquartered in
Virginia, serves Virginia markets primarily through its wholly-owned banking
subsidiary, Central Fidelity National Bank, a national banking association (the
"Bank"). At June 30, 1997, the Bank operated 243 branch offices, including 28
full-service supermarket locations, and 237 automated teller machines
throughout the Commonwealth of Virginia. Central Fidelity was formed in the
late 1970's through the consolidation of two bank holding companies, Central
National Corporation and Fidelity American Bankshares, Inc., the earliest
predecessors of which were organized in 1911 and 1865, respectively. At June
30, 1997, Central Fidelity had total assets of approximately $10.7 billion,
deposits of approximately $8.1 billion and shareholders' equity of
approximately $803.6 million.
Central Fidelity, through the Bank and its other subsidiaries, provides a
wide variety of financial services to a broad customer base of individuals,
corporations, institutions and governments primarily located in Virginia. The
Bank is an issuer of MasterCard(R) and VISA(R) credit cards. Through the use of
reciprocally shared automated teller machines, Central Fidelity can deliver
services through its membership in the Internet/HONOR regional and PLUS(R)
national networks of automated teller machines. Central Fidelity also engages
in limited international banking activities, primarily in connection with
foreign trade financing for Virginia-based companies. In addition to
traditional retail and commercial banking activities, Central Fidelity
generates noninterest income by sales of trust and fiduciary services,
annuities and other investment services.
Central Fidelity is a legal entity separate and distinct from the Bank and
its nonbanking subsidiaries. Accordingly, the right of Central Fidelity, and
thus the right of Central Fidelity's creditors, to participate in any
distribution of the assets or earnings of the Bank or any other subsidiary is
necessarily subject to the prior claims of creditors of the Bank or such
subsidiary, except to the extent that claims of Central Fidelity in its
capacity as a creditor may be recognized. The principal sources of Central
Fidelity's revenues are dividends and fees from the Bank.
3
<PAGE>
Central Fidelity, a Virginia corporation, is a bank holding company
registered with the Board of Governors of the Federal Reserve under the Bank
Holding Company Act of 1956, as amended (the "BHCA"). Central Fidelity's
executive offices are located at 1021 East Cary Street, Richmond, Virginia
23219. Its mailing address is Post Office Box 27602, Richmond, Virginia 23261-
7602, and its telephone number is (804) 782-4000.
On June 23, 1997, Central Fidelity entered into a definitive Agreement and
Plan of Merger with Wachovia Corporation, a North Carolina corporation
("Wachovia"), providing for the merger of Central Fidelity with and into
Wachovia. See "Recent Developments."
THE EXCHANGE OFFER
The Exchange Offer.......... Up to $100,000,000 aggregate Liquidation Amount
of New Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount
of Old Capital Securities. Holders may tender
their Old Capital Securities in whole or in part
in a Liquidation Amount of $100,000 (100 Capital
Securities), or any integral multiple of $1,000
in excess thereof. The Corporation and the Trust
are making the Exchange Offer in order to satisfy
their obligations under the Registration
Agreement relating to the Old Capital Securities.
For a description of the procedures for tendering
Old Capital Securities, see "The Exchange Offer--
Procedures For Tendering Old Capital Securities."
Expiration Date............. 5:00 p.m., New York City time, on September 2,
1997 (such time on such date being hereinafter
called the "Expiration Date") unless the Exchange
Offer is extended by the Corporation and the
Trust (in which case the term "Expiration Date"
shall mean the latest date and time to which the
Exchange Offer is extended). See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not conditioned
upon any minimum Liquidation Amount of Old
Capital Securities being tendered. See "The
Exchange Offer--Conditions to the Exchange
Offer." The Corporation and the Trust reserve the
right in their sole and absolute discretion,
subject to applicable law, at any time and from
time to time, (i) to delay the acceptance of the
Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer
and retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities
to withdraw their tendered Old Capital Securities
and (iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any
respect. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Withdrawal Rights........... Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written notice of
such withdrawal to the Exchange Agent (as defined
below) in conformity with certain procedures set
forth below under "The Exchange Offer--Withdrawal
Rights."
4
<PAGE>
Procedures for Tendering
Old Capital Securities..... To participate in the Exchange Offer, holders of
Old Capital Securities must tender by (a) book-
entry transfer pursuant to the procedures set
forth under "The Exchange Offer--Procedures for
Tendering Old Capital Securities" or (b)
forwarding certificates representing such Old
Capital Securities with the Letter of
Transmittal. Holders who are participants in DTC
tendering by book-entry transfer must execute
such tender through the DTC's ATOP (as defined
herein) procedures. A holder using ATOP should
transmit its acceptance to DTC on or prior to the
Expiration Date. DTC will verify such acceptance,
execute a book-entry transfer of the tendered Old
Capital Securities into the Exchange Agent's
account at DTC and then send to the Exchange
Agent confirmation of such book-entry transfer,
including an Agent's Message confirming that DTC
has received an express acknowledgment from such
holder that such holder has received and agrees
to be bound by the Letter of Transmittal and that
the Trust and the Corporation may enforce the
Letter of Transmittal against such holder. The
book-entry confirmation must be received by the
Exchange Agent in order for the tender relating
thereto to be effective.
If the tender is not made through ATOP,
certificates for such Old Capital Securities, as
well as the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed,
with any required signature guarantees, and any
other documents required by the Letter of
Transmittal, must be received by the Exchange
Agent at its address set forth in the Letter of
Transmittal on or prior to the Expiration Date in
order for such tender to be effective. See "The
Exchange Offer--Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Corporation or the Trust. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to
the Exchange Agent. See "The Exchange Offer--
Exchange Agent."
Resales of New Capital
Securities................. The Corporation and the Trust are making the
Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the
Division of Corporation Finance of the Commission
as set forth in certain interpretive letters
addressed to third parties in other transactions.
However, neither the Corporation nor the Trust
has sought its own interpretive letter, and there
can be no assurance that the staff of the
Division of Corporation Finance of the Commission
would make a similar determination with respect
to the Exchange Offer as it has in such
interpretive letters to third parties. Based on
these interpretations by the staff of the
Division of Corporation Finance, and subject to
the two immediately following sentences, the
Corporation and the Trust believe that New
Capital Securities issued pursuant to this
Exchange Offer in exchange for Old Capital
5
<PAGE>
Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without
further compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of
such holder's business and that such holder is
not participating, and has no arrangement or
understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who
is an Affiliate or who intends to participate in
the Exchange Offer for the purpose of
distributing New Capital Securities, or any
broker-dealer who purchased the Old Capital
Securities from the Trust to resell pursuant to
Rule 144A or any other available exemption under
the Securities Act, (a) will not be able to rely
on the interpretations of the staff of the
Division of Corporation Finance of the Commission
set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the
Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Old Capital Securities
unless such sale or other transfer is made
pursuant to an exemption from such requirements.
In addition, as described below, if any
Participating Broker-Dealer holds Old Capital
Securities acquired for its own account as a
result of market-making or other trading
activities and exchanges such Old Capital
Securities for New Capital Securities, then such
Participating Broker-Dealer must deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who wishes
to exchange Old Capital Securities for New
Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an
Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary
course of its business, (iii) it has no
arrangement or understanding with any person to
participate in a distribution (within the meaning
of the Securities Act) of such New Capital
Securities and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution
(within the meaning of the Securities Act) of
such New Capital Securities. The Letter of
Transmittal contains the foregoing
representations. Each Participating Broker-Dealer
must acknowledge that it acquired the Old Capital
Securities for its own account as the result of
market-making activities or other trading
activities and must agree that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such New Capital Securities. See "Plan of
Distribution." The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on
6
<PAGE>
the position taken by the staff of the Division
of Corporation Finance of the Commission in the
interpretive letters referred to above, the
Corporation and the Trust believe that
Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to
the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old
Capital Securities which represent an unsold
allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
distribution with respect to the resale of such
New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New
Capital Securities received in exchange for Old
Capital Securities where such Old Capital
Securities were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities.
Subject to certain provisions set forth in the
Registration Agreement, the Corporation and the
Trust have agreed that this Prospectus, as it may
be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of such New Capital
Securities for a period ending on the close of
business on the first anniversary following the
Expiration Date or, if earlier, when all such New
Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of
Distribution." Any person, including any
Participating Broker-Dealer, who is an Affiliate
may not rely on such interpretive letters and
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See "The
Exchange Offer--Resales of New Capital
Securities."
Exchange Agent.............. The Exchange Agent with respect to the Exchange
Offer is The Bank of New York (the "Exchange
Agent"). The addresses, and telephone and
facsimile numbers of the Exchange Agent are set
forth in "The Exchange Offer--Exchange Agent" and
in the Letter of Transmittal.
Federal Income Tax
Consequences............... The exchange of an Old Capital Security for a New
Capital Security should not constitute a taxable
exchange.
THE NEW CAPITAL SECURITIES
Securities Offered.......... $100,000,000 aggregate Liquidation Amount of
Floating Rate Capital Trust Pass-through
Securities, Series A (Liquidation Amount $1,000
per Capital Security).
Distributions............... Holders of the Capital Securities are entitled to
receive cumulative cash distributions at a
variable annual rate equal to LIBOR plus 1.00% on
the stated Liquidation Amount of $1,000 per
Capital
7
<PAGE>
Security, accruing from the original date of
issuance of the Old Capital Securities, and
(subject to the extension of distribution payment
periods described below) are payable quarterly,
in arrears, on the 15th day of January, April,
July and October of each year, commencing July
15, 1997. See "Description of New Capital
Securities--Distributions."
Each New Capital Security will pay cumulative
Distributions from the most recent Distribution
Date on the Old Capital Securities, or if no
Distributions have been paid on such Old Capital
Securities, from April 23, 1997. Holders of Old
Capital Securities whose Old Capital Securities
are accepted for exchange will not receive
accumulated Distributions on such Old Capital
Securities for any period from and after the last
Distribution Date with respect to such Old
Capital Securities prior to the original issue
date of the New Capital Securities or, if no such
Distributions have been paid, will not receive
any accumulated Distributions on such Old Capital
Securities, and will be deemed to have waived the
right to receive any Distributions on such Old
Capital Securities accumulated from and after
such Distribution Date or, if no such
Distributions have been paid, from and after
April 23, 1997.
Extension Periods........... Distributions on Capital Securities will be
deferred for the duration of any Extension Period
elected by the Corporation with respect to the
payment of interest on the Junior Subordinated
Debt Securities. No Extension Period will exceed
20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Junior Subordinated
Debt Securities. See "Description of New Junior
Subordinated Debt Securities--Option to Extend
Interest Payment Date" and "Certain United States
Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
Ranking..................... The New Capital Securities will rank pari passu,
and payments thereon will be made pro rata, with
the Common Securities except as described under
"Description of New Capital Securities--
Subordination of Common Securities." The New
Junior Subordinated Debt Securities will rank
pari passu with all other junior subordinated
debt securities to be issued by the Corporation
pursuant to the Indenture with substantially
similar subordination terms ("Other Debentures"),
and which may be issued and sold (if at all) to
other trusts to be established by the Corporation
(if any), in each case similar to the Trust
("Other Trusts"), and will be unsecured and
subordinate and junior in right of payment to the
extent and in the manner set forth in the
Indenture to all Senior Debt of the Corporation.
See "Description of New Junior Subordinated Debt
Securities." The New Guarantee will rank pari
passu with all other guarantees (if any) which
may be issued by the Corporation with respect to
capital securities (if any) which may be issued
by Other Trusts ("Other Guarantees") and will
constitute an unsecured obligation of the
Corporation and will rank subordinate and junior
8
<PAGE>
xin right of payment to the extent and in the
manner set forth in the New Guarantee to all
Senior Debt of the Corporation. See "Description
of New Guarantee." In addition, because the
Corporation is a holding company, the New Junior
Subordinated Debt Securities and the New
Guarantee are effectively subordinated to all
existing and future liabilities of the
Corporation's subsidiaries, including deposits.
See "Risk Factors--Status of the Corporation as a
Bank Holding Company."
Optional Redemption......... The Corporation has the right to redeem the
Junior Subordinated Debt Securities, in whole or
in part, at any time or from time to time on or
after April 15, 2007, at par, plus accrued and
unpaid interest to the date of redemption,
subject to the Corporation having received prior
approval from the Federal Reserve if then
required under applicable capital guidelines or
policies of the Federal Reserve. See "Description
of New Junior Subordinated Debt Securities--
Optional Redemption." Upon the redemption in
whole or in part of the Junior Subordinated Debt
Securities, the proceeds of such redemption shall
concurrently be applied to redeem on a pro rata
basis at the Redemption Price Trust Securities
having an aggregate Liquidation Amount equal to
the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed, upon
the terms and conditions described herein. See
"Description of New Capital Securities--Mandatory
Redemption."
Tax Event or Capital
Treatment Event
Redemption................. If at any time a Tax Event or a Capital Treatment
Event should occur and be continuing, the
Corporation may, within 90 days following the
occurrence of such Tax Event or Capital Treatment
Event, redeem the Junior Subordinated Debt
Securities in whole but not in part in certain
circumstances described herein at a redemption
price equal to par plus accrued and unpaid
interest thereon to the redemption date, subject
to the Corporation having received prior approval
from the Federal Reserve if then required under
applicable capital guidelines or policies of the
Federal Reserve. See "Description of New Junior
Subordinated Debt Securities--Optional
Redemption." Upon the redemption in whole or in
part of the Junior Subordinated Debt Securities,
the proceeds of such redemption shall
concurrently be applied to redeem at the
Redemption Price Trust Securities having an
aggregate Liquidation Amount equal to the
aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed, upon
the terms and conditions described herein. See
"Description of New Capital Securities--Mandatory
Redemption."
Ratings..................... The New Capital Securities are expected to be
rated "baa2" by Moody's Investors Service, Inc.
and "BBB-" by Standard & Poor's Ratings Services.
On June 25, 1997, Standard & Poor's Ratings
Services placed its rating of the Corporation on
CreditWatch with positive implications. A
security rating is not a recommendation to
9
<PAGE>
buy, sell or hold securities and may be subject
to revision or withdrawal at any time by the
assigning rating organization.
ERISA Considerations........ Prospective purchasers must carefully consider
the restrictions on purchase set forth under
"Certain ERISA Considerations."
Absence of Market for the
Capital Securities......... The New Capital Securities will be a new issue of
securities for which there is currently no
established market. The Initial Purchasers
informed the Trust and the Corporation in
connection with the offering of the Old Capital
Securities that they each intended to make a
market in the Old Capital Securities and, if
issued, the New Capital Securities. However, the
Initial Purchasers are not obligated to do so,
and any such market making may be discontinued at
any time without notice. Accordingly, there can
be no assurance as to the development or
liquidity of any market for the Old Capital
Securities or the New Capital Securities.
Use of Proceeds............. Neither the Corporation nor the Trust will
receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. See
"Use of Proceeds from Sale of Old Capital
Securities."
For additional information regarding the Capital
Securities, see "Description of New Capital
Securities," "Description of New Junior
Subordinated Debt Securities," "Description of
New Guarantee," "Description of Old Capital
Securities" and "Certain United States Federal
Income Tax Consequences."
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
10
<PAGE>
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in
the Exchange Offer.
RANKING OF OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBT
SECURITIES
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debt Securities are unsecured and rank subordinate and
junior in right of payment to all Senior Debt (which, as defined, includes all
outstanding subordinated debt of the Corporation) of the Corporation. At June
30, 1997, the aggregate outstanding Senior Debt of the Corporation was
approximately $250 million. The obligations of the Corporation under the
Guarantee also rank subordinate and junior in right of payment to creditors of
the Bank and the Corporation's other subsidiaries. See "--Status of the
Corporation as a Bank Holding Company." The Corporation does not have any
indebtedness that ranks pari passu with or junior to its obligations under the
Guarantee and the Junior Subordinated Debt Securities. None of the Indenture,
the Guarantee or the Declaration places any limitation on the amount of
secured or unsecured debt, including Senior Debt, that may be incurred by the
Corporation or any subsidiary. See "Description of New Junior Subordinated
Debt Securities--Subordination" and "Description of New Guarantee--Status of
the Guarantee."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior
Subordinated Debt Securities as and when required.
STATUS OF THE CORPORATION AS A BANK HOLDING COMPANY
The Corporation is a legal entity separate and distinct from the Bank and
its other subsidiaries, although the principal source of the Corporation's
cash revenues is dividends from the Bank. The right of the Corporation to
participate in the distribution of assets of any subsidiary, including the
Bank, upon the latter's liquidation, reorganization or otherwise (and thus the
ability of the holders of Capital Securities to benefit indirectly from any
such distribution) will be subject to the prior claims of such subsidiary's
creditors, which will take priority except to the extent that the Corporation
may itself be a creditor of such subsidiary with a recognized claim.
Accordingly, the Junior Subordinated Debt Securities will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debt Securities should look
only to the assets of the Corporation for payments on the Junior Subordinated
Debt Securities. Because the Corporation is a holding company with limited
assets and liabilities, a substantial portion of the consolidated liabilities
of the Corporation are liabilities of its subsidiaries. The Guarantee will
constitute an unsecured obligation of the Corporation and will rank
subordinate and junior in right of payment to all Senior Debt in the same
manner as the Junior Subordinated Debt Securities.
As a holding company, the Corporation conducts its operations principally
through its subsidiaries and, therefore, its principal source of cash, other
than its investing and financing activities, is receipt of dividends from the
Bank. However, there are legal limitations on the source and amount of
dividends that a national bank such as the Bank is permitted to pay. A
national bank may pay dividends only to the extent that retained net profits
(including the portion transferred to surplus) exceed bad debts (as defined by
regulation). Moreover, unless a national bank's surplus fund equals its common
capital, dividends may be paid only after 10 percent of its net profits (as
defined by regulation) for the specified preceding period have been
transferred to the bank's surplus fund. In addition, prior approval of the
Office of Comptroller of the Currency (the "OCC") is required if the total of
all dividends declared by a national bank in any calendar year will exceed the
sum of that bank's net profits for that year and its retained net profits for
the preceding two calendar years, less any required transfers to either
surplus or any fund for retirement of any preferred stock. At June 30, 1997,
the Bank could have paid approximately $82.4 million in dividends to the
Corporation without prior OCC approval. The payment of dividends by the Bank
may also be affected by other factors, such as requirements for the
11
<PAGE>
maintenance of adequate capital. In addition, the OCC is authorized to
determine, under certain circumstances relating to the financial condition of
a national bank, whether the payment of dividends would be an unsafe or
unsound banking practice and to prohibit payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
So long as no Debenture Event of Default (as defined herein) has occurred
and is continuing, the Corporation has the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debt Securities at any time
or from time to time for a period not exceeding 20 consecutive quarterly
periods with respect to each Extension Period, provided, however, that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debt Securities. As a consequence of any such deferral, quarterly
Distributions on the Capital Securities by the Trust will also be deferred
(and the amount of Distributions to which holders of the Capital Securities
are entitled will accumulate additional Distributions thereon at a variable
annual rate equal to LIBOR plus 1.00%, compounded quarterly from the relevant
payment date for such Distributions during any such Extension Period). During
any Extension Period, the Corporation may not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of the Corporation's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on, or repay, repurchase or redeem any debt
securities of the Corporation (including Other Debentures) that rank pari
passu with or junior in interest to, the Junior Subordinated Debt Securities
or (iii) make any guarantee payments with respect to any guarantee by the
Corporation of the debt securities of any subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in interest to the Junior Subordinated Debt Securities (other than (a)
dividends or distributions in Common Stock, par value $5.00 per share (the
"Common Stock"), of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) purchases or acquisitions of shares of the Corporation's Common
Stock in connection with the satisfaction by the Corporation of its
obligations under any employee benefit plan or any other contractual
obligation of the Corporation (other than a contractual obligation ranking
pari passu with or junior to the Junior Subordinated Debt Securities), (e) as
a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital
stock for another class or series of the Corporation's capital stock or (f)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged). Prior to the termination of any
Extension Period, the Corporation may further extend such Extension Period,
provided, however, that such extension does not cause such Extension Period to
exceed 20 consecutive quarterly periods or to extend beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid on the Junior Subordinated Debt Securities
(together with interest thereon accrued at a variable annual rate equal to
LIBOR plus 1.00%, compounded quarterly, to the extent permitted by applicable
law), and subject to the foregoing limitations, the Corporation may elect to
begin a new Extension Period. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period. See "Description
of New Capital Securities--Distributions" and "Description of New Junior
Subordinated Debt Securities--Option to Extend Interest Payment Date."
If an Extension Period occurs, for United States federal income tax
purposes, a holder of Capital Securities will continue to include income (in
the form of original issue discount) in respect of its pro rata share of the
Junior Subordinated Debt Securities held by the Trust as long as the Junior
Subordinated Debt Securities remain outstanding. As a result, during an
Extension Period a holder of Capital Securities will include such income in
gross income for United States federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such income from the
Trust if the holder disposes of the Capital Securities prior to the record
date for the payment of Distributions thereafter. See "Certain United States
Federal Income Tax Consequences--Interest Income and Original Issue Discount"
and "--Sales or Redemption of the Capital Securities."
12
<PAGE>
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debt Securities in the future, the market
price of the Capital Securities is likely to be affected. A holder that
disposes of its Capital Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Capital Securities. In addition, as a result of the existence of
the Corporation's right to defer interest payments on the Junior Subordinated
Debt Securities, the market price of the Capital Securities (which represent
beneficial ownership interests in the Trust holding the Junior Subordinated
Debt Securities as its sole assets) may be more volatile than the market
prices of other securities that are not subject to such deferrals.
TAX EVENT OR CAPITAL TREATMENT EVENT REDEMPTION
Upon the occurrence and continuation of a Tax Event or a Capital Treatment
Event (each as defined herein), the Corporation may, at its option within 90
days following the occurrence of such Tax Event or Capital Treatment Event and
subject to receipt of prior approval of the Federal Reserve if such approval
is then required under applicable capital guidelines or policies, redeem the
Junior Subordinated Debt Securities in whole, but not in part, at par, plus
accrued and unpaid interest thereon to the date of redemption. In such event,
the Trust will redeem the Trust Securities. See "Description of New Junior
Subordinated Debt Securities--Optional Redemption," "Description of New
Capital Securities--Mandatory Redemption" and "Description of New Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debt Securities."
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's fiscal year
1998 budget proposal (the "Budget Proposal") was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of
the issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the Corporation's consolidated
balance sheet. The above described provision of the Budget Proposal is
proposed to be effective generally for instruments issued on or after the date
of first Congressional committee action. No such action has yet occurred. If
this provision were to apply to the Junior Subordinated Debt Securities, the
Corporation would be unable to deduct interest on the Junior Subordinated Debt
Securities. Under current law, the Corporation will be able to deduct interest
on the Junior Subordinated Debt Securities. There can be no assurance,
however, that current or future legislative proposals, if enacted, or final
legislation will not affect the ability of the Corporation to deduct interest
on the Junior Subordinated Debt Securities. Such a change could give rise to a
Tax Event, which may permit the Corporation to cause a redemption of the
Capital Securities, as described more fully under "Description of New Capital
Securities--Mandatory Redemption" and "Description of New Junior Subordinated
Debt Securities--Optional Redemption." See also "Certain United States Federal
Income Tax Consequences--Possible Tax Law Changes."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBT
SECURITIES
The Corporation, as the holder of the outstanding Common Securities, has the
right at any time to terminate the Trust and cause the Junior Subordinated
Debt Securities to be distributed to the holders of the Trust Securities.
Under current United States federal income tax law, a distribution of Junior
Subordinated Debt Securities upon the dissolution of the Trust would not be a
taxable event to holders of the Capital Securities. If, however, the Trust is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of dissolution of the Trust, the
distribution of the Junior Subordinated Debt Securities may constitute a
taxable event to holders of Capital Securities. See "Certain United States
Federal Income Tax Consequences--Distribution of the Junior Subordinated Debt
Securities to Holders of Capital Securities."
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debt Securities that may be distributed in exchange for
Capital Securities if a liquidation of the Trust occurs.
13
<PAGE>
Accordingly, the Capital Securities or the Junior Subordinated Debt Securities
may trade at a discount to the price that the investor paid to purchase the
Capital Securities offered hereby. Because holders of Capital Securities may
receive Junior Subordinated Debt Securities on termination of the Trust,
prospective purchasers of Capital Securities are also making an investment
decision with regard to the Junior Subordinated Debt Securities and should
carefully review all the information regarding the Junior Subordinated Debt
Securities contained herein. See "Description of New Capital Securities--
Liquidation of the Trust and Distribution of the Junior Subordinated Debt
Securities" and "Description of New Junior Subordinated Debt Securities--
General."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Trust Securities the
following payments, to the extent not paid by the Trust: (i) any accumulated
and unpaid Distributions required to be paid on the Trust Securities, to the
extent that the Trust has funds on hand available therefor at such time, (ii)
the Redemption Price with respect to any Trust Securities called for
redemption, to the extent that the Trust has funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding-
up or liquidation of the Trust (unless the Junior Subordinated Debt Securities
are distributed to holders of the Trust Securities or all of the Capital
Securities are redeemed), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment, to
the extent that the Trust has funds on hand available therefor at such time,
and (b) the amount of assets of the Trust remaining available for distribution
to holders of the Trust Securities after the satisfaction of liabilities to
creditors of the Trust as required by applicable law. See "Description of New
Guarantee."
The holders of not less than a majority in aggregate Liquidation Amount of
the Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Trust Securities may institute a legal proceeding directly against the
Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. If the Corporation were to default on its obligation
to pay amounts payable under the Junior Subordinated Debt Securities, the
Trust would lack funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such event, holders
of the Capital Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of the Corporation to pay principal of or interest on the Junior
Subordinated Debt Securities on the applicable payment date, then a holder of
Capital Securities may institute a Direct Action. Notwithstanding any payments
made to a holder of Capital Securities by the Corporation in connection with a
Direct Action, the Corporation shall remain obligated to pay the principal of
and interest on the Junior Subordinated Debt Securities, and the Corporation
shall be subrogated to the rights of the holder of such Capital Securities
with respect to payments on the Capital Securities to the extent of any
payments made by the Corporation to such holder in any Direct Action. Except
as described herein, holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debt Securities or assert directly any other rights in respect of
the Junior Subordinated Debt Securities. See "Description of New Junior
Subordinated Debt Securities--Enforcement of Certain Rights by Holders of
Capital Securities," "Description of New Junior Subordinated Debt Securities--
Debenture Events of Default" and "Description of New Guarantee." The
Declaration provides that each holder of Capital Securities by acceptance
thereof agrees to the provisions of the New Guarantee and the Indenture. The
Bank of New York currently acts as Guarantee Trustee under the Old Guarantee
and will act as Guarantee Trustee under the New Guarantee. In addition, the
Guarantee Trustee currently holds the Old Guarantee for the benefit of the
holders of the Old Capital Securities and will hold the New Guarantee for the
benefit of the holders of the New Capital Securities. The Bank of New York
also acts as Property Trustee under the Declaration and as Debenture Trustee
under the Indenture.
14
<PAGE>
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the dissolution,
winding-up or liquidation of the Trust, and the exercise of the Trust's rights
as holder of Junior Subordinated Debt Securities. The right to vote to
appoint, remove or replace the Property Trustee, the Delaware Trustee or the
Administrative Trustees is vested exclusively in the holder of the Common
Securities except, with respect to the Property Trustee and the Delaware
Trustee, upon the occurrence of certain events described herein. The Property
Trustee, the Administrative Trustees and the Corporation may amend the
Declaration without the consent of holders of Capital Securities to ensure
that the Trust will not be classified for United States Federal income tax
purposes as an association taxable as a corporation or, as other than a
grantor trust, even if such action adversely affects the interests of such
holders. See "Description of New Capital Securities--Removal of Issuer
Trustees" and "Description of New Capital Securities--Voting Rights; Amendment
of the Declaration."
REGULATORY CAPITAL REQUIREMENTS
The Corporation and the Bank are subject to regulatory capital guidelines.
At June 30, 1997, the Bank was in compliance with applicable regulatory
capital requirements. The Corporation, at that date, had a total capital to
risk-weighted assets ratio of 13.65% and a Tier 1 Capital to risk-weighted
assets ratio of 10.51%, both above the minimum requirements of 8.0% and 4.0%,
respectively. The Corporation's leverage ratio at that date was 8.11%.
Although the minimum leverage ratio requirement is 3.00%, most bank holding
companies, including the Corporation, are expected to maintain an additional
cushion of at least 100 to 200 basis points above the minimum. However, the
Federal Reserve may assign a specific capital ratio to an individual bank
holding company, including the Corporation, based on its assessment of asset
quality, earnings performance, interest-rate risk and liquidity. As of the
date of this Prospectus, the Federal Reserve has not advised the Corporation
of a specific leverage ratio requirement.
There can be no assurance that either the Corporation or the Bank will
continue to be able to meet their respective minimum capital ratios. In the
event that the Corporation or the Bank falls below the minimum capital
requirements described above, agencies may take regulatory action including,
in the case of the Bank, "prompt corrective action." Such actions could impair
the Corporation's ability to make principal and interest payments on the
Junior Subordinated Debt Securities.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities Act
or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant to
an exemption therefrom or in a transaction not subject thereto, and in each
case in compliance with certain other conditions and restrictions. Old Capital
Securities that remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities that remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Agreement (subject to certain limited
exceptions). The Corporation and the Trust do not intend to register under the
Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer,
any trading market for Old Capital Securities which remain outstanding after
the Exchange Offer could be adversely affected.
15
<PAGE>
The New Capital Securities and any Old Capital Securities that remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Declaration and, accordingly, will vote
together as a single class for purposes of determining whether holders of the
requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Declaration. See
"Description of New Capital Securities--General."
The Registration Agreement provides that if the Exchange Offer is not
consummated by November 19, 1997, the Distribution rate borne by the holders
of Old Capital Securities will increase by 0.25% per annum commencing on
November 20, 1997 until the Exchange Offer is consummated. The aggregate
amount of such additional Distributions payable pursuant to the foregoing
provisions will in no event exceed 0.50% per annum. See "Description of Old
Capital Securities." Upon consummation of the Exchange Offer, the holders of
Capital Securities will not be entitled to any such increase in the
Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities Act
and will be subject to significant restrictions on resale to the extent that
they are not exchanged for New Capital Securities. Although the New Capital
Securities will generally be permitted to be resold or otherwise transferred
by the holders (who are not affiliates of the Corporation or the Trust)
without compliance with the registration requirements under the Securities
Act, they will constitute a new issue of securities with no established
trading market. The Capital Securities may be transferred only in blocks
having a Liquidation Amount of $100,000 (100 Capital Securities) and integral
multiples of $1,000 in excess thereof. There is no existing market for the New
Capital Securities and there can be no assurance as to the development or
liquidity of any markets that may develop for the New Capital Securities, the
ability of the holders to sell their New Capital Securities or at what price
holders of the New Capital Securities will be able to sell their New Capital
Securities. Future trading prices of the Capital Securities will depend on
many factors including, among other things, prevailing interest rates, the
Corporation's operating results and the market for similar securities. The
Initial Purchasers informed the Trust and the Corporation in connection with
the offering of the Old Capital Securities that they each intended to make a
market in the Old Capital Securities and, if issued, the New Capital
Securities; however, the Initial Purchasers are not obligated to do so, and
any such market making activity may be discontinued at any time without notice
to the holders of the New Capital Securities.
Notwithstanding the registration of the New Capital Securities pursuant to
the Exchange Offer, holders who are Affiliates of the Corporation or the Trust
may publicly offer for sale or resell the New Capital Securities only in
compliance with the provision of Rule 144 under the Securities Act.
Each Participating Broker-Dealer that receives New Capital Securities for
its own account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus in connection with any resale of such New Capital
Securities. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Subject to certain exceptions more fully described under "The Exchange
Offer--Acceptance for Exchange and Issuance of New Capital Securities,"
issuance of the New Capital Securities in exchange for Old Capital Securities
pursuant to the Exchange Offer will be made only after a timely receipt by the
Exchange Agent of such Old Capital Securities (unless such holder complies
with the procedures specified for guaranteed delivery of the Old Capital
Securities), a properly completed and duly executed Letter of Transmittal or
Agent's Message in lieu thereof and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for New Capital Securities should allow sufficient time
to ensure
16
<PAGE>
timely delivery. None of the Corporation, the Trust or the Exchange Agent is
under any duty to give notification of defects or irregularities with respect
to the tenders of Old Capital Securities for exchange.
USE OF PROCEEDS FROM SALE OF OLD CAPITAL SECURITIES
Neither the Trust nor the Corporation will receive cash proceeds from the
issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange
for the New Capital Securities will be retired and canceled.
The net proceeds to the Trust from the offering of the Old Capital
Securities were $99,134,000.
All of the proceeds from the sale of the Old Capital Securities and Common
Securities were invested by the Trust in the Old Junior Subordinated Debt
Securities. The Corporation has applied the net proceeds from the sale of the
Old Junior Subordinated Debt Securities to its general funds to be used for
general corporate purposes, including, from time to time, the making of
advances to its subsidiaries. In addition, a portion of the net proceeds has
been used by the Corporation to repurchase 2 million shares of its outstanding
Common Stock for an initial aggregate repurchase price of approximately $55.8
million, including expenses, pursuant to an accelerated stock repurchase
program. Final settlement on this transaction is expected to occur in the
third quarter of 1997.
CENTRAL FIDELITY CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the original declaration of trust executed by the Corporation, as
Depositor, The Bank of New York (Delaware), as Delaware Trustee, and the
Administrative Trustees named therein, which original declaration of trust was
amended and restated and executed on April 23, 1997 by the Corporation, as
Depositor, The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on April 2, 1997. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debt Securities and (iii) engaging in only those other activities
necessary or incidental thereto (such as engaging in this Exchange Offer).
Accordingly, the Junior Subordinated Debt Securities will be the sole assets
of the Trust, and payments under the Junior Subordinated Debt Securities will
be the sole revenues of the Trust. All of the Common Securities are owned by
the Corporation. The Common Securities rank pari passu, and payments will be
made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of any Debenture Event of Default (or an event
that, with notice or the passage of time, would become such an Event of
Default) or an Event of Default under the Declaration, the rights of the
Corporation as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise are
subordinated to the rights of the holders of the Capital Securities. See
"Description of New Capital Securities--Subordination of Common Securities."
The Corporation has acquired Common Securities in an aggregate Liquidation
Amount equal to approximately 3% of the total capital of the Trust. The Trust
has a term of 40 years, but may terminate earlier as provided in the
Declaration. The Trust's business and affairs are conducted by its trustees,
each appointed by the Corporation, as holder of the Common Securities. The
trustees for the Trust are The Bank of New York, as the
17
<PAGE>
Property Trustee, The Bank of New York (Delaware), as the Delaware Trustee,
and three individual trustees as Administrative Trustees who are employees or
officers of or affiliated with the Corporation. The Bank of New York, as
Property Trustee, will act as sole indenture trustee under the Declaration.
The Bank of New York also acts as trustee under the Old Guarantee Agreement
and the Indenture and will act as trustee under the New Guarantee Agreement.
See "Description of New Junior Subordinated Debt Securities" and "Description
of New Guarantee." The holder of the Common Securities, or the holders of a
majority in Liquidation Amount of the Capital Securities if an Event of
Default under the Declaration resulting from a Debenture Event of Default has
occurred and is continuing, are entitled to appoint, remove or replace the
Property Trustee and/or Delaware Trustee. In no event will the holders of the
Capital Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the
holder of the Common Securities. The duties and obligations of each Issuer
Trustee are governed by the Declaration. Pursuant to the expense provisions
under the Indenture, the Corporation, as obligor on the Junior Subordinated
Debt Securities, will pay all fees and expenses related to the Trust and this
Exchange Offer and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of the Trust. See "Description of New Capital
Securities--Expenses and Taxes." The address and telephone number of the
principal executive office of the Trust is c/o
Central Fidelity Banks, Inc.
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 23261-7602
Telephone: (804) 697-7145
William N. Stoyko
Corporate Secretary
CENTRAL FIDELITY
Central Fidelity, the third largest banking company headquartered in
Virginia, serves Virginia markets primarily through its wholly-owned banking
subsidiary, Central Fidelity National Bank, a national banking association. At
June 30, 1997, the Bank operated 243 branch offices, including 28 full-service
supermarket locations, and 237 automated teller machines throughout the
Commonwealth of Virginia. Central Fidelity was formed in the late 1970s
through the consolidation of two bank holding companies, Central National
Corporation and Fidelity American Bankshares, Inc., the earliest predecessors
of which were organized in 1911 and 1865, respectively. At June 30, 1997,
Central Fidelity had total assets of approximately $10.7 billion, deposits of
approximately $8.1 billion and shareholders' equity of approximately $803.6
million.
Central Fidelity, through the Bank and its other subsidiaries, provides a
wide variety of financial services to a broad customer base of individuals,
corporations, institutions and governments primarily located in Virginia. The
Bank is an issuer of MasterCard(R) and VISA(R) credit cards. Through the use
of reciprocally shared automated teller machines, Central Fidelity can deliver
services through its membership in the Internet/HONOR(R) regional and PLUS(R)
national networks of automated teller machines. Central Fidelity also engages
in limited international banking activities, primarily in connection with
foreign trade financing for Virginia-based companies. In addition to
traditional retail and commercial banking activities Central Fidelity
generates noninterest income by sales of trust and fiduciary services,
annuities and other investment services.
Year Ended December 31, 1996. Central Fidelity's net income for 1996 was
$112.7 million, an increase of 7.0% from the $105.4 million reported for 1995.
Central Fidelity's net interest income, on a taxable equivalent basis, was
$382.4 million for 1996, an increase of 10.1% from $347.3 million in 1995.
Noninterest income was $85.9 million for 1996 compared to $79.7 million in
1995, an increase of 7.8%. Noninterest expense increased 5.8% to $251.9
million for 1996 compared to $238.2 million in 1995. The increase of
noninterest expense for 1996 was adversely affected by the special Savings
Association Insured Fund ("SAIF") assessment in the amount of $4.0 million for
the year. The assessment was a one-time charge by the Federal Deposit
Insurance
18
<PAGE>
Corporation ("FDIC") to recapitalize the SAIF, and was assessed on deposits
acquired for SAIF-insured entities. Another contributing factor was a $2.3
million charge associated with certain severance arrangements. As a result of
higher consumer loan charge-offs during 1996, the provision for loan losses
was $43.9 million in 1996, representing an increase of 64.2% from $26.7
million in 1995.
Earning assets averaged $9.9 billion in 1996, compared to $9.7 billion in
1995, an increase of 1.4%. Total loans increased $486.2 million in 1996, or
8.1% from 1995, averaging $6.5 billion. Consumer loan categories accounted for
the majority of the loan growth. Securities available for sale declined 9.4%
to an average of $3.3 billion in 1996. Trading account securities averaged
$1.9 million in 1996, reflecting an increase of 72.7% from 1995. Money market
investments declined 7.6% from 1995 to an average of $95.9 million in 1996.
Interest-bearing liabilities averaged $8.5 billion in 1996, down $31.3
million from 1995. Interest-bearing deposits increased 2.9% from 1995 to an
average of $6.8 billion in 1996. Certificates of deposit $100,000 and over
contributed the largest growth to total average interest-bearing deposits, up
26.7%. Borrowings from the Federal Home Loan Bank and other short-term
borrowings also contributed to the growth in funding sources, up 28.2% and
13.0%, respectively. Medium-term notes, capitalized lease obligations and
federal funds purchased and repos all registered declines for 1996, down
79.8%, 6.3% and 6.2%, respectively. The 79.8% decline in medium-term notes was
a result of notes maturing during 1996.
Shareholders' equity grew 8.8% to an average of $819.9 million in 1996 from
$753.4 million in 1995. The return on average shareholders' equity of 13.75%
in 1996 declined from 13.99% in 1995.
Six Months Ended June 30, 1997. Central Fidelity's net income for the six
months ended June 30, 1997 was $61.6 million, an increase of 8.4% from the
$56.8 million reported for the first six months of 1996. Central Fidelity's
net interest income on a taxable equivalent basis for the six months ended
June 30, 1997 was $202.8 million, an 8.6% increase from the net interest
income reported in the corresponding 1996 period. Noninterest income for the
Corporation increased 19.7% to $49.8 million for the first six months of 1997
compared with $41.6 million for the same period in 1996. Such increase
resulted from growth in deposit fees and other charges, increases in mutual
funds and annuity sales as well as increased ATM charges. Noninterest expense
increased 8.2% to $130.4 million for the first six months of 1997 compared to
the corresponding 1996 period. Such growth was due primarily to higher
personnel, occupancy and equipment costs. Interest expense on interest-bearing
liabilities in the first six months of 1997 declined 4.8% to $199.2 million
from the corresponding 1996 period.
The Corporation's provision for loan losses increased to $27.6 million for
the six months ended June 30, 1997 compared with $21.0 million for the
corresponding period in 1996, as a result of a higher level of net charge-
offs. Such higher levels of net charge-offs resulted principally from losses
in consumer portfolios and a $3.7 million non-recurring loss in the
Corporation's commercial loan portfolio.
For the first six months of 1997, Central Fidelity's average earning assets
declined $67.2 million and interest earned on earning assets increased by a
modest $6.0 million from the levels recorded in the first six months of 1996.
The decline in earning assets was due primarily to the lower levels of
securities available for sale and money market investments during the first
six months of 1997.
Central Fidelity's total assets as of June 30, 1997 were $10.7 billion, a
modest increase from $10.5 billion at the end of 1996. Total loans at June 30,
1997 increased to $6.9 billion, an increase of 3.3% from the balance at
December 31, 1996, primarily as a result of the increase in the Corporation's
commercial and consumer mortgage loan portfolios. Central Fidelity's total
deposits were $8.1 billion at June 30, 1997, flat from the level of total
deposits at December 31, 1996. Shareholders' equity at June 30, 1997 was
$803.6 million, or 7.5% of total assets, as compared to $846.5 million, or
8.0% of total assets, at December 31, 1996. The return on average
shareholders' equity was 15.09% for the first six months of 1997 compared to
13.95% for the first six months of 1996.
Stock Repurchase Program. On March 6, 1997, the Corporation announced that
its Board of Directors granted authority for the Corporation to purchase up to
an additional 3 million shares of its Common Stock under a repurchase program
that commenced in January 1996. On May 1, 1997, the Corporation entered into
an accelerated stock repurchase program under which 2 million shares of its
outstanding Common Stock were acquired and cancelled for an initial amount of
$55,810,000. Final settlement on this transaction is expected to occur in the
third quarter of 1997. On June 24, 1997, the Corporation announced that it had
rescinded its program to repurchase its Common Stock. See "Use of Proceeds
from Sale of Old Capital Securities."
19
<PAGE>
Central Fidelity is a legal entity separate and distinct from the Bank and
its nonbanking subsidiaries. Accordingly, the right of Central Fidelity, and
thus the right of Central Fidelity's creditors, to participate in any
distribution of the assets or earnings of the Bank or any other subsidiary is
necessarily subject to the prior claims of creditors of the Bank or such
subsidiary, except to the extent that claims of Central Fidelity in its
capacity as a creditor may be recognized. The principal sources of Central
Fidelity's revenues are dividends and fees from the Bank.
Central Fidelity, a Virginia corporation, is a bank holding company
registered with the Federal Reserve under the BHCA. Central Fidelity's
executive offices are located at 1021 East Cary Street, Richmond, Virginia
23219. Its mailing address is Post Office Box 27602, Richmond, Virginia 23261-
7602, and its telephone number is (804) 782-4000.
RECENT DEVELOPMENTS
On June 23, 1997, the Corporation entered into a definitive Agreement and
Plan of Merger with Wachovia, providing for the merger of the Corporation with
and into Wachovia. The agreement has been approved by the boards of directors
of both companies and is subject to the approval of the shareholders of the
Corporation and appropriate regulatory agencies. The merger is expected to be
accounted for as a pooling of interests and will result in a tax-free exchange
of 0.63 shares of Wachovia's common stock for each share of Common Stock of
the Corporation. In addition, the Corporation entered into a stock option
agreement granting Wachovia the option to purchase approximately 19.9% of the
Corporation's outstanding shares of Common Stock under certain circumstances.
Wachovia, which has dual headquarters in Winston-Salem, North Carolina and
Atlanta, Georgia, is the 20th largest banking company in the United States
based on total assets. As of March 31, 1997, Wachovia had total assets of
approximately $47.5 billion. As of the same date, Wachovia had 473 banking
offices and 830 ATM's, predominantly located in North Carolina, South Carolina
and Georgia. In addition, on June 10, 1997, Wachovia announced that it had
reached a definitive agreement to merge with Jefferson Bankshares, Inc., a
Virginia corporation, headquartered in Charlottesville, Virginia, which
operates principally in the Charlottesville, Tidewater, Richmond,
Fredericksburg and Shenandoah Valley markets of Virginia.
20
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES FOR THE CORPORATION
The following table sets forth the consolidated ratios of earnings to fixed
charges for the Corporation for each of the years in the five-year period
ended December 31, 1996 and for each of the six months ended June 30, 1997 and
June 30, 1996. For purposes of computing these ratios, earnings represent net
income, plus total taxes based on income, plus fixed charges. Fixed charges
include interest expense (ratios are presented both excluding and including
interest on deposits), the estimated interest component of net rental expense
and amortization of debt expense.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------- ----------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Excluding interest on deposits..... 3.01x 2.65x 2.74x 2.33x 2.37x 3.72x 3.98x
Including interest on deposits..... 1.45x 1.39x 1.40x 1.35x 1.37x 1.50x 1.38x
</TABLE>
21
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following unaudited consolidated summary sets forth selected financial
data for Central Fidelity and its subsidiaries for each of the years in the
five-year period ended December 31, 1996 and for each of the six-month periods
ended June 30, 1997 and June 30, 1996. The following summary should be read in
conjunction with the financial information incorporated herein by reference to
other documents and Central Fidelity's press release dated July 9, 1997. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------------ -------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest income......... $ 398,642 $ 392,383 $ 788,620 $ 771,920 $ 664,797 $ 613,845 $ 579,174
Interest expense........ 199,185 209,180 413,353 432,295 330,691 289,731 285,697
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net interest income..... 199,457 183,203 375,267 339,625 334,106 324,114 293,477
Provision for loan
losses................. 27,565 20,951 43,865 26,713 24,359 79,509 99,757
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net income from earning
assets................. 171,892 162,252 331,402 312,912 309,747 244,605 193,720
Noninterest income...... 49,768 41,579 85,915 79,675 59,238 125,920 116,411
Noninterest expense..... 130,370 120,534 251,941 238,165 245,065 223,274 200,833
----------- ----------- ----------- ----------- ----------- ---------- ----------
Income before income
taxes.................. 91,290 83,297 165,376 154,422 123,920 147,251 109,298
Income taxes............ 29,715 26,507 52,674 49,052 39,056 44,334 30,782
----------- ----------- ----------- ----------- ----------- ---------- ----------
Net income.............. $ 61,575 $ 56,790 $ 112,702 $ 105,370 $ 84,864 $ 102,917 $ 78,516
=========== =========== =========== =========== =========== ========== ==========
PER SHARE DATA:
Net income.............. $ 1.06 $ 0.95 $ 1.89 $ 1.77 $ 1.45 $ 1.77 $ 1.50
Cash dividends
declared............... 0.46 0.42 0.86 0.79 0.76 0.68 0.55
Book value.............. 14.17 13.54 14.26 13.71 10.56 12.41 10.44
Average shares
outstanding............ 58,068,245 60,041,921 59,736,817 59,673,709 58,741,982 58,102,754 52,440,425
PERIOD-END BALANCE SHEET
DATA:
Total assets............ $10,668,698 $10,491,529 $10,540,360 $10,810,974 $10,054,172 $9,662,284 $8,712,315
Loans................... 6,939,448 6,474,293 6,716,836 6,316,813 5,772,093 4,812,509 3,953,354
Allowance for loan
losses................. 110,000 110,000 110,000 110,000 110,000 105,000 101,800
Earning assets.......... 10,043,462 9,913,528 9,937,036 10,179,856 9,456,750 9,107,251 8,139,100
Deposits................ 8,076,620 7,964,060 8,071,454 7,985,898 7,227,244 6,656,016 6,672,453
Long-term debt.......... 249,425 150,350 150,324 150,386 150,440 151,389 158,423
Shareholders' equity.... 803,565 808,524 846,499 826,547 623,072 726,137 601,987
PERFORMANCE RATIOS:
Return on average
assets................. 1.19% 1.09% 1.09% 1.03% 0.89% 1.16% 1.06%
Return on average
shareholders' equity... 15.09 13.95 13.75 13.99 12.72 15.91 15.60
Net interest margin..... 4.16 3.80 3.88 3.58 3.79 3.98 4.40
Efficiency.............. 51.76 52.21 53.38 55.85 54.60 51.36 53.30
Dividend payout......... 43.40 44.21 45.50 44.63 52.41 38.42 36.67
ASSET QUALITY RATIOS:
Nonaccrual loans to
loans.................. 0.62% 0.72% 0.57% 0.77% 1.17% 1.94% 2.13%
Nonperforming assets to
loans and foreclosed
properties............. 0.83 0.94 0.80 1.04 1.56 2.72 2.82
Net charge-offs to
average loans.......... 0.81 0.66 0.68 0.45 0.36 1.80 1.58
Provision for loan
losses to average
loans.................. 0.81 0.66 0.68 0.45 0.46 1.87 2.67
Allowance to loans...... 1.59 1.70 1.64 1.74 1.91 2.18 2.58
Allowance to nonaccrual
loans.................. 2.56x 2.36x 2.85x 2.26x 1.63x 1.12x 1.21x
Allowance to
nonperforming assets... 1.91x 1.81x 2.04x 1.67x 1.22x 0.79x 0.91x
LIQUIDITY AND CAPITAL
RATIOS:
Loans to deposits....... 85.92% 81.29% 83.22% 79.10% 79.87% 72.30% 59.25%
Equity to assets........ 7.53 7.71 8.03 7.65 6.20 7.52 6.91
Tangible equity to
tangible assets........ 6.92 7.07 7.42 7.08 5.90 7.19 6.53
Tier 1 capital.......... 10.51 9.95 10.09 9.87 10.36 11.06 9.46
Total capital........... 13.65 13.18 13.29 13.12 13.85 14.88 13.22
Leverage................ 8.11 7.35 7.57 7.06 7.04 7.10 6.85
</TABLE>
22
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of Central
Fidelity at June 30, 1997. The issuance of the New Capital Securities in the
Exchange Offer will have no effect on the capitalization of the Corporation.
The Capital Securities are treated as long-term debt. This table is based on,
and is qualified in its entirety by, the historical consolidated financial
statements of Central Fidelity, including the related notes thereto, which are
included in documents incorporated by reference herein, and should be read in
conjunction therewith.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Long-term debt...................................... $ 249,425
Capitalized lease obligations....................... 7,111
Shareholders' Equity
Preferred stock, none issued
Common Stock, par value $5 per share, authorized
100,000,000 shares,
shares outstanding--56,724,684................... 283,623
Capital surplus................................... 108,484
Unamortized deferred compensation................. (682)
Retained earnings................................. 403,526
Unrealized gains on securities available for sale,
net of income taxes.............................. 8,614
----------
Total shareholders' equity...................... 803,565
Total capitalization.......................... $1,060,101
==========
Consolidated Capital Ratios
Equity to assets.................................. 7.53%
Tier 1 Capital.................................... 10.51
Total Capital..................................... 13.65
</TABLE>
23
<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated into the
Corporation's consolidated financial statements, with the Capital Securities
treated as long-term debt. The financial statement footnotes of the
Corporation will reflect that the sole asset of the Trust will be $103,093,000
principal amount of the Junior Subordinated Debt Securities maturing on April
15, 2027. All future reports filed by the Corporation under the Exchange Act
will present information regarding the Trust and any other similar trusts in
the manner described above.
REGULATORY TREATMENT
As a registered bank holding company, the Corporation is required by the
Federal Reserve to maintain certain levels of capital for bank regulatory
purposes. The Corporation expects that the Capital Securities will be treated
as "Tier 1 Capital" of the Corporation for such purposes.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Trust entered into the Registration Agreement with the Initial
Purchasers, pursuant to which the Corporation and the Trust agreed to file and
to use their reasonable best efforts to cause to be declared effective by the
Commission a Registration Statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the
Registration Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Agreement. The form and
terms of the New Capital Securities are the same as the form and terms of the
Old Capital Securities, except that the New Capital Securities (i) have been
registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Old Capital Securities and
(ii) will not provide for any increase in the Distribution rate thereon. In
that regard, the Registration Agreement provides, among other things, that, if
the Exchange Offer is not consummated by November 19, 1997, except in limited
circumstances, the Distribution rate borne by the Old Capital Securities will
increase by 0.25% per annum commencing on November 20, 1997 until the Exchange
Offer is consummated. The aggregate amount of such additional Distributions
payable pursuant to the foregoing provisions will in no event exceed 0.50% per
annum. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any such increase in the Distribution rate
thereon or any further registration rights under the Registration Agreement,
except under limited circumstances. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old
Securities."
The Exchange Offer is not being made to, nor will the Trust or the
Corporation accept tenders for exchange from, holders of Old Capital
Securities in any jurisdiction in which the Exchange Offer or the acceptance
thereof would not be in compliance with the securities or blue sky laws of
such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC who desires to deliver such
Old Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof the Old Guarantee for the New Guarantee and
$100,000,000 aggregate principal amount of the Old Junior
24
<PAGE>
Subordinated Debt Securities for a like aggregate principal amount of the New
Junior Subordinated Debt Securities. The New Guarantee and the New Junior
Subordinated Debt Securities have been registered under the Securities Act.
TERMS OF EXCHANGE
The Trust and the Corporation hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $100,000,000 aggregate Liquidation Amount of
New Capital Securities for a like aggregate Liquidation Amount of Old Capital
Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described below. The
Trust will issue, promptly after the Expiration Date, an aggregate Liquidation
Amount of up to $100,000,000 of New Capital Securities in exchange for a like
Liquidation Amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than
$100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Old Capital Securities being tendered. As of the date of this Prospectus,
$100,000,000 aggregate Liquidation Amount of Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities that are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Declaration, but will not be entitled to any further registration rights under
the Registration Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein
or otherwise, certificates for any such unaccepted Old Capital Securities will
be returned, without expense, to the tendering holder thereof promptly after
the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the Exchange Offer. See
"--Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY TRUSTEE OF THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS
BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on September
2, 1997, unless the Exchange Offer is extended by the Corporation and the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
25
<PAGE>
The Corporation and the Trust expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i)
to delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Corporation and the Trust
determine, in their sole discretion, that any of the events or conditions
referred to under "--Conditions to the Exchange Offer" have occurred or exist,
(iii) to extend the Expiration Date of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities to withdraw their tendered
Old Capital Securities as described under "--Withdrawal Rights," and (iv) to
waive any condition or otherwise amend the terms of the Exchange Offer in any
respect. If the Exchange Offer is amended in a manner determined by the
Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a material condition of the Exchange Offer,
the Corporation and the Trust will promptly disclose such amendment by means
of an amended or supplemented Prospectus that will be distributed to the
registered holders of the Old Capital Securities, and the Corporation and the
Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Corporation and the Trust may choose to make
any public announcement and subject to applicable law, the Corporation and the
Trust shall have no obligation to publish, advertise or otherwise communicate
any such public announcement other than by issuing a release to an appropriate
news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of
Old Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Old Capital Securities into the Exchange Agent's account at
DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Trust and the Corporation may enforce such Letter of Transmittal
against such participant.
Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Trust will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if
and when the Trust gives oral or written notice to the Exchange Agent of the
Corporation's and the Trust's acceptance of such Old Capital Securities for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Corporation and the Trust for the purpose of receiving tenders of Old
Capital Securities, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for
exchange or the exchange of any Old Capital Securities tendered pursuant to
the
26
<PAGE>
Exchange Offer is delayed (whether before or after the Corporation's and the
Trust's acceptance for exchange of Old Capital Securities) or the Corporation
and the Trust extend the Exchange Offer or are unable to accept for exchange
or exchange Old Capital Securities tendered pursuant to the Exchange Offer,
then, without prejudice to the Corporation's and the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Corporation and
the Trust and subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Old Capital Securities and such Old Capital Securities may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal or Agent's Message, as the case may be, that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital
Securities, that the Trust will acquire good, marketable and unencumbered
title to the tendered Old Capital Securities, free and clear of all liens,
restrictions, charges and encumbrances, and that the Old Capital Securities
tendered for exchange are not subject to any adverse claims or proxies. The
holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Corporation, the Trust or the
Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment and transfer of the Old Capital Securities tendered pursuant to the
Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital Securities
to be validly tendered pursuant to the Exchange Offer, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry tender, an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at its address set forth
under "--Exchange Agent," and either (i) tendered Old Capital Securities must
be received by the Exchange Agent, (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
If a tendering holder is tendering less than all of its Old Capital
Securities, the tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on the Letter of Transmittal.
If fewer than all of the Old Capital Securities of a holder are tendered for
exchange, the untendered Liquidation Amount of the holder's remaining Old
Capital Securities must be $100,000 or any integral multiple of $1,000 in
excess thereof. The entire amount of Old Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. DELIVERY IS RECOMMENDED BY OVERNIGHT DELIVERY OR, IF DELIVERY
IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities
by causing DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's Authorized Tender Offer
Program ("ATOP") procedures for transfers. Such holder of Old Capital
Securities using ATOP should transmit its acceptance on DTC on or prior to the
Expiration Date (or comply with the guaranteed delivery procedures set forth
below). DTC will verify such acceptance, execute a book-entry transfer of the
tendered Old Capital Securities into the Exchange Agent's
27
<PAGE>
account at DTC and then send to the Exchange Agent confirmation of such book-
entry transfer, including an Agent's Message confirming that DTC has received
an express acknowledgment from such holder that such holder has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Corporation may enforce the Letter of Transmittal against such holder.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (ii) such registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (i) or (ii) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly executed
bond power, with the endorsement or signature on the bond power and on the
Letter of Transmittal guaranteed by a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations with respect to Old Capital Securities
and other required documents are received by the Exchange Agent.
The Corporation's and the Trust's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, the Corporation and
the Trust upon the terms and subject to the conditions of the Exchange Offer.
28
<PAGE>
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Old Capital Securities will be determined by the Corporation
and the Trust, in their sole discretion, whose determination shall be final
and binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for,
may, in the view of counsel to the Corporation or the Trust, be unlawful. The
Corporation and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The Corporation's and the Trust's interpretation of the terms and conditions
of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the
Corporation, the Trust, any affiliates or assigns of the Corporation or Trust,
the Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Trust or
the Corporation, proper evidence satisfactory to the Corporation and the
Trust, in their sole discretion, of such person's authority to so act must be
submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Corporation and the Trust are making the Exchange Offer of the New
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Corporation nor the Trust has sought its own interpretive letter, and there
can be no assurance that the staff of the Division of Corporation Finance of
the Commission would make a similar determination with respect to the Exchange
Offer as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the Corporation and the
Trust believe that New Capital Securities issued pursuant to this Exchange
Offer in exchange for Old Capital Securities may be offered for resale, resold
and otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an Affiliate or who intends to participate in the
Exchange Offer for the purpose of distributing New Capital Securities, or any
broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the Securities
Act, (i) will not be able to rely on the interpretations of the staff of the
Division of Corporation Finance of the Commission set forth in the above-
mentioned interpretive letters, (ii) will not be entitled to tender such Old
Capital Securities in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities
unless such sale or transfer is made pursuant to an exemption from such
requirements. In addition, as described below, Participating Broker-Dealers
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of New Capital Securities.
29
<PAGE>
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
In addition, the Corporation and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to the Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of
Rule 13d-3 under the Exchange Act) on behalf of whom such holder holds the
Capital Securities to be exchanged in the Exchange Offer. Each Participating
Broker-Dealer must acknowledge that it acquired the Old Capital Securities for
its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Capital Securities. See "Plan of Distribution." The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Corporation and the Trust
believe that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities
which represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale
of such New Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales
of New Capital Securities received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by such Participating Broker-
Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration
Agreement, the Corporation and the Trust have agreed that this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending on the close of business on the first
anniversary following the Expiration Date or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
See "Plan of Distribution." Any person, including any Participating Broker-
Dealer, who is an Affiliate may not rely on such interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in
lieu thereof, that, upon receipt of notice from the Corporation or the Trust
of the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in the light of the circumstances under
which they were made, not misleading, or of the occurrence of certain other
events specified in the Registration Agreement, such Participating Broker-
Dealer will suspend the sale of New Capital Securities pursuant to this
Prospectus until the Corporation or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies
of the amended or supplemented Prospectus to such Participating Broker-Dealer,
or the Corporation or the Trust has given notice that the sale of the New
Capital Securities may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
30
<PAGE>
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name
of the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Old Capital Securities, the tendering holder must submit the certificate
numbers shown on the particular Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in "--
Procedures for Tendering Old Capital Securities," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of withdrawal
will be effective if delivered to the Exchange Agent by written, telegraphic,
telex or facsimile transmission on or prior to the Expiration Date.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time
on or prior to the Expiration Date by following any of the procedures
described above under "--Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Trust, any Affiliates or
assigns of the Corporation or the Trust, the Exchange Agent nor any other
person shall be under any duty to give any notification of any irregularities
in any notice of withdrawal or incur any liability for failure to give any
such notification. Any Old Capital Securities which have been tendered but
which are withdrawn will be returned to the holder thereof without cost to
such holder promptly after withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Each New Capital Security will pay cumulative Distributions from the most
recent Distribution Date on the Old Capital Securities, or if no Distributions
have been paid on such Old Capital Securities, from April 23, 1997. Holders of
Old Capital Securities whose Old Capital Securities are accepted for exchange
will not receive accumulated Distributions on such Old Capital Securities for
any period from and after the last Distribution Date with respect to such Old
Capital Securities prior to the original issue date of the New Capital
Securities or, if no such Distributions have been paid, will not receive any
accumulated Distributions on such Old Capital Securities, and will be deemed
to have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Date or, if no such
Distributions have been paid, from and after April 23, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Corporation and the Trust will not be required to
accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions has occurred or exists:
(i) there shall occur a change in the current interpretation by the staff
of the Commission (including oral interpretations) which permits the New
Capital Securities issued pursuant to the Exchange Offer in exchange for
Old Capital Securities to be offered for resale, resold and otherwise
transferred by holders thereof (other than broker-dealers and any such
holder which is an Affiliate) without compliance with the registration and
prospectus delivery provisions in the ordinary course of such holders'
business and such
31
<PAGE>
holders have no arrangement or understanding with any person to participate
in the distribution of such New Capital Securities;
(ii) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Corporation's and the Trust's judgment,
would reasonably be expected to impair the ability of the Trust or the
Corporation to proceed with the Exchange Offer;
(iii) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Corporation's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or the
Corporation to proceed with the Exchange Offer;
(iv) a banking moratorium shall have been declared by United States
federal or New York state authorities which, in the Corporation's and the
Trust's judgment, would reasonably be expected to impair the ability of the
Trust or the Corporation to proceed with the Exchange Offer;
(v) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Trust's and
the Corporation's judgment, would reasonably be expected to impair the
ability of the Trust or the Corporation to proceed with the Exchange Offer;
(vi) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge the
Corporation or the Trust, threatened for that purpose or any governmental
approval has not been obtained, which approval the Corporation and the
Trust shall, in their sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby;
(vii) any change, or any development involving a prospective change, in
the business or financial affairs of the Trust or the Corporation or any of
its subsidiaries has occurred which, in the judgment of the Corporation and
the Trust, might materially impair the ability of the Trust or the
Corporation to proceed with the Exchange Offer;
(viii) there shall occur any change in law or in currently prevailing
interpretations thereof by the Commission's staff (including oral
interpretations) which causes the Trust and the Corporation to determine
upon advice of their outside counsel that they are not permitted to effect
the Exchange Offer as contemplated by this Prospectus; or
(ix) the Corporation shall have received an opinion of a nationally
recognized independent tax counsel to the Corporation experienced in such
matters to the effect that as a result of the consummation of the Exchange
Offer, there is more than an insubstantial risk that (A) if the Junior
Subordinated Debt Securities are held by or on behalf of the Trust, (x) the
Trust is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to interest accrued or
received on the Junior Subordinated Debt Securities or subject to more than
a de minimis amount of other taxes, duties or other governmental charges as
determined by such counsel or (y) any portion of interest payable by the
Corporation to the Trust on the Junior Subordinated Debt Securities is not,
or within 90 days of the date of such opinion will not be, deductible by
the Corporation in whole of in part for United States federal income tax
purposes or (B) with respect to Junior Subordinated Debt Securities which
are no longer held by or on behalf of the Trust, any portion of interest
payable by the Corporation on the Junior Subordinated Debt Securities is
not, or within 90 days of the date of such opinion will not be, deductible
by the Corporation in whole or in part for United States federal income tax
purposes.
If the Corporation and the Trust determine in their sole discretion that any
of the foregoing events or conditions has occurred or exists, the Corporation
and the Trust may, subject to applicable law, terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any such condition or otherwise amend the terms of the
Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Corporation and the Trust will
promptly disclose such waiver by means of an amended or supplemented
Prospectus that will be distributed to the
32
<PAGE>
registered holders of the Old Capital Securities, and the Corporation and the
Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal, all whether by
registered or certified mail, by hand or by overnight courier, should be
directed to the Exchange Agent as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Reorganization Section
Telephone: (212) 571-3780
Facsimile: (212) 815-3687
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this
Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Corporation and the Trust expect that the exchange of Old Capital
Securities for New Capital Securities should not be a taxable exchange for
federal income tax purposes, and the holders of Old Capital Securities should
not recognize any taxable gain or loss or any interest income as a result of
such exchange.
33
<PAGE>
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Issuer Trustees on behalf of
the Trust have issued the Old Capital Securities and the Common Securities and
will issue the New Capital Securities. The New Capital Securities will
represent beneficial ownership interests in the Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust over the Common Securities, as well as other benefits
as described in the Declaration. See "--Subordination of Common Securities."
The Declaration has been qualified under the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). This summary of certain provisions of the Capital
Securities, the Common Securities and the Declaration does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Declaration, including the definitions therein of
certain terms. The Declaration is attached as an exhibit to the Registration
Statement.
GENERAL
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $100,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities will rank pari
passu, and payments will be made thereon pro rata, with the Common Securities
except as described under "--Subordination of Common Securities." Legal title
to the Junior Subordinated Debt Securities is held by the Property Trustee on
behalf of the Trust in trust for the benefit of the holders of the Capital
Securities and Common Securities. The Guarantee is a guarantee on a
subordinated basis with respect to the Capital Securities but does not
guarantee payment of Distributions or amounts payable on redemption of the
Capital Securities or on liquidation of the Trust when the Trust does not have
funds on hand available to make such payments. See "Description of New
Guarantee."
DISTRIBUTIONS
The Capital Securities represent beneficial ownership interests in the
Trust, and Distributions on each Capital Security are payable at a variable
annual rate equal to LIBOR plus 1.00% of the stated Liquidation Amount of
$1,000, and are payable quarterly in arrears on the 15th day of January,
April, July and October of each year to the holders of the Capital Securities
at the close of business on the Business Day (as defined herein) immediately
preceding such Distribution Date (each, a "record date"). Distributions on the
Capital Securities will be cumulative. Distributions will accumulate from the
original issue date of the Old Capital Securities. The first Distribution Date
for the Capital Securities will be July 15, 1997. The amount of Distributions
payable for any period will be computed on the actual number of days elapsed
in a year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Capital Securities is not a Business Day,
payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any additional
Distributions or other payments in respect to any such delay) with the same
force and effect as if made on the date such payment was originally payable
(each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in The
City of New York are authorized or required by law or executive order to
remain closed, or a day on which the corporate trust office of the Property
Trustee or the Debenture Trustee is closed for business.
So long as no Debenture Event of Default has occurred and is continuing, the
Corporation has the right under the Indenture to defer the payment of interest
on the Junior Subordinated Debt Securities at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debt Securities. As a consequence
of any such election, quarterly Distributions on the Capital Securities by the
Trust will be deferred during any such Extension Period. Distributions to
which holders of the Capital Securities are entitled will accumulate
additional Distributions thereon at a variable annual rate equal to LIBOR plus
1.00%, compounded quarterly from the relevant payment date for such
Distributions during any such Extension Period, to the extent permitted by
applicable law. The term "Distributions" as used herein shall include any
34
<PAGE>
such additional Distributions. During any such Extension Period, the
Corporation may not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred
stock), (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation (including
Other Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debt Securities, or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in interest to the Junior Subordinated Debt
Securities (other than (a) dividends or distributions in Common Stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Guarantee, (d) purchases or
acquisitions of shares of the Corporation's Common Stock in connection with
the satisfaction by the Corporation of its obligations under any employee
benefit plan or any other contractual obligation of the Corporation (other
than a contractual obligation ranking pari passu with or junior to the Junior
Subordinated Debt Securities), (e) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock or (f) the purchase of fractional interests in
shares of the Corporation's stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged). Prior to the termination of any such Extension Period, the
Corporation may further extend such Extension Period, provided that such
extension does not cause such Extension Period to exceed 20 consecutive
quarterly periods or to extend beyond the Stated Maturity of the Junior
Subordinated Debt Securities. Upon the termination of any such Extension
Period and the payment of all amounts then accrued and unpaid on the Junior
Subordinated Debt Securities (together with interest thereon accrued at a
variable annual rate equal to LIBOR plus 1.00%, compounded quarterly, to the
extent permitted by applicable law), and subject to the foregoing limitations,
the Corporation may elect to begin a new Extension Period. No interest or
other amounts shall be due and payable during an Extension Period, except at
the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of
any such Extension Period at least three Business Days prior to the earlier of
(i) the date the Distributions on the Capital Securities would have been
payable except for the election to begin such Extension Period or (ii) the
date the Administrative Trustees are required to give notice to any automated
quotation system or to holders of such Capital Securities of the record date
or the date such Distributions are payable, but in any event not less than
three Business Days prior to such record date. The Debenture Trustee shall
give notice of the Corporation's election to begin or extend an Extension
Period to the holders of the Capital Securities. There is no limitation on the
number of times that the Corporation may elect to begin an Extension Period.
See "Description of New Junior Subordinated Debt Securities--Option to Extend
Interest Payment Date" and "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debt Securities.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debt Securities in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. See "Description of New Junior Subordinated
Debt Securities--General." If the Corporation does not make interest payments
on the Junior Subordinated Debt Securities, the Property Trustee will not have
funds available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments)
is guaranteed by the Corporation on a limited basis as set forth herein under
"Description of New Guarantee."
MANDATORY REDEMPTION
The Junior Subordinated Debt Securities will mature on April 15, 2027. The
Junior Subordinated Debt Securities may be redeemed by the Corporation, in
whole or in part, at any time and from time to time on or
35
<PAGE>
after April 15, 2007, at par, plus accrued and unpaid interest thereon to the
date of redemption. In addition, the Junior Subordinated Debt Securities may
be redeemed by the Corporation at any time, in whole but not in part, in
certain circumstances described herein upon the occurrence and continuation of
a Tax Event or a Capital Treatment Event, within 90 days following the
occurrence of such Tax Event or Capital Treatment Event, as the case may be,
at par, plus accrued and unpaid interest thereon to the date of redemption,
upon not less than 30 nor more than 60 days' notice to holders of such Junior
Subordinated Debt Securities. In each case, the right of the Corporation to
redeem the Junior Subordinated Debt Securities is subject to the Corporation
having received prior approval from the Federal Reserve, if then required
under applicable capital guidelines or policies of the Federal Reserve.
Upon the repayment in full at maturity or redemption in whole or in part of
the Junior Subordinated Debt Securities (other than following the distribution
of the Junior Subordinated Debt Securities to the holders of the Trust
Securities), the proceeds from such repayment or payment shall concurrently be
applied to redeem on a pro rata basis at the Redemption Price, Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debt Securities so repaid or
redeemed; provided, however, that holders of such Trust Securities shall be
given not less than 30 nor more than 60 days' notice of such redemption (other
than at the Stated Maturity of the Junior Subordinated Debt Securities). See
"Description of New Junior Subordinated Debt Securities--Optional Redemption."
In the event that fewer than all of the outstanding Capital Securities are to
be redeemed, the Capital Securities held in book-entry form will be redeemed
in accordance with the procedures of DTC as described under "--Form,
Denominations, Book-Entry Procedures and Transfer."
"Tax Event" means the receipt by the Trust or the Corporation of an opinion
of a nationally recognized independent tax counsel to the Corporation
experienced in such matters to the effect that, as a result of (a) any
amendment to or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any judicial decision
or official administrative pronouncement, ruling, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to
or change in the administrative position or interpretation of any
Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which
such amendment or change is made known, which amendment or change is effective
or such Administrative Action or decision is announced, in each case, on or
after the Issue Date, there is more than an insubstantial risk that (x) if the
Trust holds the Junior Subordinated Debt Securities, (i) the Trust is, or will
be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to interest accrued or received on the Junior
Subordinated Debt Securities or subject to more than a de minimis amount of
other taxes, duties or other governmental charges as determined by such
counsel, or (ii) any portion of interest payable by the Corporation to the
Trust on the Junior Subordinated Debt Securities is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation in whole
or in part for United States federal income tax purposes or (y) with respect
to Junior Subordinated Debt Securities which are no longer held by the Trust,
any portion of interest payable by the Corporation on the Junior Subordinated
Debt Securities is not, or within 90 days of the date of such opinion will not
be, deductible by the Corporation in whole or in part for United States
federal income tax purposes.
"Capital Treatment Event" means the Corporation shall have received an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein or any rules, guidelines or policies of the Federal Reserve or (b) any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or such pronouncement, action or decision is announced on or
after the Issue Date of the Capital Securities, the Corporation will not be
entitled to treat the Capital Securities as "Tier 1 Capital" (or the
equivalent thereof) for purposes of the risk-based capital adequacy
36
<PAGE>
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation; provided, however, that the distribution of the Junior
Subordinated Debt Securities in connection with the liquidation of the Trust
by the Corporation shall not in and of itself constitute a Capital Treatment
Event.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debt Securities the Additional
Sums (as defined below).
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event.
REDEMPTION PROCEDURES
Trust Securities shall be redeemed, if at all, at the Redemption Price with
the proceeds from the contemporaneous repayment or redemption of the Junior
Subordinated Debt Securities. Redemptions of the Trust Securities shall be
made and the Redemption Price shall be payable on each Redemption Date (as
defined below) 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."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the date fixed for
redemption (the "Redemption Date"), to the extent funds are available, with
respect to the Capital Securities held in global form, the Property Trustee
will deposit irrevocably with DTC funds sufficient to pay the Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of the Capital Securities. See "--Form, Denomination,
Book-Entry Procedures and Transfer." With respect to the Capital Securities
held in certificated form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Capital
Securities funds sufficient to pay the Redemption Price and will give such
paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing
the Capital Securities. See "--Payment and Paying Agency." Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date shall be
payable to the holders of the Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of the Capital Securities will cease, except the right
of the holders of the Capital Securities to receive the Redemption Price, but
without interest on such Redemption Price, and the Capital Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Capital Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price is improperly withheld or refused
and not paid either by the Trust or by the Corporation pursuant to the
Guarantee as described under "Description of New Guarantee," Distributions on
Capital Securities will continue to accrue at the then applicable rate, from
the Redemption Date originally established by the Trust 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 law), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender in the
open market or by private agreement.
Notice of any redemption (other than at the Stated Maturity of the Junior
Subordinated Debt Securities) will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Trust Securities at
its registered address. Unless the Corporation defaults in payment of the
Redemption Price on, or in
37
<PAGE>
the repayment of, the Junior Subordinated Debt Securities, on and after the
Redemption Date, Distributions will cease to accrue on the Trust Securities
called for redemption.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBT
SECURITIES
The Corporation, as the holder of the outstanding Common Securities, will
have the right at any time (including, without limitation, upon the occurrence
of a Tax Event or Capital Treatment Event) to terminate the Trust and cause a
Like Amount of the Junior Subordinated Debt Securities to be distributed to
the holders of the Trust Securities upon liquidation of the Trust; provided,
however, that following such distribution of the Junior Subordinated Debt
Securities, the Corporation agrees to use its best efforts to maintain any
ratings of such Junior Subordinated Debt Securities by any nationally
recognized rating agency for so long as any such Junior Subordinated Debt
Securities are outstanding. Such right to terminate is subject to prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.
Upon liquidation of the Trust and certain other events, the Junior
Subordinated Debt Securities may be distributed to holders of the Capital
Securities. Under current United States federal income tax law, a distribution
of Junior Subordinated Debt Securities upon the dissolution of the Trust would
not be a taxable event to holders of the Capital Securities. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution of the Trust,
the distribution of the Junior Subordinated Debt Securities may constitute a
taxable event to holders of Capital Securities. See "Certain United States
Federal Income Tax Consequences--Distribution of Junior Subordinated Debt
Securities to Holders of Capital Securities."
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated Debt
Securities to the holders of the Trust Securities if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate
the Trust (which direction is optional and, except as described above, wholly
within the discretion of the Corporation, as Depositor); (iii) redemption of
all of the Trust Securities as described under "--Mandatory Redemption" above;
(iv) expiration of the term of the Trust; and (v) the entry of an order for
the dissolution of the Trust by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii), (iv) or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously
as the Issuer Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Junior Subordinated Debt Securities, unless such distribution would not be
practical, in which event such holders will be entitled to receive out of the
assets of the Trust available for distribution to holders, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, an
amount equal to, in the case of holders of Capital Securities, the aggregate
of the Liquidation Amount plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If
such Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Capital
Securities shall be paid on a pro rata basis. The holder(s) of the Common
Securities will be entitled to receive Distributions upon any such liquidation
pro rata with the holders of the Capital Securities, except that if a
Debenture Event of Default (or an event that, with notice or passage of time,
would become such an Event of Default) or an Event of Default under the
Declaration has occurred and is continuing, the Capital Securities shall have
a priority over the Common Securities with respect to any such distributions.
See "--Subordination of Common Securities." If an early termination occurs as
described in clause (v) above, the Junior Subordinated Debt Securities will be
subject to optional redemption in whole (but not in part).
"Like Amount" means (i) with respect to a redemption of Capital Securities,
Capital Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debt Securities to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will
38
<PAGE>
be used to pay the Redemption Price of the Capital Securities and (ii) with
respect to a distribution of Junior Subordinated Debt Securities to holders of
Capital Securities in connection with a dissolution or liquidation of the
Trust, Junior Subordinated Debt Securities having a principal amount equal to
the Liquidation Amount of the Trust Securities of the holder to whom such
Junior Subordinated Debt Securities are distributed.
If the Corporation elects not to redeem the Junior Subordinated Debt
Securities prior to maturity and the Trust is not liquidated and the Junior
Subordinated Debt Securities are not distributed to holders of the Trust
Securities, the Capital Securities will remain outstanding until the repayment
of the Junior Subordinated Debt Securities at the Stated Maturity.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debt Securities to holders of the Trust Securities, (i) the
Capital Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee, as the record holder of the Capital Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debt Securities to be delivered upon such distribution with
respect to Capital Securities held by DTC or its nominee and (iii) any
certificates representing Capital Securities not held by DTC or its nominee
will be deemed to represent Junior Subordinated Debt Securities having a
principal amount equal to the Liquidation Amount of such Capital Securities
and bearing accrued and unpaid interest in an amount equal to the accumulated
and unpaid Distributions on such Capital Securities until such certificates
are presented to the Administrative Trustees or their agent for cancellation,
whereupon the Corporation will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior Subordinated Debt
Securities.
There can be no assurance as to the market prices for the Capital Securities
or the Junior Subordinated Debt Securities that may be distributed in exchange
for the Trust Securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the Capital Securities that an investor may purchase, or
the Junior Subordinated Debt Securities that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Capital Securities offered hereby.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata to the
holders of Capital Securities and Common Securities based on the Liquidation
Amount of the Trust Securities, provided that, if on any Distribution Date or
Redemption Date any Debenture Event of Default (or an event that, with notice
or passage of time, would become such an Event of Default) or an Event of
Default under the Declaration shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or, in the case of payment of the Redemption Price, the full
amount of such Redemption Price on all of the outstanding Capital Securities,
shall have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or the Redemption Price of, the Capital Securities then due
and payable.
In the case of any Event of Default under the Declaration resulting from a
Debenture Event of Default, the Corporation as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event
of Default under the Declaration until the effect of all such Events of
Default have been cured, waived or otherwise eliminated. Until all such Events
of Default under the Declaration have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
such Capital Securities and not on behalf of the Corporation as holder of the
Common Securities, and only the holders of the Capital Securities will have
the right to direct the Property Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Declaration (an "Event of Default") (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be
39
<PAGE>
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
New Junior Subordinated Debt Securities--Debenture Events of Default");
(ii) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days;
(iii) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable;
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Declaration (other
than a covenant or warranty, a default in the performance of which or the
breach of which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Issuer Trustees by the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Capital Securities, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Declaration; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Depositor, unless such Event
of Default shall have been cured or waived. The Corporation, as Depositor, and
the Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Debenture Event of Default (or an event that with notice or the passage
of time, would become such an Event of Default) or an Event of Default under
the Declaration has occurred and is continuing, the Capital Securities shall
have a preference over the Common Securities as described above. See "--
Liquidation of the Trust and Distribution of Junior Subordinated Debt
Securities" and "--Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Declaration.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's property
may at the time be located, the Corporation, as the holder of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of such Trust's property, or to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the Declaration. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
40
<PAGE>
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under
the Declaration, provided such person shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other person, except as described below or as
otherwise set forth in the Declaration. The Trust may, at the request of the
Corporation, as Depositor, with the consent of the Administrative Trustees but
without the consent of the holders of the Capital Securities, the Property
Trustee or the Delaware Trustee, merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a trust organized as such under the laws of
any State; provided, however, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Trust with respect to the
Capital Securities or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital Securities (the
"Successor Securities") so long as the Successor Securities rank the same as
the Capital Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) the Corporation
expressly appoints a trustee of such successor entity possessing the same
powers and duties as the Property Trustee as the holder of the Junior
Subordinated Debt Securities, (iii) the Successor Securities are listed or
traded, or any Successor Securities will be listed or traded upon notification
of issuance, on any national securities exchange or other organization on
which the Capital Securities are then listed or traded, if any, (iv) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect, (vi) such successor entity
has a purpose identical and limited to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Corporation has received an opinion from independent counsel to the
Trust experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such
successor entity will be required to register as an investment company under
the Investment Company Act of 1940 (the "Investment Company Act") and (viii)
the Corporation or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Trust or the successor entity to be classified as an association taxable
as a corporation or as other than a grantor trust for United States federal
income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of New Guarantee--Amendments
and Assignment" and as otherwise required by law and the Declaration, the
holders of the Capital Securities will have no voting rights.
The Declaration may be amended from time to time by the Corporation, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities, (i) to cure any ambiguity,
41
<PAGE>
correct or supplement any provision in the Declaration that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Declaration, which shall not
be inconsistent with the other provisions of the Declaration, or (ii) to
modify, eliminate or add to any provisions of the Declaration to such extent
as shall be necessary to ensure that the Trust will be classified for United
States federal income tax purposes as a grantor trust or as other than an
association taxable as a corporation at all times that any Trust Securities
are outstanding or to ensure that the Trust will not be required to register
as an "investment company" under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely
affect in any material respect the interests of any holder of Trust
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of the Trust Securities. The
Declaration may be amended by the Issuer Trustees and the Corporation with (i)
the consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding Capital Securities, and (ii) receipt
by the Issuer Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not cause the Trust to be classified as an
association taxable as a corporation or affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act. In
addition, without the consent of each holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a holder of Trust Securities
to institute suit for the enforcement of any such payment on or after such
date.
So long as any Junior Subordinated Debt Securities are held by the Trust,
the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
or executing any trust or power conferred on the Property Trustee with respect
to the Junior Subordinated Debt Securities, (ii) waive any past default that
is waivable under Section 5.13 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior
Subordinated Debt Securities shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debt Securities, where such consent shall be required, without,
in each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Capital Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Junior Subordinated Debt Securities affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of
each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of
default with respect to the Junior Subordinated Debt Securities. In addition
to obtaining the foregoing approvals of such holders of the Capital
Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall obtain an opinion of counsel experienced in such matters to the effect
that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes as a result of such
action and such action would not cause the Trust to be classified as other
than a grantor trust for United States federal income tax purposes.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required for
the Trust to redeem and cancel the Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Corporation, the Issuer
42
<PAGE>
Trustees or any affiliate of the Corporation or any Issuer Trustees, shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
EXPENSES AND TAXES
In the Indenture, the Corporation, as borrower, has agreed to pay all debts
and other obligations (other than with respect to payments of Distributions,
amounts payable upon redemption and the Liquidation Amount of the Trust
Securities) and all costs and expenses of the Trust (including costs and
expenses relating to the organization of the Trust, the fees and expenses of
the Issuer Trustees and the costs and expenses relating to the operation of
the Trust) and the offering of the Capital Securities, and to pay any and all
taxes and all costs and expenses with respect to the foregoing (other than
United States withholding taxes) to which the Trust might become subject. The
foregoing obligations of the Corporation under the Indenture are for the
benefit of, and shall be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice thereof. Any such Creditor may enforce such
obligations of the Corporation directly against the Corporation, and the
Corporation has irrevocably waived any right or remedy to require that any
such Creditor take any action against the Trust or any other person before
proceeding against the Corporation. The Corporation has also agreed in the
Indenture to execute such additional agreement(s) as may be necessary or
desirable to give full effect to the foregoing.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
In the event that Capital Securities are issued in certificated form, such
Capital Securities will be in blocks having a Liquidation Amount of $100,000
(100 Capital Securities) and integral multiples of $1,000 in excess thereof
and may be transferred or exchanged in such blocks in the manner and at the
offices described below.
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for DTC, in New York, New
York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC as described
below.
Except as set forth below, the Global Capital Securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee and only in amounts that would not cause a holder to own
less than 100 Capital Securities. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below. In addition, transfer of
beneficial interests in the Global Capital Securities will be subject to the
applicable rules and procedures of DTC and its direct or indirect participants
which may change from time to time. See "--Exchange of Book-Entry Capital
Securities for Certificated Capital Securities."
Depositary Procedures
DTC has advised the Trust and the Corporation as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
to accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership
43
<PAGE>
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, ownership of interests in the Global Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC, if they are Participants in DTC, or indirectly through
organizations which are Participants in such system. All interests in a Global
Capital Security will be subject to the procedures and requirements of DTC.
The laws of some states require that certain persons take physical delivery in
certificated form of certain securities, such as the Capital Securities, that
they own. Consequently, the ability to transfer beneficial interests in a
Global Capital Security to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Capital Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Capital Securities, see "--Exchange
of Book-Entry Capital Securities for Certificated Capital Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
CAPITAL SECURITIES WILL NOT BE ENTITLED TO HAVE CAPITAL SECURITIES REGISTERED
IN THEIR NAMES, WILL NOT RECEIVE OR BE ENTITLED TO RECEIVE PHYSICAL DELIVERY
OF CAPITAL SECURITIES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE
REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE DECLARATION FOR ANY PURPOSE.
Payments in respect of the Global Capital Security registered in the name of
DTC or its nominee will be payable by the Property Trustee to DTC or its
nominee as the registered holder under the Declaration by wire transfer in
immediately available funds on each Distribution Date. Under the terms of the
Declaration, the Property Trustee will treat the persons in whose names the
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to, or payments made on account of, beneficial ownership interests in
the Global Capital Securities, or for maintaining, supervising or reviewing
any of DTC's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global Capital
Securities, or (ii) any other matter relating to the actions and practices of
DTC or any of its Participants or Indirect Participants. DTC has advised the
Trust and the Corporation that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to credit
the accounts of the relevant Participants with the payment on the payment
date, in amounts proportionate to their respective holdings in Liquidation
Amount of beneficial interests in the Global Capital Security, as shown on the
records of DTC, unless DTC has reason to believe it will not receive payment
on such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Capital Securities represented by
Global Capital Securities held through such Participants will be governed by
standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the
responsibility of DTC, the Property Trustee or the Trust. Neither the Trust
nor the Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Capital Securities,
and the Trust and the Property Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its Participants. Transfers
between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds.
44
<PAGE>
DTC has advised the Trust and the Corporation that it will take any action
permitted to be taken by a holder of Capital Securities (including, without
limitation, the presentation of Capital Securities for exchange as described
below) only at the direction of one or more Participants to whose account with
DTC interests in the Global Capital Securities are credited and only in
respect of such portion of the aggregate Liquidation Amount of the Capital
Securities represented by the Global Capital Securities as to which such
Participant or Participants has or have given such direction. However, if
there is an Event of Default under the Declaration, DTC reserves the right to
exchange the Global Capital Securities for legended Capital Securities in
certificated form and to distribute such Capital Securities to its
Participants.
So long as DTC or its nominee is the registered owner of the Global Capital
Securities, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Capital Securities represented by the Global
Capital Security for all purposes under the Declaration.
Neither DTC nor its nominee will consent or vote with respect to the Capital
Securities. Under its usual procedures, DTC would mail an omnibus proxy to the
Trust as soon as possible after the record date. The omnibus proxy assigns the
consenting or voting rights of DTC or its nominee to those Participants to
whose accounts the Capital Securities are credited on the record date
(identified in a listing attached to the omnibus proxy).
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for
the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Capital Securities among Participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trust nor the
Property Trustee will have any responsibility for the performance by DTC or
its Participants or Indirect Participants of their respective obligations
under the rules and procedures governing their operations.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is no
longer willing or able to properly discharge its responsibilities with respect
to the Capital Securities and the Corporation is unable to locate a qualified
successor, or (y) has ceased to be a "clearing agency" registered under the
Exchange Act; (ii) the Trust at its sole option elects to terminate the book-
entry system through DTC; or (iii) there shall have occurred and be continuing
a Debenture Event of Default. In addition, beneficial interests in a Global
Capital Security may be exchanged by or on behalf of DTC for certificated
Capital Securities upon request by DTC, but only upon at least 20 days prior
written notice given to the Property Trustee in accordance with DTC's
customary procedures. In all cases, certificated Capital Securities delivered
in exchange for any Global Capital Security or beneficial interests therein
will be registered in the names, and issued in any approved denominations,
requested by or on behalf of DTC (in accordance with its customary
procedures).
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities held in global form shall be
made to DTC, which shall credit the relevant accounts at DTC on the applicable
Distribution Dates or in respect of the Capital Securities that are not held
by DTC, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register. The
paying agent (the "Paying Agent") initially is the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee, the Administrative Trustees and the Corporation. In the
event that the Property Trustee shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company acceptable to the Administrative Trustees and the Corporation)
to act as Paying Agent.
45
<PAGE>
The Bank of New York has informed the Trust that so long as it serves as
paying agent for the Capital Securities, it anticipates that information
regarding Distributions on the Capital Securities, including payment date,
record date and redemption information, will be made available through The
Bank of New York at 101 Barclay Street, New York, New York 10286, Attn:
Corporate Trust Department.
RESTRICTIONS ON TRANSFER
The New Capital Securities will be issued, and may be transferred only, in
blocks having a liquidation amount (the "Liquidation Amount") of $100,000 (100
Capital Securities) and integral multiples of $1,000 in excess thereof. Any
attempted transfer, sale or other disposition of New Capital Securities in a
block having a Liquidation Amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed
not to be the holder of such New Capital Securities for any purpose, including
but not limited to the receipt of Distributions on such New Capital
Securities, and such transferee shall be deemed to have no interest whatsoever
in such New Capital Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee is acting as the registrar and transfer agent for the
Capital Securities.
Registration of transfers of the Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer or exchange of the Capital Securities after they have been called
for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Declaration and, during the existence of an Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Trust
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the Declaration or is unsure of the application of any provision of the
Declaration, and the matter is not one on which holders of the Capital
Securities or the Common Securities are entitled under the Declaration to
vote, then the Property Trustee shall take such action as is directed by the
Corporation and, if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust Securities and
will have no liability except for its own bad faith, negligence or willful
misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation for United States federal income tax purposes or as other than a
grantor trust for United States federal income tax purposes, and so that the
Junior Subordinated Debt Securities will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In this connection,
the Corporation and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of the
Trust or the Declaration, that the Corporation and the Administrative Trustees
determine in their discretion to be necessary or desirable for such purposes,
as long as such action does not materially adversely affect the interests of
the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
46
<PAGE>
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBT SECURITIES
The Old Junior Subordinated Debt Securities were issued, and the New Junior
Subordinated Debt Securities will be issued, as a separate series under the
Indenture. The Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete, and where
reference is made to particular provisions of the Indenture, such provisions,
including the definitions of certain terms, some of which are not otherwise
defined herein, are qualified in their entirety by reference to all of the
provisions of the Indenture and those terms made a part of the Indenture by
the Trust Indenture Act. The Indenture is attached as an exhibit to the
Registration Statement.
GENERAL
Concurrently with the issuance of the Old Capital Securities and the Common
Securities, the Trust invested the proceeds thereof in the Junior Subordinated
Debt Securities issued by the Corporation. The Junior Subordinated Debt
Securities bear interest at a variable annual rate equal to LIBOR plus 1.00%,
payable quarterly in arrears on the 15th day of January, April, July and
October of each year (each, an "Interest Payment Date"), commencing July 15,
1997, to the person in whose name each Junior Subordinated Debt Security is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. It is anticipated
that, until the liquidation of the Trust, each Junior Subordinated Debt
Security will be held in the name of the Property Trustee in trust for the
benefit of the holders of the Trust Securities. The amount of interest payable
for any period will be computed on the basis of the actual number of days
elapsed in a year of twelve 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debt Securities is not a
Business Day, then payment of the interest payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable. Accrued interest that
is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at a variable
annual rate equal to LIBOR plus 1.00%, compounded quarterly from the relevant
Interest Payment Date. The term "interest" as used herein shall include
quarterly payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums, as applicable. Unless
previously redeemed or repurchased, the Junior Subordinated Debt Securities
will mature on April 15, 2027. See "--Optional Redemption."
Pursuant to the Exchange Offer, the Corporation will exchange the Old Junior
Subordinated Debt Securities for the New Junior Subordinated Debt Securities
as soon as practicable after the date hereof. No Old Junior Subordinated Debt
Securities will remain outstanding after such exchange. The Junior
Subordinated Debt Securities are unsecured and rank junior and be subordinate
in right of payment to all Senior Debt. Because the Corporation is a bank
holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including the Bank, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability
of holders of the Capital Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of such subsidiary,
except to the extent that the Corporation may itself be recognized as a
creditor of such subsidiary. Accordingly, the Junior Subordinated Debt
Securities will be subordinated to all Senior Debt and effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debt Securities should look
only to the assets of the Corporation for payments on the Junior Subordinated
Debt Securities. The Indenture does not limit the incurrence or issuance of
other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture or any existing or other indenture that the
Corporation may enter into in the future or otherwise. See "--Subordination."
The Junior Subordinated Debt Securities rank pari passu with all Other
Debentures issued under the Indenture and are unsecured and subordinate and
junior in right of payment to the extent and in the manner set forth in the
Indenture to all Senior Debt of the Corporation. See "--Subordination." As a
holding company, the Corporation conducts its operations principally through
its subsidiaries and, therefore, its principal source of cash, other than its
investing and financing activities, is receipt of dividends from the Bank. The
Corporation is a
47
<PAGE>
legal entity separate and distinct from the Bank and its other subsidiaries.
See "Risk Factors--Ranking of Obligations Under the Guarantee and the Junior
Subordinated Debt Securities" and "--Status of the Corporation as a Bank
Holding Company." The Bank is subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions
with, the Corporation and certain other affiliates, and on investments in
stock or other securities thereof. Such restrictions prevent the Corporation
and such other affiliates from borrowing from the Bank unless the loans are
secured by various types of collateral. In addition, payment of dividends to
the Corporation by the Bank is subject to ongoing review by banking regulators
and is subject to various statutory limitations and in certain circumstances
requires approval by banking regulatory authorities. The Other Debentures will
be issuable in one or more series pursuant to an indenture supplemental to the
Indenture or a resolution of the Corporation's Board of Directors or a
committee thereof.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debt Securities will be represented by one or more
global certificates registered in the name of Cede & Co. as the nominee of DTC
if, and only if, distributed to the holders of the Trust Securities. Until
such time, the Junior Subordinated Debt Securities will be held in the name of
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. Should the Junior Subordinated Debt Securities be distributed to
holders of the Trust Securities, beneficial interests in the Junior
Subordinated Debt Securities will be shown on, and transfers thereof will be
effected only through, records maintained by Participants in DTC. Except as
described below, Junior Subordinated Debt Securities in certificated form will
not be issued in exchange for the global certificates.
A global security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than Cede & Co. only if
(i) DTC notifies the Corporation that it is unwilling or unable to continue as
a depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a "clearing agency"
registered under the Exchange Act, at a time when DTC is required to be so
registered to act as such depositary, (ii) the Corporation in its sole
discretion determines that such global security shall be so exchangeable, or
(iii) there shall have occurred and be continuing a Debenture Event of
Default. Any global security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for certificates registered in such names as
DTC shall direct. It is expected that such instructions will be based upon
directions received by DTC from its Participants with respect to ownership of
beneficial interests in such global security. In the event that Junior
Subordinated Debt Securities are issued in certificated form, such Junior
Subordinated Debt Securities will be in minimum blocks having an aggregate
principal amount of $100,000 and integral multiples of $1,000 in excess
thereof and may be transferred or exchanged only in such minimum denominations
and in the manner and at the offices described below.
Payments on Junior Subordinated Debt Securities represented by a global
security will be made to DTC, as the depositary for the Junior Subordinated
Debt Securities. In the event Junior Subordinated Debt Securities are issued
in certificated form, principal and interest will be payable, the transfer of
the Junior Subordinated Debt Securities will be registrable, and Junior
Subordinated Debt Securities will be exchangeable for Junior Subordinated Debt
Securities of other denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Corporation,
provided that payment of interest may be made at the option of the Corporation
by check mailed to the address of the persons entitled thereto or by wire
transfer.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "Description of New Capital Securities--Form,
Denomination, Book-Entry Procedures and Transfer." If the Junior Subordinated
Debt Securities are distributed to the holders of the Trust Securities upon
the termination of the Trust, the form, denomination, book-entry and transfer
procedures with respect to the Capital Securities as described under
"Description of New Capital Securities--Form, Denomination, Book-Entry
Procedures and Transfer," shall apply to the Junior Subordinated Debt
Securities mutatis mutandis.
48
<PAGE>
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on Junior Subordinated Debt
Securities will be made at the office of the Debenture Trustee in The City of
New York or at the office of such Paying Agent or Paying Agents as the
Corporation may designate from time to time, except that at the option of the
Corporation payment of any interest may be made (except in the case of Junior
Subordinated Debt Securities in global form), (i) by check mailed to the
address of the person entitled thereto as such address shall appear in the
register for Junior Subordinated Debt Securities or (ii) by wire transfer to
an account specified by the person entitled thereto as specified in such
register, provided that proper transfer instructions have been received by the
relevant Record Date. Payment of any interest on any Junior Subordinated Debt
Security will be made to the person in whose name such Junior Subordinated
Debt Security is registered at the close of business on the Record Date for
such interest, except in the case of defaulted interest. The Corporation may
at any time designate additional Paying Agents or rescind the designation of
any Paying Agent; however the Corporation will at all times be required to
maintain a Paying Agent in each Place of Payment for the Junior Subordinated
Debt Securities.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by the Corporation in trust, for the payment of the principal of or
interest on any Junior Subordinated Debt Security and remaining unclaimed for
two years after such principal or interest has become due and payable shall,
at the request of the Corporation, be repaid to the Corporation and the holder
of such Junior Subordinated Debt Security shall thereafter look, as a general
unsecured creditor, only to the Corporation for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing, the
Corporation has the right under the Indenture to defer the payment of interest
on the Junior Subordinated Debt Securities at any time or from time to time
for a period not exceeding 20 consecutive quarterly periods with respect to
each Extension Period, provided, that no Extension Period may extend beyond
the Stated Maturity of the Junior Subordinated Debt Securities. At the end of
an Extension Period, the Corporation must pay all interest then accrued and
unpaid on the Junior Subordinated Debt Securities (together with interest
thereon accrued at a variable annual rate equal to LIBOR plus 1.00%,
compounded quarterly from the relevant Interest Payment Date, to the extent
permitted by applicable law). During an Extension Period and for so long as
the Junior Subordinated Debt Securities remain outstanding, interest will
continue to accrue and holders of Junior Subordinated Debt Securities (and
holders of the Capital Securities while Capital Securities are outstanding)
will be required to accrue interest income (in the form of OID) for United
States federal income tax purposes. See "Certain United States Federal Income
Tax Consequences--Interest Income and Original Issue Discount."
During any Extension Period, the Corporation may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debt
Securities or (iii) make any guarantee payments with respect to any guarantee
by the Corporation of the debt securities of any subsidiary of the Corporation
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in interest to the Junior Subordinated Debt Securities (other than (a)
dividends or distributions in Common Stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) purchases or acquisitions of shares of
the Corporation's Common Stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debt Securities),
(e) as a result of a reclassification of the Corporation's capital stock or
the exchange or conversion of one class or series of the Corporation's capital
stock for another class or series of the Corporation's capital stock or (f)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock
49
<PAGE>
or the security being converted or exchanged). Prior to the termination of any
Extension Period the Corporation may further extend such Extension Period,
provided, however, that such extension does not cause such Extension Period to
exceed 20 consecutive quarterly periods or to extend beyond the Stated
Maturity of the Junior Subordinated Debt Securities. Upon the termination of
any Extension Period and the payment of all interest then accrued and unpaid
on the Junior Subordinated Debt Securities (together with interest thereon
accrued at a variable annual rate equal to LIBOR plus 1.00%, compounded
quarterly, to the extent permitted by applicable law), and subject to the
foregoing limitations, the Corporation may elect to begin a new Extension
Period. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of
any Extension Period (or an extension thereof) at least three Business Days
prior to the earlier of (i) the date the Distributions on the Capital
Securities would have been payable except for the election to begin or extend
such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any automated quotation system or to holders of
Capital Securities of the record date or the date such Distributions are
payable, but in any event not less than three Business Days prior to such
record date. The Debenture Trustee shall give notice of the Corporation's
election to begin or extend a new Extension Period to the holders of the
Capital Securities. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period.
OPTIONAL REDEMPTION
The Corporation may redeem the Junior Subordinated Debt Securities, in whole
or in part, at any time and from time to time, on or after April 15, 2007 upon
not less than 30 nor more than 60 days' notice, at par plus accrued and unpaid
interest to the redemption date. In addition, the Junior Subordinated Debt
Securities may be redeemed by the Corporation at any time, in whole but not in
part, in certain circumstances described herein upon the occurrence and
continuation of a Tax Event or a Capital Treatment Event, upon not less than
30 nor more than 60 days' notice, within 90 days following the occurrence of
such Tax Event or Capital Treatment Event, as the case may be, at par, plus
any accrued and unpaid interest thereon to the redemption date. In each case,
the right of the Corporation to redeem the Junior Subordinated Debt Securities
is subject to the receipt by the Corporation of prior approval from the
Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve. See "Description of New Capital Securities--
Mandatory Redemption."
INTEREST
The Junior Subordinated Debt Securities bear interest at a variable annual
rate equal to LIBOR plus 1.00%, from the original date of issuance of the Old
Junior Subordinated Debt Securities, payable quarterly in arrears on the 15th
day of January, April, July and October of each year, commencing July 15,
1997, to the person in whose name such Junior Subordinated Debt Security is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. The term "interest" as
used herein, as such term relates to the Junior Subordinated Debt Securities,
includes any compounded interest or Additional Sums or any Additional
Distributions payable unless otherwise stated. In the event the Junior
Subordinated Debt Securities are not held solely in book-entry only form, the
Corporation will select relevant record dates, which shall be 15 days prior to
the relevant Interest Payment Date.
The Bank of New York, as Calculation Agent (the "Calculation Agent"), will
calculate the interest rate for each quarterly interest period based on LIBOR
determined as of two London Business Days (defined as any day, other than a
Saturday or Sunday, on which banks are open for business in London) prior to
the first day of such interest period (each, a "Determination Date"). "LIBOR"
means, with respect to a quarterly interest period relating to an Interest
Payment Date (in the following order of priority):
(i) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page 3750
as of 11:00 a.m. (London time) on the related Determination Date;
(ii) if such rate does not appear on Telerate Page 3750 as of 11:00 a.m.
(London time) on the related Determination Date, LIBOR will be the
arithmetic mean (if necessary rounded upwards to the nearest whole
50
<PAGE>
multiple of .00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear on Reuters
Monitor Money Rates Page LIBO ("Reuters Page LIBO") as of 11:00 a.m.
(London time) on such Determination Date;
(iii) if such rate does not appear on Reuters Page LIBO as of 11:00 a.m.
(London time) on the related Determination Date, the Calculation Agent will
request the principal London offices of four leading banks in the London
interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for
Eurodollar deposits having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date. If at least two quotations are provided,
LIBOR will be the arithmetic mean (if necessary rounded upwards to the
nearest whole multiple of .00001%) of such quotations;
(iv) if fewer than two such quotations are provided as requested in
clause (iii) above, the Calculation Agent will request four major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in Eurodollars
as of 11:00 a.m. (London time) on such Determination Date. If at least two
such quotations are provided, LIBOR will be the arithmetic mean (if
necessary rounded upwards to the nearest whole multiple of .00001%) of such
quotations; and
(v) if fewer than two such quotations are provided as requested in clause
(iv) above, LIBOR will be LIBOR determined with respect to the interest
period immediately preceding such current interest period.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case may
be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the case may be, by
a corrected rate before 12:00 noon (London time) on such Determination Date,
the corrected rate as so substituted on the applicable page will be the
applicable LIBOR for such Determination Date.
LIBOR for the initial interest period (commencing upon the original issuance
of the Old Junior Subordinated Debt Securities) shall be determined as
provided above.
Absent manifest error, the Calculation Agent's determination of LIBOR and
its calculation of the applicable interest rate for each interest period will
be final and binding. Investors may obtain the interest rates for the current
and preceding interest period by writing or calling the office of Corporate
Trust Administration at the Calculation Agent at The Bank of New York, 101
Barclay Street, New York, New York 10286.
The amount of interest payable for any period will be computed on the basis
of the actual number of days elapsed in a year of twelve 30-day months. In the
event that any date on which interest is payable on the Junior Subordinated
Debt Securities is not a Business Day, then payment of the interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on such date.
ADDITIONAL SUMS
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debt Securities such amounts as
shall be required so that the Distributions payable by the Trust shall not be
reduced as a result of any such additional taxes, duties or other governmental
charges. The Corporation has covenanted in the Indenture that, if and so long
as (i) the Trust is the holder of all Junior Subordinated Debt Securities and
(ii) a Tax Event in respect of the Trust has occurred and is continuing, it
will pay Additional Sums (as defined under "Description of New Capital
Securities--Mandatory Redemption") in respect of such Trust Securities to the
Trust.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation has also covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock
51
<PAGE>
(which includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem
any debt securities of the Corporation (including Other Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debt
Securities or (iii) make any guarantee payments with respect to any guarantee
by the Corporation of the debt securities of any subsidiary of the Corporation
(including under Other Guarantees) if such guarantee ranks pari passu with or
junior in interest to the Junior Subordinated Debt Securities (other than (a)
dividends or distributions in Common Stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) purchases or acquisitions of shares of
the Corporation's Common Stock in connection with the satisfaction by the
Corporation of its obligations under any employee benefit plan or any other
contractual obligation of the Corporation (other than a contractual obligation
ranking pari passu with or junior in interest to the Junior Subordinated Debt
Securities), (e) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock or (f) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), if at
such time (i) there shall have occurred a Debenture Event of Default, (ii) the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee or (iii) the Corporation shall have given notice of its
election of an Extension Period as provided in the Indenture and shall not
have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debt Securities, amend, waive or
supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of
Junior Subordinated Debt Securities or the holders of the Capital Securities
so long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Corporation and the Debenture Trustee, with
the consent of the holders of not less than a majority in principal amount of
outstanding Junior Subordinated Debt Securities, to modify the Indenture in a
manner affecting the rights of the holders of Junior Subordinated Debt
Securities; provided, however, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Debt Security so
affected, change the Stated Maturity, or reduce the principal amount of the
Junior Subordinated Debt Securities, or reduce the rate or extend the time of
payment of interest thereon or reduce the percentage of principal amount of
Junior Subordinated Debt Securities, or have certain other effects as set
forth in the Indenture.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debt Securities, any
supplemental Indenture for the purpose of creating any Other Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debt Securities that has
occurred and is continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debt Securities when due (subject to the deferral of any due date in the
case of an Extension Period);
(ii) failure to pay any principal on the Junior Subordinated Debt
Securities when due, whether at maturity, upon redemption, by declaration
of acceleration or otherwise;
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
the Corporation from the Debenture Trustee or the holders of at least 25%
in aggregate outstanding principal amount of the Junior Subordinated Debt
Securities;
52
<PAGE>
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation; or
(v) the voluntary or involuntary dissolution, winding-up or termination
of the Trust, except in connection with the distribution of the Junior
Subordinated Debt Securities to the holder of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of
the Trust, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate outstanding principal amount of the Junior Subordinated Debt
Securities may declare the principal due and payable immediately upon a
Debenture Event of Default and, should the Debenture Trustee or such holders
of Junior Subordinated Debt Securities fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Capital
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debt Securities may
annul such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debt Securities which
has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
Should the holders of Junior Subordinated Debt Securities fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities affected thereby may, on behalf of the
holders of all the Junior Subordinated Debt Securities, waive any past
default, except a default in the payment of principal of or interest (unless
such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) on the Junior Subordinated Debt
Securities or a default in respect of a covenant or provision which under the
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Junior Subordinated Debt Security. Should the holders of such
Junior Subordinated Debt Securities fail to annul such declaration and waive
such default, the holders of a majority in aggregate Liquidation Amount of the
Capital Securities shall have such right. The Corporation is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Corporation is in compliance with all the conditions and covenants applicable
to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the Junior Subordinated Debt Securities, and any other amounts
payable under the Indenture, to be forthwith due and payable and to enforce
its other rights as a creditor with respect to the Junior Subordinated Debt
Securities.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable, a holder of Capital Securities may
institute a Direct Action. The Corporation may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of the holders of all of the Capital Securities. If the right to bring
a Direct Action is removed following the Exchange Offer, the Trust may become
subject to the reporting obligations under the Exchange Act. Notwithstanding
any payments made to a holder of Capital Securities by the Corporation in
connection with a Direct Action, the Corporation shall remain obligated to pay
the principal of and interest on the Junior Subordinated Debt Securities, and
the Corporation shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Corporation to such holder in any Direct
Action.
The holders of the Capital Securities will not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph, available
to the holders of the Junior Subordinated Debt Securities unless there
53
<PAGE>
shall have been an Event of Default under the Declaration. See "Description of
New Capital Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge with or into any other person or convey, transfer or lease its
properties and assets substantially as an entirety to any person, and no
person shall consolidate with or merge with or into the Corporation or convey,
transfer or lease its properties and assets substantially as an entirety to
the Corporation, unless (i) in case the Corporation consolidates with or
merges with or into another person or conveys or transfers its properties and
assets substantially as an entirety to any person, the successor person is
organized under the laws of the United States or any state or the District of
Columbia, and such successor person expressly assumes the Corporation's
obligations on the Junior Subordinated Debt Securities issued under the
Indenture; (ii) immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or both, would
become a Debenture Event of Default, shall have occurred and be continuing;
(iii) if at the time any Capital Securities are outstanding, such transaction
is permitted under the Declaration and the Guarantee and does not give rise to
any breach or violation of the Declaration or the Guarantee; and (iv) certain
other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debt Securities protection in the event of a highly leveraged or
other transaction involving the Corporation that may adversely affect holders
of the Junior Subordinated Debt Securities.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debt Securities issued thereunder shall be subordinate and junior
in right of payment to all Senior Debt to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, the holders of Senior Debt will
first be entitled to receive payment in full of principal of and interest, if
any, on such Senior Debt before the holders of Junior Subordinated Debt
Securities, or the Property Trustee on behalf of the holders, will be entitled
to receive or retain any payment or distribution in respect thereof.
In the event of the acceleration of the maturity of the Junior Subordinated
Debt Securities, the holders of all Senior Debt outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of the Junior Subordinated Debt Securities will be entitled to receive
or retain any payment in respect of the principal of or interest, if any, on
the Junior Subordinated Debt Securities.
In the event that the Corporation shall default in the payment of any
principal of or interest, if any, on any Senior Debt when the same becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and until such default
shall have been cured or waived or shall have ceased to exist or all Senior
Debt shall have been paid, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made for
principal or interest, if any, on the Junior Subordinated Debt Securities, or
in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Junior Subordinated Debt Securities.
"Senior Debt" means (a) the principal of, and premium, if any, and interest
on all indebtedness of the Corporation for money borrowed, whether outstanding
on the date of execution of the Indenture or thereafter created, assumed or
incurred, (b) all obligations to make payment pursuant to the terms of
financial instruments, such as (i) securities contracts and foreign currency
exchange contracts, (ii) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor
54
<PAGE>
agreements, collar agreements, interest rate agreements, foreign exchange
agreements, options, commodity futures contracts and commodity options
contracts, and (iii) similar financial instruments; except, in the case of
both (a) and (b) above, such indebtedness and obligations that are expressly
stated to rank junior in right of payment to, or pari passu in right of
payment with, the Junior Subordinated Debt Securities, (c) and indebtedness or
obligations of others of the kind described in both (a) and (b) above for the
payment of which the Corporation is responsible or liable as guarantor or
otherwise, and (d) any deferrals, renewals or extensions of any such Senior
Debt; provided, however, that Senior Debt shall not be deemed to include (i)
any debt of the Corporation which, when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978,
was without recourse to the Corporation, (ii) any debt of the Corporation to
any of its subsidiaries, (iii) debt to any employee of the Corporation, (iv)
debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such debt by the holders of the Junior
Subordinated Debt Securities as a result of the subordination provisions of
the Indenture would be greater than such payments otherwise would have been as
a result of any obligation of such holders of such debt to pay amounts over to
the obligees on such trade accounts payable or accrued liabilities arising in
the ordinary course of business as a result of subordination provisions to
which such debt is subject, (v) trade accounts payable or accrued liabilities
arising in the ordinary course of business and (vi) any other debt securities
issued pursuant to the Indenture.
The Indenture places no limitation on the amount of Senior Debt that may be
incurred by the Corporation. The Corporation expects from time to time to
incur additional indebtedness constituting Senior Debt. At June 30, 1997, the
aggregate outstanding Senior Debt of the Corporation was approximately $250
million on an unconsolidated basis. The Indenture also places no limitation on
the indebtedness of the Corporation's subsidiaries, which rank senior in right
of payment to the Junior Subordinated Debt Securities.
RESTRICTIONS ON TRANSFER
The New Junior Subordinated Debt Securities will be issued, and may be
transferred only, in blocks having aggregate principal amounts of $100,000 and
integral multiples of $1,000 in excess thereof. Any transfer, sale or other
disposition of New Junior Subordinated Debt Securities in a block having a
principal amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such New Junior Subordinated Debt Securities for any purpose,
including but not limited to the receipt of payments on such New Junior
Subordinated Debt Securities, and such transferee shall be deemed to have no
interest whatsoever in such New Junior Subordinated Debt Securities.
GOVERNING LAW
The Indenture and the Junior Subordinated Debt Securities are governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee has and is subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debt Securities,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
55
<PAGE>
DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was entered into by the Corporation concurrently with the
issuance by the Trust of the Old Capital Securities and the Common Securities
for the benefit of the holders from time to time of such Old Capital
Securities and the Common Securities. As soon as practicable after the date
hereof, the Old Guarantee will be exchanged by the Corporation for the New
Guarantee. The New Guarantee Agreement has been qualified under the "Trust
Indenture Act." This summary of certain provisions of the Guarantee does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the
definitions therein of certain terms, and the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Trust Securities. The New Guarantee Agreement is attached as an exhibit to
the Registration Statement.
GENERAL
The Corporation has agreed (and under the New Guarantee will agree) to pay
in full on a subordinated basis, to the extent set forth herein, the Guarantee
Payments (as defined herein) to the holders of the Trust Securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The following
payments with respect to the Trust Securities, to the extent not paid by or on
behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accrued and unpaid Distributions required to be paid on the
Trust Securities, to the extent that the Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to Trust
Securities called for redemption, to the extent that the Trust has funds on
hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of the Trust Securities or the redemption of all of the Capital
Securities) the lesser of (a) the Liquidation Distribution, to the extent the
Trust has funds available therefor and (b) the amount of assets of the Trust
remaining available for distribution to holders of the Trust Securities upon
liquidation of the Trust after satisfaction of liabilities to creditors of the
Trust as required by applicable law. The Corporation's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts
by the Corporation to the holders of the Trust Securities or by causing the
Trust to pay such amounts to such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Trust's obligations under the Trust Securities, although it will apply only to
the extent that the Trust has funds sufficient to make such payments, and is
not a guarantee of collection. If the Corporation does not make interest
payments on the Junior Subordinated Debt Securities held by the Trust, the
Trust will not be able to pay Distributions on the Capital Securities and will
not have funds legally available therefor.
The Guarantee ranks subordinate and junior in right of payment to all Senior
Debt. See "--Status of the Guarantee." As a holding company, the Corporation
conducts its operations principally through its subsidiaries and, therefore,
its principal source of cash, other than its investing and financing
activities, is receipt of dividends from the Bank. However, there are legal
limitations on the source and amount of dividends that a national bank such as
the Bank is permitted to pay. A national bank may pay dividends only to the
extent that retained net profits (including the portion transferred to
surplus) exceed bad debts (as defined by regulation). Moreover, unless a
national bank's surplus fund equals its common capital, dividends may be paid
only after 10 percent of its net profits (as defined by regulation) for the
specified preceding period have been transferred to the bank's surplus fund.
In addition, prior approval of the OCC is required if the total of all
dividends declared by a national bank in any calendar year will exceed the sum
of that bank's net profits for that year and its retained net profits for the
preceding two calendar years, less any required transfers to either surplus or
any fund for retirement of any preferred stock. At June 30, 1997, the Bank
could have paid approximately $82.4 million in dividends to the Corporation
without prior OCC approval. The payment of dividends by the Bank may also be
affected by other factors, such as requirements for the maintenance of
adequate capital. In addition, the OCC is authorized to determine, under
certain circumstances relating to the financial condition of a national bank,
whether thepayment of dividends would be an unsafe or unsound banking practice
and to prohibit payment thereof. See
56
<PAGE>
"Central Fidelity." The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Corporation, including Senior Debt,
whether under the Indenture, any other indenture that the Corporation may
enter into in the future or otherwise.
Taken together, the Corporation's obligations under the Guarantee, the
Declaration, the Junior Subordinated Debt Securities and the Indenture,
including the Corporation's obligation to pay the costs, expenses and other
liabilities of the Trust (other than the Trust's obligations to the holders of
the Trust Securities under the Trust Securities), provide, in the aggregate, a
full, irrevocable and unconditional guarantee of all of the Trust's
obligations under the Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Capital
Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debt Securities and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of the Corporation and
ranks subordinate and junior in right of payment to all Senior Debt in the
same manner as Junior Subordinated Debt Securities.
The Guarantee ranks pari passu with all Other Guarantees issued by the
Corporation. The Guarantee constitutes a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). The Guarantee is held for the benefit of the holders of the Trust
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the Trust Securities of the Junior Subordinated
Debt Securities. The Guarantee does not place a limitation on the amount of
additional Senior Debt that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Trust Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of
such outstanding Capital Securities. The manner of obtaining any such approval
will be as set forth under "Description of New Capital Securities--Voting
Rights; Amendment of the Declaration." All guarantees and agreements contained
in the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the
holders of the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder;
provided, however, that except with respect to a default in payment of any
Guarantee Payment, the Corporation shall have received notice of default and
shall not have cured such default within 60 days after receipt of such notice;
and provided, further, that no event of default under the Guarantee shall
occur unless an Event of Default under the Declaration or a Debenture Event of
Default shall have occurred. The holders of not less than a majority in
aggregate Liquidation Amount of the Capital Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
57
<PAGE>
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Corporation in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at
the request of any holder of the Trust Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
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 Trust Securities, upon full payment of
the amounts payable upon liquidation of the Trust or upon distribution of
Junior Subordinated Debt Securities to the holders of the Trust Securities.
The Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of the Trust Securities must restore payment
of any sums paid under the Trust Securities or the Guarantee.
GOVERNING LAW
The Old Guarantee is and the New Guarantee will be governed by and construed
in accordance with the laws of the State of New York.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the Registration Agreement
(which rights will terminate upon consummation of the Exchange Offer, except
under limited circumstances); and (ii) the New Capital Securities will not
provide for any increase in the Distribution rate thereon. The Old Securities
provided that, in the event that the Exchange Offer is not consummated on or
prior to November 19, 1997, or in certain limited circumstances, in the event
a shelf registration statement (the "Shelf Registration Statement") with
respect to the resale of the Old Capital Securities is not declared effective
on or prior to November 19, 1997, the interest rate borne by the Old Junior
Subordinated Debt Securities would increase by 0.25% per annum, and the
Distribution rate borne by the Old Capital Securities would increase by 0.25%
per annum, each commencing on November 20, 1997 until the time the Exchange
Offer is consummated or any required Shelf Registration Statement is declared
effective, as the case may be. The aggregate amount of such additional
interest and Distributions payable pursuant to the foregoing provisions will
in no event exceed 0.50% per annum. The holders of New Securities are not, and
upon consummation of the Exchange Offer the holders of Old Securities will not
be, entitled to any such additional interest or Distributions. Accordingly,
holders of the Old Capital Securities should review the information set forth
under "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of New Capital Securities."
58
<PAGE>
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of New Guarantee." Taken together, the
Corporation's obligations under the Junior Subordinated Debt Securities, the
Indenture, the Declaration and the Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Capital Securities. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Capital
Securities. If and to the extent that the Corporation does not make payments
on the Junior Subordinated Debt Securities, the Trust will not pay
Distributions or other amounts due on the Capital Securities. The Guarantee
does not cover payment of Distributions when the Trust does not have
sufficient funds to pay such Distributions. In such event, the remedy of a
holder of Capital Securities is to institute a Direct Action. The obligations
of the Corporation under the Guarantee are subordinate and junior in right of
payment to all Senior Debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount or Redemption Price of the Junior
Subordinated Debt Securities will be equal to the sum of the aggregate
Liquidation Amount or Redemption Price, as applicable, of the Trust
Securities; (ii) the interest rate and interest and other payment dates on the
Junior Subordinated Debt Securities will match the Distribution rate and
Distribution and other payment dates for the Capital Securities; (iii) the
Corporation shall pay for all costs, expenses and liabilities of the Trust
except the Trust's obligations to holders of Trust Securities under such Trust
Securities; and (iv) the Declaration further provides that the Trust will not
engage in any activity that is not consistent with the limited purposes
thereof.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set off any payment it is otherwise required to make
thereunder with and to the extent the Corporation has theretofore made, or is
concurrently on the date of such payment making, any payment under the
Guarantee used to satisfy the related payment of indebtedness under the
Indenture.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Trust
or any other person or entity.
A default or event of default under any Senior Debt would not constitute a
default or Event of Default under the Declaration. However, in the event of
payment defaults under, or acceleration of, Senior Debt, the subordination
provisions of the Indenture provide that no payments may be made in respect of
the Junior Subordinated Debt Securities until such Senior Debt has been paid
in full or any payment default thereunder has been cured or waived. Failure to
make required payments on Junior Subordinated Debt Securities would constitute
an Event of Default under the Declaration.
LIMITED PURPOSE OF THE TRUST
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Capital Securities and Common
Securities, investing the proceeds of the Trust Securities in Junior
Subordinated Debt Securities and engaging in other activities necessary or
incidental thereto.
59
<PAGE>
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debt
Securities, after satisfaction of the liabilities of creditors of the Trust as
required by applicable law, the holders of the Trust Securities will be
entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of New Capital Securities--Liquidation
of the Trust and Distribution of Junior Subordinated Debt Securities." Upon
any voluntary or involuntary liquidation or bankruptcy of the Corporation, the
Property Trustee, as holder of the Junior Subordinated Debt Securities, would
be a subordinated creditor of the Corporation, subordinated in right of
payment to all Senior Debt as set forth in the Indenture, but entitled to
receive payment in full of principal and interest, before any stockholders of
the Corporation receive payments or distributions. Since the Corporation is
the guarantor under the Guarantee and has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to
the holders of its Trust Securities), the positions of a holder of Capital
Securities and a holder of Junior Subordinated Debt Securities relative to
other creditors and to stockholders of the Corporation in the event of
liquidation or bankruptcy of the Corporation are expected to be substantially
the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
Unless otherwise stated, this summary addresses only the tax consequences to a
"U.S. Holder" (as defined below) that acquired Old Capital Securities on their
original issue at their original offering price and does not address the tax
consequences to persons that may be subject to special treatment under United
States federal income tax law, such as banks, insurance companies, thrift
institutions, regulated investment companies, real estate investment trusts,
tax-exempt organizations, dealers in securities or currencies, persons that
hold Capital Securities as part of a position in a "straddle" or as part of a
"hedging", "conversion" or other integrated investment transaction for United
States federal income tax purposes, persons whose functional currency is not
the United States dollar or persons that do not hold Capital Securities as
capital assets. For purposes of this summary, a U.S. Holder is a
Securityholder (as defined below) who or that is (i) an individual citizen or
resident of the United States, (ii) a domestic corporation or partnership
organized under the laws of the United States or any State thereof or the
District of Columbia or (iii) an estate or trust the income of which is
subject to United States federal income taxation regardless of source.
The statements of law or legal conclusions set forth in this summary
constitute the opinion of Sullivan & Cromwell, special tax counsel to the
Corporation and the Trust. This summary is based upon the Internal Revenue
Code of 1986, as amended, Treasury Regulations, Internal Revenue Service (the
"IRS") rulings and pronouncements and judicial decisions now in effect, all of
which are subject to change at any time. Such changes may be applied
retroactively in a manner that could cause the tax consequences to vary
substantially from the consequences described below, possibly adversely
affecting a beneficial owner of the Capital Securities. In particular,
legislation has been proposed that could adversely affect the Corporation's
ability to deduct interest on the Junior Subordinated Debt Securities, which
may in turn permit the Corporation to cause a redemption of the Capital
Securities. See "--Possible Tax Law Changes." The authorities on which this
summary is based are subject to various interpretations, and it is therefore
possible that the United States federal income tax treatment of the purchase,
ownership and disposition of the Capital Securities may differ from the
treatment described below.
INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE CAPITAL SECURITIES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES AND THE TRUST
Under current law and assuming compliance with the terms of the Declaration,
the Trust will not be classified as an association taxable as a corporation
for United States federal income tax purposes. Moreover, the
60
<PAGE>
Trust should be classified as a grantor trust, and if not so classified will
be classified as a partnership, for United States federal income tax purposes.
As a result, each beneficial owner of Capital Securities (a "Securityholder")
that is a U.S. Holder will be required to include in its gross income its pro
rata share of the interest income, including OID, paid or accrued with respect
to the Junior Subordinated Debt Securities, whether or not cash is actually
distributed to the Securityholders. See "--Interest Income and Original Issue
Discount," below. The Junior Subordinated Debt Securities will be classified
as indebtedness of the Corporation for United States federal income tax
purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations (the "Regulations"), a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Corporation
believes that the likelihood of its exercising its option to defer payments of
interest is remote. Based on the foregoing, the Corporation believes that the
Junior Subordinated Debt Securities will not be considered to be issued with
OID at the time of their original issuance.
The following discussion assumes that unless and until the Corporation
exercises its option to defer interest on the Junior Subordinated Debt
Securities, the Junior Subordinated Debt Securities will not be treated as
issued with OID other than de minimis OID.
Under the Regulations, if the Corporation exercised its option to defer any
payment of interest, the Junior Subordinated Debt Securities would be treated
as reissued with OID, and, thereafter, all stated interest on the Junior
Subordinated Debt Securities would be treated as OID as long as the Junior
Subordinated Debt Securities remained outstanding. In such event, all of a
U.S. Holder's taxable interest income with respect to the Junior Subordinated
Debt Securities would be accounted for as OID on an economic accrual basis
regardless of such U.S. Holder's method of tax accounting, and actual
distributions of stated interest would not be reported separately as taxable
income. Consequently, a U.S. Holder would be required to include OID in gross
income even though the Corporation would not make any actual cash payments
during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take the
position that the Junior Subordinated Debt Securities were issued with OID at
the time of their original issuance.
Because income on the Capital Securities will constitute interest or OID,
corporate U.S. Holders will not be entitled to the dividends-received
deduction with respect to any income recognized with respect to the Capital
Securities.
Subsequent uses of the term "interest" in this summary shall include income
in the form of OID.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES TO HOLDERS OF CAPITAL
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debt Securities, as described under the caption "Description of New Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debt Securities," will be non-taxable and will result in a U.S. Holder
receiving directly its pro rata share of the Junior Subordinated Debt
Securities previously held indirectly through the Trust, with a holding period
and aggregate adjusted tax basis equal to the holding period and aggregate
adjusted tax basis such U.S. Holder had in its Capital Securities immediately
before such distribution. If, however, the liquidation of the Trust were to
occur because the Trust was subject to United States federal income tax with
respect to income accrued or received on the Junior Subordinated Debt
Securities, the distribution of Junior Subordinated Debt Securities to U.S.
Holders by the Trust would be a taxable event to the Trust and each U.S.
Holder, and each U.S. Holder would recognize gain or loss as if the U.S.
Holder had exchanged its Capital Securities for the Junior Subordinated Debt
Securities it received upon the liquidation of the Trust. A U.S. Holder will
include interest in respect of the Junior Subordinated Debt Securities
received from the Trust in the manner described above under "--Interest Income
and Original Issue Discount."
61
<PAGE>
SALES OR REDEMPTION OF THE CAPITAL SECURITIES
Gain or loss will be recognized by a U.S. Holder on a sale, exchange, or
other disposition of the Capital Securities (including a redemption for cash)
in an amount equal to the difference between the amount realized and the U.S.
Holder's adjusted tax basis in the Capital Securities sold or so redeemed.
Assuming that the Corporation does not exercise its option to defer payment of
interest on the Junior Subordinated Debt Securities, a U.S. Holder's adjusted
tax basis in the Capital Securities generally will be its initial purchase
price. If the Junior Subordinated Debt Securities are deemed to be issued with
OID (as a result of the Corporation's deferral of any interest payment), a
U.S. Holder's adjusted tax basis in the Capital Securities generally will be
its initial purchase price, increased by OID previously included in such U.S.
Holder's gross income to the date of disposition and decreased by
distributions or other payments received on the Capital Securities other than
payments of stated interest that are not treated as OID. Gain or loss
recognized by a U.S. Holder on the Capital Securities generally will be
taxable as capital gain or loss (except to the extent any amount realized is
treated as a payment of accrued interest with respect to such U.S. Holder's
pro rata share of the Junior Subordinated Debt Securities required to be
included in income) and generally will be long-term capital gain or loss if
the Capital Securities have been held for more than one year.
Should the Corporation exercise its option to defer any payment of interest
on the Junior Subordinated Debt Securities, the Capital Securities may trade
at a price that does not fully reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debt Securities.
In the event of such a deferral, a Securityholder that disposes of its Capital
Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from the Trust for the period
prior to such disposition) will nevertheless be required to include in income
as ordinary income accrued but unpaid interest on the Junior Subordinated Debt
Securities through the date of disposition and to add such amount to its
adjusted tax basis in its Capital Securities disposed of. Such U.S. Holder
will recognize a capital loss on the disposition of its Capital Securities to
the extent the selling price (which may not fully reflect the value of accrued
but unpaid interest) is less than the U.S. Holder's adjusted tax basis in the
Capital Securities (which will include accrued but unpaid interest). Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
The exchange of an Old Capital Security for a New Capital Security should
not constitute a taxable exchange.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the Budget Proposal was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of
the issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the corporation's consolidated
balance sheet. The above described provision of the Budget Proposal is
proposed to be effective generally for instruments issued on or after the date
of first Congressional committee action. No such action has yet occurred. If
this provision were to apply to the Junior Subordinated Debt Securities, the
Corporation would be unable to deduct interest on the Junior Subordinated Debt
Securities. Under current law, the Corporation will be able to deduct interest
on the Junior Subordinated Debt Securities. There can be no assurance,
however, that current or future legislative proposals, if enacted, or final
legislation will not affect the ability of the Corporation to deduct interest
on the Junior Subordinated Debt Securities. Such a change could give rise to a
Tax Event, which may permit the Corporation to cause a redemption of the
Capital Securities, as described more fully under "Description of New Capital
Securities--Mandatory Redemption" and "Description of New Junior Subordinated
Debt Securities--Optional Redemption."
62
<PAGE>
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership or a non-resident fiduciary of a foreign estate or trust.
Under current United States federal income tax law, and subject to the
discussion of backup withholding below: (i) payments by the Trust or any of
its paying agents to any Securityholder who or that is a United States Alien
Holder will not be subject to United States federal withholding tax; provided
that (a) the Securityholder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Corporation entitled to vote, (b) the Securityholder is not a controlled
foreign corporation that is related to the Corporation through stock ownership
and (c) either (A) the Securityholder certifies to the Trust or its agent,
under penalties of perjury, that it is not a United States holder and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such statement has been received from the
Securityholder by it or by a Financial Institution holding such security for
the Securityholder and furnishes the Trust or its agent with a copy thereof;
and (ii) a United States Alien Holder of a Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security.
Recently proposed Internal Revenue Service Treasury regulations (the
"Proposed Regulations") would provide alternative methods for satisfying the
certification requirement described in clause (i)(c) above. The Proposed
Regulations also would require, in the case of Capital Securities held by a
foreign partnership, that (x) the certification described in clause (i)(c)
above be provided by the partners rather than by the foreign partnership and
(y) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule would apply in the case of
tiered partnerships. The Proposed Regulations are proposed to be effective for
payments made after December 31, 1997. There can be no assurance that the
Proposed Regulations will be adopted or as to the provisions that they will
include if and when adopted in temporary or final form.
INFORMATION REPORTING TO SECURITYHOLDERS
Generally, income on the Capital Securities will be reported to
Securityholders on Forms 1099, which forms should be mailed to Securityholders
by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the Securityholder
complies with certain certification requirements. Any withheld amounts will be
allowed as a credit against the Securityholder's United States federal income
tax, provided the required information is furnished to the Internal Revenue
Service on a timely basis.
63
<PAGE>
CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
(a "Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an
investment in the Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence
and diversification requirements of ERISA and would be consistent with the
documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or
"disqualified persons" under the Code ("Parties in Interest") with respect to
such Plan. A violation of these "prohibited transaction" rules may result in
an excise tax or other liabilities under ERISA and/or Section 4975 of the Code
for such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church
plans (as defined in Section 3(33) of ERISA) and foreign plans (as described
in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or
Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in the Trust
and no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to 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 interest in the
Trust were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans) and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"), or if the New Capital Securities were "publicly-
offered securities" for purposes of the Plan Assets Regulation. No assurance
can be given by the Initial Purchaser that the value of the Capital Securities
held by Benefit Plan Investors will be less than 25% of the total value of
such Capital Securities at the completion of the initial offering or
thereafter, and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception. Furthermore, it is not
anticipated that the New Capital Securities would be considered to be
"publicly-offered securities" under the Plan Assets Regulation. All of the
Common Securities are held by the Corporation.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities were acquired with "plan
assets" of such Plan and assets of the Trust were deemed to be "plan assets"
of Plans investing in the Trust. For example, if the Corporation is a Party in
Interest with respect to an investing Plan (either directly or by reason of
its ownership of the Trust or of any of the Corporation's other subsidiaries),
extensions of credit between the Corporation and the Trust (as represented by
the Junior Subordinated Debt Securities and the Guarantee) would likely be
prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the
Code, unless exemptive relief were available under an applicable
administrative exemption (see below).
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited
transactions resulting from the purchase or holding of the Capital Securities,
assuming that assets of the Trust were deemed to be "plan assets" of Plans
investing in the Trust (see above). Those class exemptions are PTCE 96-23 (for
certain transactions determined by in-house asset managers),
64
<PAGE>
PTCE 95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank collective
investment funds), PTCE 90-1 (for certain transactions involving insurance
company pooled separate accounts) and PTCE 84-14 (for certain transactions
determined by independent qualified professional asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Trust for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of
any Plan, unless such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or
holder of the Capital Securities or any interest therein will be deemed to
have represented by its purchase and holding thereof that it either (a) is not
a Plan or a Plan Asset Entity and is not purchasing such securities on behalf
of or with "plan assets" of any Plan or (b) is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 with respect to
such purchase or holding. Furthermore, to avoid certain prohibited
transactions under ERISA and the Code that could result under certain
circumstances if the Capital Securities are deemed to be such equity
interests, each investing Plan, by purchasing the Capital Securities, will be
deemed to have directed the Trust to invest in the Junior Subordinated Debt
Securities and to have appointed the Property Trustee.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering
purchasing the Capital Securities on behalf of or with "plan assets" of any
Plan consult with their counsel regarding the potential consequences if the
assets of the Trust were deemed to be "plan assets" and the availability of
exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in certain interpretive letters, the Corporation and
the Trust believe that Participating Broker-Dealers, may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the
Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to below in connection
with resales of New Capital Securities received in exchange for Old Capital
Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making
or other trading activities. Subject to certain provisions set forth in the
Registration Agreement, the Corporation and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such New
Capital Securities for a period ending on the close of business on the first
anniversary following the Expiration Date or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
Any person, including any Participating Broker-Dealer, who is an Affiliate may
not rely on such interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction. In addition, until October 26, 1997, all dealers
effecting transactions in the New Capital Securities may be required to
deliver a prospectus.
65
<PAGE>
The Trust and the Corporation will not receive any proceeds from any sale of
New Capital Securities by broker-dealers. New Capital Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be
sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Capital Securities or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account pursuant
to the Exchange Offer and any broker or dealer that participates in a
distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of one year after the Expiration Date, the Trust and the
Corporation will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Trust and the Corporation
have agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Old Capital Securities) other
than commissions or concessions of any brokers or dealers and will indemnify
the holders of the Old Capital Securities (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
VALIDITY OF NEW SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Corporation and the Trust. The validity of the New Guarantee
and the New Junior Subordinated Debt Securities will be passed upon for the
Corporation by Sullivan & Cromwell. Sullivan & Cromwell will rely on the
opinion of Richards, Layton & Finger as to matters of Delaware law and on the
opinion of Williams, Mullen, Christian & Dobbins as to matters of Virginia
law. As of June 1, 1997 certain principals of Williams, Mullen, Christian &
Dobbins were beneficial owners of an aggregate of approximately 371,762 shares
of the Corporation's Common Stock.
ACCOUNTANTS
The consolidated financial statements of Central Fidelity Banks, Inc. and
subsidiaries as of December 31, 1996 and 1995 and for each of the years in the
three year period ended December 31, 1996, included in Central Fidelity's 1996
Form 10-K incorporated by reference into this Offering Memorandum, have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent auditors, included in Central Fidelity's 1996 Form
10-K and incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
66
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 10 of Chapter 9 of Title 13.1 of the Code of Virginia (the "Virginia
Code") permits a Virginia corporation to indemnify any director or officer for
reasonable expenses incurred in any legal proceeding in advance of final
disposition of the proceeding, if the director or officer furnishes the
corporation a written statement of his good faith belief that he has met the
standard of conduct prescribed by the Virginia Code, and a determination is
made by the board of directors that such standard has been met. In a
proceeding by or in the right of the corporation, no indemnification shall be
made in respect of any matter as to which an officer or director is adjudged
to be liable to the corporation, unless the court in which the proceeding took
place determines that, despite such liability, such person is reasonably
entitled to indemnification in view of all the relevant circumstances. In any
other proceeding, no indemnification shall be made if the director or officer
is adjudged liable to the corporation on the basis that personal benefit was
improperly received by him. Corporations are given the power to make any other
or further indemnity, including advance of expenses, to any director or
officer that may be authorized by the articles of incorporation or any bylaw
made by the shareholders, or any resolution adopted, before or after the
event, by the shareholders, except an indemnity against willful misconduct or
a knowing violation of the criminal law. Unless limited by its articles of
incorporation, indemnification of a director or officer is mandatory when he
entirely prevails in the defense of any proceeding to which he is a party
because he is or was a director or officer.
The Articles of Incorporation of Central Fidelity contain provisions
indemnifying the directors and officers of Central Fidelity against expenses
and liabilities incurred in legal proceedings and authorizing the Board of
Directors to advance and reimburse expenses as permitted by law. The Articles
of Incorporation of Central Fidelity also eliminate the liability of directors
and officers to Central Fidelity or its shareholders for monetary damages in
excess of one dollar as permitted by the Virginia Code.
Under the Amended and Restated Declaration of Trust, Central Fidelity, as
depositor of the Trust, has agreed (i) to indemnify and hold harmless each
Issuer Trustee and any employee or agent of the Trust or its Affiliates from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such person in good faith on behalf of the Trust and in a manner
such person reasonably believes to be within the scope of authority conferred
on such person by the Declaration, except that no person shall be entitled to
be indemnified in respect of any loss, damage or claim incurred by such person
by reason of negligence or willful misconduct with respect to such acts or
omissions, and (ii) to advance expenses (including legal fees) incurred by
such person in defending any claim, demand, action, suit or proceeding, from
time to time, prior to the final disposition of such claim, demand, action,
suit or proceeding.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT NAME
----------- ------------
<C> <S>
4.1 --Junior Subordinated Indenture, dated as of April 23, 1997,
between the Corporation and The Bank of New York, as Debenture
Trustee*
4.2 --Certificate of Trust of Central Fidelity Capital Trust I*
4.3 --Declaration of Trust of Central Fidelity Capital Trust I*
4.4 --Amended and Restated Declaration Trust, dated as of April 23,
1997, of Central Fidelity Capital Trust I*
4.5 --Form of Capital Security Certificate for Central Fidelity
Capital Trust I (included in Exhibit 4.4)
4.6 --Form of New Guarantee Agreement for the benefit of the holders
of the Trust Securities*
4.7 --Form of Junior Subordinated Debt Security (included in Exhibit
4.1)
4.8 --Registration Agreement, dated as of April 23, 1997, among the
Corporation, Central Fidelity Capital Trust I and the Initial
Purchasers*
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT NAME
----------- ------------
<S> <C>
5.1 --Opinion of Sullivan & Cromwell as to validity of the New Junior
Subordinated Debt Securities and the New Guarantee to be issued
by the Corporation
5.2 --Opinion of Richards, Layton & Finger, special Delaware counsel,
as to validity of the New Capital Securities to be issued by
Central Fidelity Capital Trust I*
8 --Opinion of Sullivan & Cromwell as to certain federal income tax
matters*
12 --Statement re: Computation of Consolidated Ratio of Earnings to
Fixed Charges*
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Richards, Layton & Finger (included in Exhibit 5.2)
23.3 --Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.4 --Consent of Williams, Mullen, Christian & Dobbins (included in
Exhibit 5.1)
24 --Powers of Attorney*
25.1 --Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Junior Subordinated Indenture
25.2 --Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Amended and Restated Declaration of Trust
25.3 --Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the New Guarantee Agreement
99.1 --Form of Letter of Transmittal*
99.2 --Form of Notice of Guaranteed Delivery*
</TABLE>
- --------
* Previously filed.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of a
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) which is
incorporated by reference in the Registration Statement 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, each of the
Registrants has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
Registrant of expenses incurred or paid by a director, officer or controlling
person of a 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, such 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
Securities Act and will be governed by the final adjudication of such issue.
Each of the undersigned Registrants hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
<PAGE>
Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove the registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF RICHMOND, VIRGINIA ON JULY 24, 1997.
Central Fidelity Banks, Inc.
/s/ Charles W. Tysinger
____________________________________
CHARLES W. TYSINGER
CHIEF FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the July 24, 1997
- ------------------------------------- Board, President
(LEWIS N. MILLER, JR.) and Chief Executive
Officer
/s/ Charles W. Tysinger Chief Financial July 24, 1997
- ------------------------------------- Officer (Principal
(CHARLES W. TYSINGER) Financial Officer)
* Senior Vice President July 24, 1997
- ------------------------------------- (Principal Accounting
(JAMES F. CAMPBELL) Officer)
* Director July 24, 1997
- -------------------------------------
(JAMES F. BETTS)
* Director July 24, 1997
- -------------------------------------
(ALVIN R. CLEMENTS)
* Director July 24, 1997
- -------------------------------------
(PHYLLIS L. COTHRAN)
* Director July 24, 1997
- -------------------------------------
(JACK H. FERGUSON)
Director July , 1997
- -------------------------------------
(THOMAS R. GLASS)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director July , 1997
- -------------------------------------
(GEORGE R. LEWIS)
* Director July 24, 1997
- -------------------------------------
(G. BRUCE MILLER)
* Director July 24, 1997
- -------------------------------------
(T. JUSTIN MOORE, III)
* Director July 24, 1997
- -------------------------------------
(RICHARD L. MORRILL)
* Director July 24, 1997
- -------------------------------------
(LLOYD U. NOLAND, III)
* Director July 24, 1997
- -------------------------------------
(WILLIAM G. REYNOLDS, JR.)
* Director July 24, 1997
- -------------------------------------
(KENNETH S. WHITE)
</TABLE>
* Charles W. Tysinger, by signing his name hereto, signs this document on
behalf of each of the persons indicated by an asterisk above pursuant to
powers of attorney duly executed by such persons and filed herewith with the
Securities and Exchange Commission.
July 24, 1997 By: /s/ Charles W. Tysinger
---------------------------------
CHARLES W. TYSINGER
ATTORNEY-IN-FACT
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
Central Fidelity Capital Trust I, has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Richmond, Virginia on July 24, 1997.
Central Fidelity Capital Trust I
By: Central Fidelity Banks, Inc,
as Depositor
/s/ Charles W. Tysinger
-------------------------------------
NAME: CHARLES W. TYSINGER
TITLE: CORPORATE EXECUTIVE VICE
PRESIDENT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT NAME
----------- ------------
<S> <C>
4.1 --Junior Subordinated Indenture, dated as of April 23, 1997,
between the Corporation and The Bank of New York, as
Debenture Trustee*
4.2 --Certificate of Trust of Central Fidelity Capital Trust I*
4.3 --Declaration of Trust of Central Fidelity Capital Trust I*
4.4 --Amended and Restated Declaration Trust, dated as of April
23, 1997, of Central Fidelity Capital Trust I*
4.5 --Form of Capital Security Certificate for Central Fidelity
Capital Trust I (included in Exhibit 4.4)
4.6 --Form of New Guarantee Agreement for the benefit of the
holders of the Trust Securities*
4.7 --Form of Junior Subordinated Debt Security (included in
Exhibit 4.1)
4.8 --Registration Agreement, dated as of April 23, 1997, among
the Corporation, Central Fidelity Capital Trust I and the
Initial Purchasers*
5.1 --Opinion of Sullivan & Cromwell as to validity of the New
Junior Subordinated Debt Securities and the New Guarantee
to be issued by the Corporation
5.2 --Opinion of Richards, Layton & Finger, special Delaware
counsel, as to validity of the New Capital Securities to be
issued by Central Fidelity Capital Trust I*
8 --Opinion of Sullivan & Cromwell as to certain federal
income tax matters*
12 --Statement re: Computation of Consolidated Ratio of
Earnings to Fixed Charges*
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Richards, Layton & Finger (included in Exhibit
5.2)
23.3 --Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.4 --Consent of Williams, Mullen, Christian & Dobbins (included
in Exhibit 5.1)
24 --Powers of Attorney*
25.1 --Form T-1 Statement of Eligibility of The Bank of New York
to act as trustee under the Junior Subordinated Indenture
25.2 --Form T-1 Statement of Eligibility of The Bank of New York
to act as trustee under the Amended and Restated
Declaration of Trust
25.3 --Form T-1 Statement of Eligibility of The Bank of New York
to act as trustee under the New Guarantee Agreement
99.1 --Form of Letter of Transmittal*
99.2 --Form of Notice of Guaranteed Delivery*
</TABLE>
- --------
* Previously filed.
<PAGE>
Exhibit 5.1
June 10, 1997
Central Fidelity Banks, Inc.,
1021 East Cary Street,
P.O. Box 27602,
Richmond, Virginia 23261.
Central Fidelity Capital Trust I,
1021 East Cary Street,
P.O. Box 27602,
Richmond, Virginia 23261.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of (i) $100,000,000 aggregate Liquidation Amount of Floating Rate Capital
Trust Pass-through Securities, Series A, Liquidation Amount $1,000 per security
(the "Capital Securities") to be issued by Central Fidelity Capital Trust I, a
statutory business trust created under the laws of the State of Delaware (the
"Issuer"), (ii) the guarantee with respect to the Capital Securities (the
"Guarantee") to be executed and delivered by
<PAGE>
Central Fidelity Banks, Inc.
Central Fidelity Capital Trust I -2-
Central Fidelity Banks, Inc., a Virginia corporation (the "Company"), and (iii)
$100,000,000 aggregate principal amount of Floating Rate Junior Subordinated
Debt Securities, Series A (the "Junior Subordinated Debt Securities") of the
Company, we, as your special counsel, have examined such trust and corporate
records, certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion,
when:
(i) the Registration Statement relating to the Capital Securities, the
Guarantee and the Junior Subordinated Debt Securities (the "Registration
Statement") has become effective under the Act;
(ii) the terms of the Guarantee and of its issuance and delivery have
been duly established so as not to violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the
Company and so as to comply with any requirement or restriction imposed by
any court or governmental body having jurisdiction over the Company, and the
Guarantee Agreement relating to the Guarantee
<PAGE>
Central Fidelity Banks, Inc.
Central Fidelity Capital Trust I -3-
has been duly executed and delivered as contemplated in the Registration
Statement;
(iii) the terms of the Junior Subordinated Debt Securities and of their
issuance and delivery have been duly established in conformity with the
Junior Subordinated Indenture relating to the Junior Subordinated Debt
Securities (the "Indenture") so as not to violate any applicable law or
result in a default under or breach of any agreement or instrument binding
upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the
Company, and the Junior Subordinated Debt Securities have been duly
executed and authenticated in accordance with the Indenture and issued and
delivered as contemplated in the Registration Statement; and
(iv) the terms of the Capital Securities and of their issuance and
delivery have been duly established in conformity with the Amended and
Restated Declaration of Trust of the Issuer (the "Declaration") so as not
to violate any applicable law or result in a default under or breach of any
agreement or instrument binding upon
<PAGE>
Central Fidelity Banks, Inc.
Central Fidelity Capital Trust I -4-
the Issuer and so as to comply with any requirement or restriction imposed
by any court or governmental body having jurisdiction over the Issuer, and
the Capital Securities have been duly executed and authenticated in
accordance with the Declaration and issued and delivered as contemplated in
the Registration Statement;
the Guarantee and the Junior Subordinated Debt Securities will constitute valid
and legally binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the States of New York and Virginia, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction. With respect to
all matters of Virginia law, we have relied upon the opinion, dated as of the
date hereof, of Williams, Mullen, Christian & Dobbins, and our opinion is
subject to the same assumptions, qualifications and limitations with respect to
such matters as are contained in the opinion of
<PAGE>
Cental Fidelity Banks, Inc.
Central Fidelity Capital Trust I -5-
Williams, Mullen, Christian & Dobbins. We believe you and we are justified in
relying on such opinion for such matters.
We understand that you have received an opinion, dated as of the date
hereof, regarding the Capital Securities from Richards, Layton & Finger, LLP,
special Delaware counsel for the Company and the Issuer. We are expressing no
opinion with respect to the matters contained in such opinion.
Also, we have relied as to certain matters on information obtained from
public officials, officers of the Company and the Issuer and other sources
believed by as to be responsible, and we have assumed that the Indenture has
been duly authorized, executed and delivered by the Trustee thereunder, an
assumption which we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
New Securities" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
<PAGE>
Central Fidelity Banks, Inc.
Central Fidelity Capital Trust I -6-
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
Attachment to Exhibit 5.1
[Williams, Mullen, Christian & Dobbins letterhead]
June 10, 1997
Central Fidelity Banks, Inc.
1021 East Cary Street
Richmond, Virginia 23219
Central Fidelity Capital Trust I
1021 East Cary Street
Richmond, Virginia 23219
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-5805
Re: Floating Rate Junior Subordinated Debt Securities, Series A of Central
Fidelity Banks, Inc.; Guarantee of Central Fidelity Banks, Inc. with
respect to Floating Rate Capital Trust Pass-through Securities, Series A
------------------------------------------------------------------------
Ladies and Gentlemen:
We have served as Virginia counsel to Central Fidelity Banks, Inc., a
Virginia corporation (the "Company"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company and
Central Fidelity Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), with the Securities and Exchange
Commission for the registration under the Securities Act of 1933, as amended
(the "Act"), of (i) $100,000,000 Floating Rate Capital Trust Pass-through
Securities, Series A (Liquidation Amount $1,000 per Capital Trust Pass-through
Security)(the "New Capital Securities") of the Trust, (ii) the guarantee (the
"New Guarantee") with respect to the New Capital Securities to be executed and
delivered by the Company, and (iii) $100,000,000 Floating Rate Junior
Subordinated Debt Securities, Series A (the "New Junior Subordinated Debt
Securities") of the Company. Unless otherwise defined herein or unless the
context otherwise requires, terms defined in the
<PAGE>
June 10, 1997
Page 2
Registration Statement (either directly or by reference to other documents)
shall have the same meaning when used herein.
In connection with the foregoing, we have examined such corporate
proceedings, records, certificates and originals or copies, certified or
otherwise identified to our satisfaction, of documents as we considered
necessary for the purposes of this opinion. As to certain factual matters, we
have relied upon certificates and representations of the Company and its
officers. We have assumed the correctness of the factual matters contained in
such reliance sources, and have not acquired any information giving us
knowledge, without any independent investigation for the purpose, that such
factual matters are incorrect.
We have assumed the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all items submitted to us as originals and
the conformity with originals of all items submitted to us as copies. In making
our examination of the documents and instruments executed by persons other than
the Company, we have assumed that each such other person had the power to enter
into and perform all of its obligations thereunder and also have assumed the due
authorization by each such person for the entering into and performance of such
obligations and the due execution and delivery of such documents by each such
person. We have further assumed that each such other person that is not a
natural person is duly organized, validly existing and in good standing under
the laws of the jurisdiction under which it was created, and that all such other
persons, including natural persons, have all necessary power and authority to
own their respective properties and assets and to conduct their respective
businesses as presently conducted and proposed to be conducted under the terms
of all such documents and instruments reviewed by
<PAGE>
June 10, 1997
Page 3
us to which each is a party. We have further assumed that entry into and
performance of the obligations of each person, other than the Company, to the
documents and instruments reviewed by us do not and will not constitute a breach
or violation of, or conflict with, any law, governmental requirement, license,
permit, order, contract, indenture or obligation of any kind to which such
person or its property is subject.
Based upon the foregoing, and subject to the qualifications hereinafter
set forth, we are of the opinion that:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the Commonwealth of Virginia and is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended, and has the corporate power and authority to own its properties and
conduct its business as described in the Registration Statement.
2. Each of the Registration Statement and the Indenture has been duly
authorized, executed and delivered by the Company, and the New Guarantee
Agreement has been duly authorized by the Company.
3. When (i) the Registration Statement has become effective under the
Act; (ii) the terms of the New Guarantee and of its issuance and delivery have
been duly established so as not to violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the Company
and so as to comply with any requirement or restriction
<PAGE>
June 10, 1997
Page 4
imposed by any court or governmental body having jurisdiction over the Company,
and the New Guarantee Agreement relating to the New Guarantee has been duly
executed and delivered as contemplated in the Registration Statement; (iii) the
terms of the New Junior Subordinated Debt Securities and of their issuance and
delivery have been duly established in conformity with the Indenture relating to
the New Junior Subordinated Debt Securities so as not to violate any applicable
law or result in a default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company,
and the New Junior Subordinated Debt Securities have been duly executed and
authenticated in accordance with the Indenture and issued and delivered as
contemplated in the Registration Statement; and (iv) the terms of the New
Capital Securities and of their issuance and delivery have been duly established
in conformity with the Amended and Restated Declaration of Trust of the Trust
(the "Declaration") so as not to violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the Trust
and so as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Trust, and the New Capital
Securities have been duly executed and authenticated in accordance with the
Declaration and issued and delivered as contemplated in the Registration
Statement; the Guarantee and the New Junior Subordinated Debt Securities will
constitute valid and legally binding obligations of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity.
<PAGE>
June 10, 1997
Page 5
Our opinion is limited in all respects to the application of the laws of
the Commonwealth of Virginia and, to the extent applicable, the federal laws of
the United States. We render no opinion on the laws of any other jurisdiction
(or any subdivision thereof).
We understand that you have received an opinion, dated as of the date
hereof, regarding the New Capital Securities from Richards, Layton & Finger,
LLP, special Delaware counsel for the Company and the Trust. We are expressing
no opinion with respect to the matters contained in such opinion.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the reference to us under an
appropriate caption relating to the validity of the New Securities in any
Prospectus forming a part of the Registration Statement. In giving such consent
we do not thereby admit that we are in the category of person whose consent is
required under Section 7 of the Act.
Very truly yours,
WILLIAMS, MULLEN, CHRISTIAN & DOBBINS
by /s/ William H. Schwarzschild
----------------------------
William H. Schwarzschild, III
Shareholder
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Central Fidelity Banks, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Accountants" in the prospectus.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
June 24, 1997
<PAGE>
================================================================================
Exhibit 25.1
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CENTRAL FIDELITY BANKS, INC.
(Exact name of obligor as specified in its charter)
Virginia 54-1091649
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 23261-7602
(Address of principal executive offices) (Zip code)
----------------------
Floating Rate Junior Subordinated Debt Securities, Series A
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 5th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 7
Consolidated Report of Condition of ---------
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin......................................... $ 6,024,605
Interest-bearing balances................................. 808,821
Securities:
Held-to-maturity securities............................... 1,071,747
Available-for-sale securities............................. 3,105,207
Federal funds sold in domestic offices of the
bank:..................................................... 4,250,941
Loans and lease financing receivables:
Loans and leases, net of unearned
income ...................................... 31,962,915
LESS: Allowance for loan and lease losses ........ 635,084
LESS: Allocated transfer risk reserve................. 429
Loans and leases, net of unearned income,
allowance, and reserve ................................. 31,327,402
Assets held in trading accounts............................. 1,539,612
Premises and fixed assets (including
capitalized leases)....................................... 692,317
Other real estate owned..................................... 22,123
Investments in unconsolidated subsidiaries
and associated companies.................................. 213,512
Customers' liability to this bank on
acceptances outstanding................................... 985,297
Intangible assets........................................... 590,973
Other assets................................................ 1,487,903
-----------
Total assets................................................ $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices ...................................... $25,929,642
Noninterest-bearing ........................... 11,245,050
Interest-bearing .............................. 14,684,592
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ................................. 12,852,809
Noninterest-bearing .............................. 552,203
Interest-bearing .............................. 12,300,606
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased..................................... 1,360,877
Securities sold under agreements to repurchase.............. 226,158
Demand notes issued to the U.S. Treasury.................... 204,987
Trading liabilities......................................... 1,437,445
Other borrowed money:
With original maturity of one year or less................ 2,312,556
With original maturity of more than one year.............. 20,766
Bank's liability on acceptances executed and
outstanding............................................... 1,014,717
Subordinated notes and debentures........................... 1,014,400
Other liabilities........................................... 1,721,291
-----------
Total liabilities........................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock................................................ 942,284
Surplus..................................................... 731,319
Undivided profits and capital reserves...................... 2,354,095
Net unrealized holding gains (losses) on
available-for-sale securities............................. 7,030
Cumulative foreign currency translation
adjustments............................................... ( 9,916)
-----------
Total equity capital........................................ 4,024,812
-----------
Total liabilities and equity capital ....................... $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Exhibit 25.2
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CENTRAL FIDELITY CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o Central Fidelity Banks, Inc.
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 23261-7602
(Address of principal executive offices) (Zip code)
----------------------
Floating Rate Capital Trust Pass-through Securities, Series A
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 5th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
---------------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 7
Consolidated Report of Condition of ---------
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin......................................... $ 6,024,605
Interest-bearing balances................................. 808,821
Securities:
Held-to-maturity securities............................... 1,071,747
Available-for-sale securities............................. 3,105,207
Federal funds sold in domestic offices of the
bank:..................................................... 4,250,941
Loans and lease financing receivables:
Loans and leases, net of unearned
income ...................................... 31,962,915
LESS: Allowance for loan and lease losses ........ 635,084
LESS: Allocated transfer risk reserve................. 429
Loans and leases, net of unearned income,
allowance, and reserve ................................. 31,327,402
Assets held in trading accounts............................. 1,539,612
Premises and fixed assets (including
capitalized leases)....................................... 692,317
Other real estate owned..................................... 22,123
Investments in unconsolidated subsidiaries
and associated companies.................................. 213,512
Customers' liability to this bank on
acceptances outstanding................................... 985,297
Intangible assets........................................... 590,973
Other assets................................................ 1,487,903
-----------
Total assets................................................ $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices ...................................... $25,929,642
Noninterest-bearing ........................... 11,245,050
Interest-bearing .............................. 14,684,592
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ................................. 12,852,809
Noninterest-bearing .............................. 552,203
Interest-bearing .............................. 12,300,606
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased..................................... 1,360,877
Securities sold under agreements to repurchase.............. 226,158
Demand notes issued to the U.S. Treasury.................... 204,987
Trading liabilities......................................... 1,437,445
Other borrowed money:
With original maturity of one year or less................ 2,312,556
With original maturity of more than one year.............. 20,766
Bank's liability on acceptances executed and
outstanding............................................... 1,014,717
Subordinated notes and debentures........................... 1,014,400
Other liabilities........................................... 1,721,291
-----------
Total liabilities........................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock................................................ 942,284
Surplus..................................................... 731,319
Undivided profits and capital reserves...................... 2,354,095
Net unrealized holding gains (losses) on
available-for-sale securities............................. 7,030
Cumulative foreign currency translation
adjustments............................................... ( 9,916)
-----------
Total equity capital........................................ 4,024,812
-----------
Total liabilities and equity capital ....................... $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Exhibit 25.3
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CENTRAL FIDELITY BANKS, INC.
(Exact name of obligor as specified in its charter)
Virginia 54-1091649
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1021 East Cary Street
P.O. Box 27602
Richmond, Virginia 23261-7602
(Address of principal executive offices) (Zip code)
----------------------
Guarantee of Floating Rate Capital Trust
Pass-through Securities, Series A of
Central Fidelity Capital Trust I
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 5th day of June, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
-----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 7
Consolidated Report of Condition of ---------
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin......................................... $ 6,024,605
Interest-bearing balances................................. 808,821
Securities:
Held-to-maturity securities............................... 1,071,747
Available-for-sale securities............................. 3,105,207
Federal funds sold in domestic offices of the
bank:..................................................... 4,250,941
Loans and lease financing receivables:
Loans and leases, net of unearned
income ...................................... 31,962,915
LESS: Allowance for loan and lease losses ........ 635,084
LESS: Allocated transfer risk reserve................. 429
Loans and leases, net of unearned income,
allowance, and reserve ................................. 31,327,402
Assets held in trading accounts............................. 1,539,612
Premises and fixed assets (including
capitalized leases)....................................... 692,317
Other real estate owned..................................... 22,123
Investments in unconsolidated subsidiaries
and associated companies.................................. 213,512
Customers' liability to this bank on
acceptances outstanding................................... 985,297
Intangible assets........................................... 590,973
Other assets................................................ 1,487,903
-----------
Total assets................................................ $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices ...................................... $25,929,642
Noninterest-bearing ........................... 11,245,050
Interest-bearing .............................. 14,684,592
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ................................. 12,852,809
Noninterest-bearing .............................. 552,203
Interest-bearing .............................. 12,300,606
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased..................................... 1,360,877
Securities sold under agreements to repurchase.............. 226,158
Demand notes issued to the U.S. Treasury.................... 204,987
Trading liabilities......................................... 1,437,445
Other borrowed money:
With original maturity of one year or less................ 2,312,556
With original maturity of more than one year.............. 20,766
Bank's liability on acceptances executed and
outstanding............................................... 1,014,717
Subordinated notes and debentures........................... 1,014,400
Other liabilities........................................... 1,721,291
-----------
Total liabilities........................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock................................................ 942,284
Surplus..................................................... 731,319
Undivided profits and capital reserves...................... 2,354,095
Net unrealized holding gains (losses) on
available-for-sale securities............................. 7,030
Cumulative foreign currency translation
adjustments............................................... ( 9,916)
-----------
Total equity capital........................................ 4,024,812
-----------
Total liabilities and equity capital ....................... $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
