As filed with the Securities and Exchange Commission on ___________ ___, 1996
File No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PROVIDENT BANCORP, INC. OHIO DELAWARE 31-0982792
PROVIDENT CAPITAL TRUST I (STATE OR OTHER [To be applied for]
(EXACT NAME OF REGISTRANT JURISDICTION OF (I.R.S. EMPLOYER
AS SPECIFIED IN ITS INCORPORATION OR IDENTIFICATION
CHARTER) ORGANIZATION) NUMBER)
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2000
(Address, including zip code, and telephone number, including area
code, of Registrants' principal executive offices)
Mark E. Magee
Vice President, General Counsel and Secretary
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Edward E. Steiner Lee Meyerson
Keating, Muething & Klekamp Andrew R. Keller
1800 Provident Tower Simpson Thacher & Bartlett
One East Fourth Street 425 Lexington Avenue
Cincinnati, Ohio 45202 New York, New York 10017
(513) 579-6400 (212) 455-2000
Approximate Date of Commencement of Proposed Sale to the Public: As soon
as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. / /
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to be Amount to be Aggregate Offering Aggregate Offering Amount of
Registered Registered Price per Security Price<F1> Registration Fee
- ------------------------------------------- -------------- -------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Trust Preferred Securities of Provident Capital
Trust I<F2> . . . . . . . . . . . . . . . . . . 40,000 $25.00 $1,000,000 $303.03
Junior Subordinated Debentures due ______ 2026
of Provident Bancorp, Inc.<F2> . . . . . . . .
Guarantee of Trust Preferred Securities by
Provident Bancorp, Inc. . . . . . . . . . . . .
<FN>
<F1> Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
<F2> The Junior Subordinated Debentures will be purchased by Provident Capital
Trust I with the proceeds of the sale of the Trust Preferred Securities.
No separate consideration will be received for the issuance of the Junior
Subordinated Debentures or the Guarantee of the Trust Preferred
Securities. Pursuant to Rule 457(a), no separate fee is payable with
respect to the Junior Subordinated Debentures or the Guarantee of the
Trust Preferred Securities.
</TABLE>
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
_______________________________________________________________________________
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
_______________________________________________________________________________
SUBJECT TO COMPLETION, DATED _________ ___, 1996
Trust Preferred Securities
PROVIDENT CAPITAL TRUST I
% Trust Preferred Securities
(Liquidation Preference $25 per Preferred Security)
Guaranteed to the extent set forth herein by
Provident Bancorp, Inc.
__________________
The % Trust Preferred Securities (the "Preferred Securities"), offered
hereby represent preferred undivided beneficial interests in the assets of
Provident Capital Trust I, a Delaware statutory business trust (the "Trust").
Provident Bancorp, Inc., an Ohio corporation (the "Company"), will be the owner
of all of the beneficial interests represented by common securities of the
Trust (the "Common Securities"). The Trust exists for the sole purpose of
issuing the Preferred Securities and the Common Securities and investing the
proceeds
(Continued on next page)
See "Risk Factors" beginning on page 8 hereof for certain information relevant
to an investment in the Preferred Securities, including the period and
circumstances during and under which payments of distributions on the Preferred
Securities may be deferred and certain United States federal income tax
consequences of such deferral.
Application will be made to list the Preferred Securities on the New York Stock
Exchange. If approved for listing, trading of the Preferred Securities on the
New York Stock Exchange is expected to commence within 30 days after the
initial delivery of the Preferred Securities.
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.
__________________________
<PAGE>
THESE SECURITIES WILL NOT BE DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND WILL
NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
____________________________
<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds To
Offering Price<F1> Commission<F2> Trust<F3><F4>
------------------- ------------------- ----------------------
<S> <C> <C> <C>
Per Preferred Security . . . . . . . . $ (3) $
Total<F5> . . . . . . . . . . . . . . . $ (3) $
<FN>
_________________________
<F1> Plus accrued distributions, if any, from _________, 19__.
<F2> The Trust and the Company have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
<F3> In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures,
the Underwriting Agreement provides that the Company will pay to the
Underwriters, as compensation ("Underwriters' Compensation") for their
arranging the investment therein of such proceeds, $ per Preferred
Security (or $ in the aggregate). See "Underwriting".
<F4> Expenses of the offering to be paid by the Company are estimated to be
$________.
<F5> The Trust and the Company have granted to the Underwriters an option
exercisable for 30 days to purchase up to an additional _______ Preferred
Securities at the initial public offering price per Preferred Security
solely to cover over-allotments, if any. The Company will pay to the
Underwriters, as Underwriters' Compensation, the commission set forth
above in footnote (3) with respect to such additional Preferred
Securities. If such option is exercised in full, the Initial Public
Offering Price, Underwriters' Compensation and Proceeds to the Trust will
be $____________, $____________ and $___________, respectively. See
"Underwriting".
</TABLE>
______________________
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made in book-entry
form only through the facilities of The Depository Trust Company on or about
, 1996, against payment therefor in immediately available funds.
LEHMAN BROTHERS
____________ ___, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_________________________
(Continued from previous page)
thereof in % Junior Subordinated Debentures (the "Junior Subordinated
Debentures") to be issued by the Company. The Junior Subordinated Debentures
will mature on __________ ___, 2026, which date may be extended to a date not
later than __________ ___, 2045 if certain conditions are met. The Preferred
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 Preferred Securities --
Subordination of Common Securities".
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable quarterly in arrears on the last day of March, June,
September and December of each year, commencing ________ ___, 199_, at the
annual rate of % of the liquidation preference of $25 per Preferred Security
("Distributions"). The distribution rate and the distribution payment dates and
other payment dates for the Preferred Securities will correspond to the
interest rate and interest payment dates and other payment dates on the Junior
Subordinated Debentures, which will be the sole assets of the Trust. The
Company will guarantee the payment of Distributions and payments on liquidation
of the Trust or redemption of the Preferred Securities, but only in each case
to the extent of funds held by the Trust, as described herein (the
"Guarantee"). See "Description of Guarantee". If the Company does not make
interest payments on the Junior Subordinated Debentures held by the Trust, the
Trust will have insufficient funds to pay Distributions on the Preferred
Securities. In such event, a holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce payment of such
Distributions to such holder. The Company's obligations under the Guarantee,
taken together with its obligations under the Junior Subordinated Debentures
and the Indenture (as defined herein), including its obligation to pay all
costs, expenses and liabilities of the Trust (other than with respect to the
Preferred Securities), constitute a full and unconditional guarantee of all of
the Trust's obligations under the Preferred Securities. The obligations of the
Company under the Guarantee and the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Indebtedness (as defined in
"Description of Junior Subordinated Debentures--Subordination") of the Company
and will be structurally subordinated to all liabilities and obligations of the
Company's subsidiaries. As of __________ ___, 1996, approximately $_________
aggregate principal amount of Indebtedness was outstanding, and the Company's
consolidated subsidiaries had approximately $________ of indebtedness and other
liabilities. The terms of the Junior Subordinated Debentures place no
limitation on the amount of Indebtedness that may be incurred by the Company or
on the amount of liabilities and obligations of the Company's subsidiaries. See
"Description of Junior Subordinated Debentures--Subordination".
<PAGE>
The Company has the right to defer payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each deferral period (each,
an "Extension Period"), during which Extension Periods the Company shall have
the right to make full or partial payments of interest on any Interest Payment
Date, provided that no Extension Period may extend beyond the Stated Maturity
(as defined herein) of the Junior Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all amounts then due on any
Interest Payment Date (as defined herein), the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. Accordingly,
there could be multiple Extension Periods of varying lengths throughout the
term of the Junior Subordinated Debentures. If interest payments on the Junior
Subordinated Debentures are so deferred, distributions on the Preferred
Securities will also be deferred and the Company may not, and may not permit
any subsidiary of the Company to, subject to certain exceptions set forth
herein, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities that rank pari passu
with or junior to the Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or junior
to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company and (b) payments under the
Guarantee). During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Preferred Securities are entitled will accumulate) at the rate
of % per annum, compounded quarterly, and holders of the Preferred
Securities will be required to accrue interest income for United States federal
income tax purposes prior to receipt of cash related to such interest income.
See "Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period" and "Certain United States Federal Income Tax Consequences--
Original Issue Discount".
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company, subject to the receipt of any necessary prior approval
of the Board of Governors of the Federal Reserve System (the "Federal
Reserve"), (i) on or after ________ ___, 2001, in whole at any time or in part
from time to time, at a redemption price equal to the principal amount of the
Junior Subordinated Debentures so redeemed plus the accrued and unpaid interest
thereon to the date fixed for redemption, or (ii) at any time, in whole (but
not in part), upon the occurrence and continuation of a Special Event (as
defined herein), at such redemption price, in each case subject to the further
conditions described under "Description of Junior Subordinated Debentures--
Redemption". The Preferred Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Junior Subordinated Debentures at
maturity or their earlier redemption, in an amount equal to the amount of
related Junior Subordinated Debentures maturing or being redeemed and at a
redemption price equal to the aggregate liquidation preference of such
Preferred Securities plus accumulated and unpaid Distributions thereon to the
date of redemption.
<PAGE>
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Federal Reserve, to terminate the Trust and cause the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities and the
Common Securities in liquidation of the Trust. If the Junior Subordinated
Debentures are distributed to the holders of Preferred Securities upon the
liquidation of the Trust, the Company will use its best efforts to list the
Junior Subordinated Debentures on the New York Stock Exchange or such other
stock exchanges, if any, on which the Preferred Securities are then listed. See
"Description of Preferred Securities--Redemption--Special Event Redemption or
Distribution of Junior Subordinated Debentures".
In the event of the liquidation of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as provided by applicable law, the
holders of the Preferred Securities will be entitled to receive a liquidation
preference of $25 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Junior Subordinated Debentures as described
above. See "Description of Preferred Securities--Liquidation Distribution Upon
Dissolution".
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Chicago Regional Office, Suite 1400,
Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, 13th Floor, Suite 1300,
New York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also maintains a
Web site (http://www.sec.gov) that contains reports, proxy statements and other
information regarding the Company.
The Company and the Trust have filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus omits, in accordance with the rules and regulations of the
Commission, certain of the information contained in the Registration Statement.
Reference is hereby made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein for further information with respect to the
Company, the Trust and the securities offered hereby. Statements contained
herein concerning the provisions of any document are not necessarily complete
and, in each instance, where a copy of such document has been filed as an
exhibit to the Registration Statement or otherwise has been filed with the
Commission, reference is made to the copy so filed. Each such statement is
qualified in its entirety by such reference.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company does not believe such financial
statements would be material to holders of the Preferred Securities because
(i) all of the voting securities of the Trust will be owned, directly or
indirectly, by the Company, a reporting company under the Exchange Act,
(ii) the Trust has no independent operations but exists for the sole purpose of
issuing securities representing undivided beneficial interests in its assets
and investing the proceeds thereof in Junior Subordinated Debentures issued by
the Company, and (iii) the obligations of the Trust under the Preferred
Securities are fully and unconditionally guaranteed by the Company. See
"Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee".
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31 and June 30, 1996 and the Company's Current Reports on
Form 8-K dated September 19, September 26 and October 3, 1996, previously filed
by the Company with the Commission, are incorporated by reference in this
Prospectus and shall be deemed to be a part hereof.
Each document filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of any offering of securities
made by this Prospectus shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of filing 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 the Registration Statement and 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 the Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any and all of the documents that have been or may be incorporated by
reference herein (other than exhibits to such documents which are not
specifically incorporated by reference into such documents). Such requests
should be directed to Investor Relations Department, Linn Street, 855E,
Cincinnati, Ohio 45203, telephone (513) 345-7102.
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified by the more detailed information and financial
statements appearing elsewhere, or incorporated by reference, in this
Prospectus. Unless otherwise noted, the material set forth herein does not give
effect to the exercise of the Underwriters' over-allotment option.
The Company
The Company is a Cincinnati-based bank holding company formed in 1980
which operates throughout Ohio, northern Kentucky and southeastern Indiana. At
September 30, 1996, the Company had total assets of $6.5 billion, total
deposits of $4.4 billion and total shareholders' equity of $471 million. Its
lead bank, chartered by the State of Ohio in 1902, is The Provident Bank (the
"Bank"), a full-service commercial bank that operates primarily in the greater
Cincinnati area.
The Company's banking subsidiaries have 71 branch offices: 56 in the
greater Cincinnati area (which includes 9 in northern Kentucky), 12 in the
greater Dayton area, 1 branch in Columbus, Ohio and 2 branches in Cleveland,
Ohio. The Company's executive offices are located at One East Fourth Street,
Cincinnati, Ohio 45202 and its telephone number is (513) 579-2000.
The Offering
The Trust . . . . . . . . . . . . Provident Capital Trust I, a Delaware
statutory business trust. The sole
assets of the Trust will be the
Junior Subordinate Debentures.
Securities Offered . . . . . . . ___% Preferred Securities evidencing
preferred undivided beneficial
interests in the assets of the Trust.
Distributions . . . . . . . . . . Holders of the Preferred Securities
will be entitled to receive cumulative
cash distributions at an annual rate
of % of the liquidation amount of
$25 per Preferred Security, accruing
from the date of original issuance and
payable quarterly in arrears on the
last day of March, June, September and
December of each year commencing on
________ ___, 199__. The distribution
rate and the distribution and other
payment dates for the Preferred
Securities will correspond to the
interest rate and interest and other
payment dates on the Junior
Subordinated Debentures. See
"Description of Preferred Securities".
<PAGE>
Junior Subordinated Debentures . The Trust will invest the proceeds
from the issuance of the Preferred
Securities and Common Securities in an
equivalent amount of % Junior
Subordinated Debentures of the
Company. The Junior Subordinated
Debentures will mature on __________
___, 2026, which date may be extended
to a date not later than __________
___, 2045 if certain conditions are
met. The Junior Subordinated
Debentures will rank subordinate and
junior in right of payment to all
Indebtedness of the Company. In
addition, the Company's obligations
under the Junior Subordinated
Debentures will be structurally
subordinated to all existing and
future liabilities and obligations of
its subsidiaries. See "Risk Factors--
Ranking of Subordinate Obligations
Under the Guarantee and the Junior
Subordinated Debentures", "Risk
Factors--Status of Company as Holding
Company" and "Description of Junior
Subordinated Debentures--
Subordination".
Guarantee . . . . . . . . . . . . Payment of distributions out of moneys
held by the Trust, and payments on
liquidation of the Trust or the
redemption of Preferred Securities,
are guaranteed by the Company to the
extent the Trust has funds available
therefor. If the Company does not make
principal or interest payments on the
Junior Subordinated Debentures, the
Trust will not have sufficient funds
to make distributions on the Preferred
Securities, in which event the
Guarantee shall not apply to such
distribution until the Trust has
sufficient funds available therefor.
The Company's obligations under the
Guarantee, taken together with its
obligations under the Junior
Subordinated Debentures and the
Indenture, including its obligation to
pay all costs, expenses and
liabilities of the Trust (other than
with respect to the Preferred
Securities), constitute a full and
unconditional guarantee of all of the
<PAGE>
Trust's obligations under the
Preferred Securities. See "Description
of Guarantee" and "Relationship Among
the Preferred Securities, the Junior
Subordinated Debentures and the
Guarantee". The obligations of the
Company under the Guarantee are
subordinate and junior in right of
payment to all Indebtedness of the
Company. See "Risk Factors--Ranking of
Subordinated Obligations Under the
Guarantee and the Junior Subordinated
Debentures" and "Description of
Guarantee".
Right to Defer Interest . . . . . The Company has the right to defer
payment of interest on the Junior
Subordinated Debentures by extending
the interest payment period on the
Junior Subordinated Debentures, from
time to time, for up to 20 consecutive
quarters. There could be multiple
Extension Periods of varying lengths
throughout the term of the Junior
Subordinated Debentures. If interest
payments on the Junior Subordinated
Debentures are so deferred,
distributions on the Preferred
Securities will also be deferred and
the Company may not, and may not
permit any subsidiary of the Company
to, subject to certain exceptions set
forth herein, (i) declare or pay any
dividends or distributions on, or
redeem, purchase, acquire, or make a
liquidation payment with respect to,
the Company's capital stock or (ii)
make any payment of principal,
interest or premium, if any, on or
repay, repurchase or redeem any debt
securities that rank pari passu with
or junior to the Junior Subordinated
Debentures or make any guarantee
payments with respect to any guarantee
by the Company of the debt securities
of any subsidiary of the Company if
such guarantee ranks pari passu with
or junior to the Junior Subordinated
Debentures (other than (a) dividends
or distributions in common stock of
the Company and (b) payments under the
Guarantee). During an Extension
Period, interest on the Junior
<PAGE>
Subordinated Debentures will continue
to accrue (and the amount of
Distributions to which holders of the
Preferred Securities are entitled will
accumulate) at the rate of % per
annum, compounded quarterly. During an
Extension Period, holders of Preferred
Securities will be required to include
deferred interest income allocated to
their Preferred Securities in their
gross income (as original issue
discount ("OID")) even though the cash
payments attributable thereto have not
been made. See "Description of Junior
Subordinated Debentures--Option to
Extend Interest Payments Period" and
"Certain United States Federal Income
Tax Consequences--Original Issue
Discount".
Redemption . . . . . . . . . . . The Junior Subordinated Debentures are
redeemable by the Company (in whole
or, from time to time, in part) on or
after ________ ___, 2001, or at any
time, in whole but not in part, upon
the occurrence of a Special Event, in
either case subject to prior approval
of the Federal Reserve if then
required under applicable capital
guidelines or policies of the Federal
Reserve. If the Junior Subordinated
Debentures are redeemed, the Trust
must redeem Trust Securities having an
aggregate liquidation amount equal to
the aggregate principal amount of the
Junior Subordinated Debentures so
redeemed. The Trust Securities will be
redeemed upon maturity of the Junior
Subordinated Debentures. See
"Description of Preferred Securities
Mandatory Redemption" and " Special
Event Redemption or Distribution of
Junior Subordinated Debentures".
Liquidation of the Trust . . . . Upon the occurrence and continuation
of a Special Event, the Company will
have the right, subject to the prior
approval of the Federal Reserve if
then required under applicable capital
guidelines or policies of the Federal
Reserve, to terminate the Trust and
cause the Junior Subordinated
Debentures to be distributed to the
<PAGE>
holders of the Preferred Securities
and the Common Securities in
liquidation of the Trust. If the
Junior Subordinated Debentures are
distributed to the holders of
Preferred Securities upon the
liquidation of the Trust, the Company
will use its best efforts to list the
Junior Subordinated Debentures on the
New York Stock Exchange or such other
stock exchanges, if any, on which the
Preferred Securities are then listed.
See "Description of Preferred
Securities--Redemption--Special Event
Redemption or Distribution of Junior
Subordinated Debentures."
In the event of the liquidation of the
Trust, after satisfaction of the
claims of creditors of the Trust, if
any, as provided by applicable law,
the holders of the Preferred
Securities will be entitled to receive
a liquidation preference of $25 per
Preferred Security plus accumulated
and unpaid Distributions thereon to
the date of payment, which may be in
the form of a distribution of such
amount in Junior Subordinated
Debentures as described above. See
"Description of Preferred Securities
Liquidation Distribution Upon
Dissolution."
Use of Proceeds . . . . . . . . . The proceeds from the sale of the
Preferred Securities will be used to
purchase the Junior Subordinated
Debentures. The Company expects to use
the proceeds from the sale of the
Junior Subordinated Debentures for
general corporate purposes, which may
include the repayment of indebtedness,
investments in or extensions of credit
to its subsidiaries and the financing
of possible acquisitions. See "Use of
Proceeds".
Ratings . . . . . . . . . . . . . It is expected that the Preferred
Securities will be rated ___ by
Standard & Poor's Ratings Services
("S&P"), ___ by Moody's Investors
Service, Inc. ("Moody's"), ___ by
Fitch Investors Service, L.P.
<PAGE>
("Fitch") and ___ by Duff and Phelps
Credit Rating Co. ("DCR"). A security
rating is not a recommendation to buy,
sell or hold securities and may be
subject to revision or withdrawal at
any time by the assigning rating
organization.
<PAGE>
RISK FACTORS
Prospective purchasers of the Preferred Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Company under the Guarantee issued by the
Company for the benefit of the holders of Preferred Securities and under the
Junior Subordinated Debentures are unsecured and rank subordinate and junior in
right of payment to all Indebtedness of the Company. At ___________ ___, 1996,
the Indebtedness of the Company aggregated approximately $__________. Neither
the Indenture, the Guarantee nor the Declaration places any limitation on the
amount of secured or unsecured Indebtedness that may be incurred by the
Company. See "Description of Guarantee--Status of the Guarantee" and
"Description of Junior Subordinated Debentures--Subordination".
Status of Company as Holding Company
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from the Bank,
which is the Company's principal subsidiary. There are various regulatory
restrictions on the ability of the Bank to pay dividends or make other payments
to the Company. At September 30, 1996, the Bank could pay an aggregate of $___
million in dividends to the Company without prior regulatory approval. In
addition, the right of the Company 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 Preferred
Securities to benefit indirectly from such distribution), will be subject to
the prior claims of creditors of that subsidiary, except to the extent that any
claims of the Company of a creditor of such subsidiary may be recognized as
such. Accordingly, the Preferred Securities will effectively be subordinated to
all existing and future liabilities of the Company's subsidiaries, and holders
of the Preferred Securities should look only to the assets of the Company for
payments on the Preferred Securities. As of _________, 1996, the Company's
consolidated subsidiaries had indebtedness and other liabilities of
approximately $___________.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Trust Enforcement Event (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as a holder of the Junior
Subordinated Debentures against the Company. The holders of a majority in
liquidation amount of the Preferred Securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
<PAGE>
right to direct the Property Trustee to exercise the remedies available to it
as a holder of the Junior Subordinated Debentures. If the Property Trustee
fails to enforce its rights with respect to the Junior Subordinated Debentures
held by the Trust, any record holder of Junior Preferred Securities may
institute legal proceedings directly against the Company to enforce the
Property Trustee's rights under such Junior Subordinated Debentures without
first instituting any legal proceedings against such Property Trustee or any
other person or entity.
If the Company were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Trust would lack funds
for the payment of Distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. However, in the event the Company failed to pay interest on or
principal of the Junior Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Preferred Securities may
directly institute a proceeding against the Company for enforcement of payment
to such holder of the interest on or principal of such Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation
preference of the Preferred Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Company will be subrogated to the
rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by the Company to such holder of Preferred
Securities in such Direct Action. Except as set forth herein, holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of Junior Subordinated Debentures or assert directly
any other rights in respect of the Junior Subordinated Debentures. See
"Description of Preferred Securities--Enforcement of Certain Rights by Holders
of Preferred Securities", "Description of Guarantee" and "Description of Junior
Subordinated Debentures--Indenture Events of Default". The Declaration provides
that each holder of Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Indenture.
Option to Extend Interest Payment Period; Tax Consequences
The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarters, provided that no Extension
Period may extend beyond the Stated Maturity (as defined below) of the Junior
Subordinated Debentures. As a consequence of any such deferral, quarterly
Distributions on the Preferred Securities by the Trust will be deferred but
would continue to accumulate at the rate of % per annum, compounded
quarterly) during any such Extension Period. During any such Extension Period,
the Company may not, and may not permit any subsidiary of the Company to (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu with or junior to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
<PAGE>
with or junior to the Junior Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company and (b) payments under the
Guarantee). Prior to the termination of any such Extension Period, the Company
may further extend the Extension Period, provided that no Extension Period may
exceed 20 consecutive quarters or extend beyond the Stated Maturity (as defined
below) of the Junior Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due on any Interest
Payment Date, the Company may elect to begin a new Extension Period subject to
the above requirements. See "Description of Preferred Securities--
Distributions" and "Description of Junior Subordinated Debentures--Option to
Extend Interest Payment Period".
Should the Company defer payment of interest on the Junior
Subordinated Debentures, a holder of Preferred Securities will be required to
accrue income (in the form of OID) in respect of its pro rata share of the
Junior Subordinated Debentures held by the Trust for United States federal
income tax purposes. As a result, a holder of Preferred 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 Preferred Securities prior
to the record date for the payment of Distributions. See "Certain United States
Federal Income Tax Consequences--Original Issue Discount" and "--Sales or
Redemption of Preferred Securities".
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of the Company's right to defer interest
payments, the market price of the Preferred Securities (which represent
preferred undivided beneficial interests in the Junior Subordinated Debentures)
may be more volatile than the market prices of other similar securities where
the Trust does not have such right to defer interest payments.
Special Event Redemption; Proposed Tax Legislation
Upon the occurrence and continuation of a Special Event, the Company
has the right, subject to the prior approval of the Federal Reserve if then
required under applicable capital guidelines and policies of the Federal
Reserve, to redeem the Junior Subordinated Debentures in whole (but not in
part) at the redemption price within 90 days following the occurrence of such
Special Event and thereby cause a mandatory redemption of the Preferred
Securities and Common Securities. A "Special Event" means a Tax Event or an
Investment Company Event (each as defined herein).
On March 19, 1996 as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that would, among other things, deny interest deductions on a
debt instrument issued on or after December 7, 1995 if the instrument had a
maximum weighted average maturity of more than 40 years. The Proposed
<PAGE>
Legislation would also generally deny interest deductions for interest on an
instrument, issued by a corporation, that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of
the Company 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 Company's consolidated
balance sheet. For purposes of determining the weighted average maturity or the
term of an instrument, any right to extend would be treated as exercised. The
above-described provisions of the Proposed Legislation were proposed to be
effective generally for instruments issued on or after December 7, 1995. If
either provision were to apply to the Junior Subordinated Debentures, the
Company would not be able to deduct interest on the Junior Subordinated
Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement (the "Joint
Statement") to the effect that it was their intention that the effective date
of the President's legislative proposals, if adopted, will be no earlier than
the date of appropriate Congressional action. In addition, subsequent to the
publication of the Joint Statement, Senator Daniel Patrick Moynihan and
Representative Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury
Department officials concurring with the view expressed in the Joint Statement
(the "Democrat Letters"). If the principles contained in the Joint Statement
and the Democrat Letters were followed and the Proposed Legislation were
enacted, such legislation would not apply to the Junior Subordinated
Debentures. There can be no assurance, however, that current or future
legislative or administrative proposals or final legislation will not adversely
affect the ability of the Company to deduct interest on the Junior Subordinated
Debentures or otherwise affect the tax treatment described herein. Such a
change, therefore, could give rise to a Tax Event, which would permit the
Company to cause a redemption of the Preferred Securities upon receiving an
opinion of counsel as described more fully under "Description of Preferred
Securities--Redemption--Special Event Redemption or Distribution of Junior
Subordinated Debentures".
Liquidation Distribution of Junior Subordinated Debentures
Upon the occurrence and continuation of a Special Event the Company
will have the right, subject to the prior approval of the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve, to terminate the Trust and cause the Junior Subordinated Debentures to
be distributed to the holders of the Preferred Securities and the Common
Securities in liquidation of the Trust. In addition, upon liquidation of the
Trust in certain other events, the Junior Subordinated Debentures may be
distributed to such holders. Generally, a distribution by the Trust of the
Junior Subordinated Debentures pursuant to a liquidation of the Trust will be
non-taxable and will result in a holder of the Preferred Securities receiving
directly the holder's pro rata share of the Junior Subordinated Debentures
(previously held indirectly through the Trust). If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior
Subordinated Debentures, the distribution of Junior Subordinated Debentures to
holders of the Preferred Securities by the Trust would be a taxable event to
the Trust and each holder, and holders of the Preferred Securities would
<PAGE>
recognize gain or loss as if they had exchanged their Preferred Securities for
the Junior Subordinated Debentures they received upon the liquidation of the
Trust. See "Certain United States Federal Income Tax Consequences--Receipt of
Subordinated Debentures or Cash Upon Liquidation of the Trust".
There can be no assurance as to the market prices for Preferred
Securities or Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a liquidation of the Trust occurs.
Accordingly, the Preferred Securities that an investor may purchase, whether
pursuant to the offer made hereby or in the secondary market, or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Trust prospective purchasers of Preferred Securities are
also making an investment decision with regard to the Junior Subordinated
Debentures and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of Preferred
Securities--Redemption--Special Event Redemption or Distribution of Junior
Subordinated Debentures" and "Description of Junior Subordinated Debentures--
General".
Limited Voting Rights
Holders of Preferred Securities generally will have limited voting
rights relating only to the modification of the Preferred Securities and
certain other matters described herein. Holders of Preferred Securities will
not be entitled to vote to appoint, remove or replace any of the Trustees (as
defined below), which voting rights are vested exclusively in the holder of the
Common Securities. The Trustees and the Company may amend the Declaration
without the consent of holders of Preferred Securities to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust even if such action adversely affects the interests of such holders. See
"Description of Preferred Securities--Voting Rights; Amendment of the
Declaration" and "--Removal of Trustees".
Bank Regulatory Restrictions on Operations of the Trust
Because the Trust is a subsidiary of the Company, federal banking
authorities will have the right to examine the Trust and its activities. Under
certain circumstances, including any determination that the Company's
relationship to the Trust results in an unsafe and unsound banking practice,
such banking authorities will have the authority to issue orders which could
restrict the ability of the Trust to make distributions on or to redeem the
Preferred Securities.
Trading Characteristics of Preferred Securities
Application will be made to list the Preferred Securities on the New
York Stock Exchange. The Preferred Securities may trade at prices that do not
fully reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debentures.
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of Preferred Securities will be
invested by the Trust in Junior Subordinated Debentures. The Company expects to
use the proceeds from the sale of such Junior Subordinated Debentures
(estimated at approximately $_________ million before expenses of the offering)
for general corporate purposes, which may include the repayment of
indebtedness, investments in or extensions of credit to its subsidiaries and
the financing of possible acquisitions. The Company engages on a regular basis
in discussions regarding the potential acquisition of branches, deposits and
other financial institutions but it currently has no agreements, arrangements
or understandings with respect to any possible acquisitions. Pending such use,
the net proceeds may be temporarily invested in short-term obligations. The
precise amounts and timing of the application of proceeds will depend upon the
funding requirements of the Company and its subsidiaries and the availability
of other funds.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The Company's consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
--------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits . . . . . 2.29 2.59 2.55 3.13 4.40 5.29 3.30
Including Interest on Deposits . . . . . 1.42 1.40 1.41 1.53 1.63 1.49 1.23
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits . . . . . 2.16 2.39 2.40 2.82 3.60 3.99 2.70
Including Interest on Deposits . . . . . 1.40 1.39 1.40 1.51 1.60 1.47 1.22
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges
and earnings to combined fixed charges and preferred stock dividend
requirements, earnings represent net income plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, represent
interest expense (except interest on deposits), capitalized interest, and the
interest factor included in rents. Fixed charges, including interest on
deposits, represent all interest expense, capitalized interest, and the
interest factor included in rents. Combined fixed charges and preferred stock
dividend requirements, excluding interest on deposits, represent interest
<PAGE>
expense (except interest paid on deposits), capitalized interest, an amount
equal to the pre-tax earnings required to meet applicable preferred stock
dividend requirements, and the interest factor included in rents. Combined
fixed charges and preferred stock dividend requirements, including interest on
deposits, represent all interest expense, capitalized interest, an amount equal
to the pre-tax earnings required to meet applicable preferred stock dividend
requirements, and the interest factor included in rents.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Trust will be
included in the consolidated financial statements of the Company. The Preferred
Securities will be presented in the consolidated balance sheet of the Company
as a separate line item directly above shareholders' equity under the caption
"Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trust Holding Solely Junior Subordinated Debentures of the Company" and
appropriate disclosures about the Preferred Securities, the Guarantee and the
Junior Subordinated Debentures will be included in the notes to the
consolidated financial statements for financial reporting purposes, the Company
will record Distributions payable on the Preferred Securities as an expense in
the consolidated statements of income.
REGULATORY TREATMENT
The Company is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. The Company expects that the
Preferred Securities will be treated as Tier 1 capital of the Company for such
purposes.
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries as of September 30, 1996, and as adjusted to give
effect to the consummation of the offering of the Preferred Securities.
<TABLE>
<CAPTION>
Actual As Adjusted
------------------------- ------------------------
(Dollars in Thousands)
<S> <C> <C>
Long-Term Debt:
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,533 $
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663,046
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,579
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely junior subordinated debentures of the company . . . . 0
Shareholders' equity:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,730
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,672
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 308,615
Reserve for retirement of capital securities . . . . . . . . . . . . . . 6,333
Net unrealized loss on marketable securities . . . . . . . . . . . . . . (1,188)
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . 471,162
----------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,136,741
==========
Capital ratios:
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.71%
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.70%
Tier 1 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 7.18%
</TABLE>
<PAGE>
THE TRUST
The Trust is a statutory business trust formed under the Delaware Business
Trust Act, as amended (the "Trust Act"), pursuant to a declaration of trust and
the filing of a certificate of trust with the Secretary of State of the State
of Delaware; such declaration will be amended and restated in its entirety (as
so amended and restated, the "Declaration") substantially in the form filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The Company will acquire
Common Securities in an aggregate liquidation amount equal to at least 3% of
the total capital of the Trust. The Trust will use all the proceeds derived
from the issuance of the Preferred Securities and the Common Securities to
purchase the Junior Subordinated Debentures and, accordingly, the assets of the
Trust will consist solely of the Junior Subordinated Debentures. The Trust
exists for the exclusive purpose of (i) issuing the Trust Securities
representing undivided beneficial ownership interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Junior
Subordinated Debentures, and (iii) engaging in only those other activities
necessary or incidental thereto.
Pursuant to the Declaration, there will initially be five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") will
be individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee will be a financial institution that is
unaffiliated with the Company and is indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act (the "Property
Trustee"). The fifth trustee will be an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee"). Initially,
The Bank of New York will act as Property Trustee, and its affiliate, The Bank
of New York (Delaware) will act as Delaware Trustee until, in each case,
removed or replaced by the holder of the Common Securities. For purposes of
compliance with the Trust Indenture Act, The Bank of New York will also act as
trustee under the Guarantee (the "Guarantee Trustee").
The Property Trustee will hold title to the Junior Subordinated Debentures
for the benefit of the holders of the Trust Securities, and the Property
Trustee will have the power to exercise all rights, powers and privileges with
respect to the Junior Subordinated Debentures under the Indenture (as defined
herein) as the holder of the Junior Subordinated Debentures. In addition, the
Property Trustee will maintain exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Junior Subordinated Debentures for the benefit of the holders of
the Trust Securities. The Trust Guarantee Trustee will hold the Trust Guarantee
for the benefit of the holders of the Preferred Securities. The Company, as the
holder of all the Common Securities, will have the right to appoint, remove or
replace any of the Trustees and to increase or decrease the number of trustees,
provided that the number of trustees shall be at least three; provided further
that at least one trustee shall be a Delaware Trustee, at least one trustee
shall be the Property Trustee and at least one Trustee shall be a Regular
Trustee. The Company will pay all fees and expenses related to the organization
and operations of the Trust (including any taxes, duties, assessments or
<PAGE>
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Trust) and
the offering of the Preferred Securities and be responsible for all debts and
obligations of the Trust (other than with respect to the Preferred Securities).
For so long as the Preferred Securities remain outstanding, the Company
will covenant (i) to maintain directly 100% ownership of the Common Securities,
(ii) to cause the Trust to remain a statutory business trust and not to
voluntarily dissolve, wind-up, liquidate or be terminated, except as permitted
by the Declaration, (iii) to use its commercially reasonable efforts to ensure
that the Trust will not be an "investment company" for purposes of the 1940 Act
and (iv) to take no action that would be reasonably likely to cause the Trust
to be classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Act. See "Description of the Preferred Securities".
The Declaration and the Trust Guarantee also incorporate by reference the
terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o
Provident Bancorp, Inc., One East Fourth Street, Cincinnati, Ohio 45202, and
its telephone number is (513) 579-2000.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Declaration, the Regular Trustees on behalf
of the Trust will issue the Preferred Securities and the Common Securities. The
Preferred Securities will represent undivided beneficial interests in the
assets of the Trust and the holders thereof will be entitled to a preference in
certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation over the Common Securities, as well as other benefits
as described in the Declaration. This summary of certain provisions of the
Preferred 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, and the Trust Indenture Act. Wherever particular defined terms of the
Declaration (as supplemented or amended from time to time) are referred to
herein, the definitions of such defined terms are incorporated herein by
reference. The form of the Declaration has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
General
The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities except as described under "--
Subordination of Common Securities". Legal title to the Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Preferred Securities and the Common Securities. The Guarantee
executed by the Company for the benefit of the holders of the Preferred
Securities will be a guarantee on a subordinated basis with respect to the
<PAGE>
Preferred Securities but will not guarantee payment of Distributions or amounts
payable on redemption or liquidation of the Preferred Securities when the Trust
does not have sufficient funds available to make such payments. See
"Description of Guarantee". In such event, the remedy of a holder of Preferred
Securities is to vote to direct the Property Trustee to enforce the Property
Trustee's rights under the Junior Subordinated Debentures. See "--Voting
Rights; Amendment of the Declaration" below. The Company's obligations under
the Guarantee, taken together with its obligations under the Junior
Subordinated Debentures and the Indenture, including its obligation to pay all
costs, expenses and liabilities of the Trust (other than with respect to the
Preferred Securities), constitute a full and unconditional guarantee of all of
the Trust's obligations under the Preferred Securities.
Distributions
Distributions on each Preferred Security will be payable at the annual rate
of % of the liquidation preference of $25, payable quarterly in arrears on
the last day of March, June, September and December of each year. Distributions
will accumulate from the date of original issuance and commence on ________
___, 199__. The amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions. The revenue of the Trust available for distribution to holders
of its Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Preferred Securities and the Common Securities. See
"Description of Junior Subordinated Debentures". If the Company does not make
interest payments on the Junior Subordinated Debentures, the Property Trustee
will not have funds available to pay Distributions on the Preferred Securities.
The Company will have the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarters (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity (as defined below) of the Junior Subordinated Debentures. As a
consequence of any such extension, quarterly Distributions on the Preferred
Securities will be deferred by the Trust during any such Extension Period.
Distributions to which holders of the Preferred Securities are entitled will
accumulate and compound quarterly at the rate per annum of % thereof from the
relevant payment date for such Distributions. The term "Distributions" as used
herein shall include any such compounded amounts unless the context otherwise
requires. During any such Extension Period, the Company may not, and may not
permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
<PAGE>
Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company and (b) payments under the Guarantee). Prior to the
termination of any such Extension Period, the Company may further extend the
Extension Period, provided that no Extension Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity (as defined below) of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period. See "Description of the Junior
Subordinated Debentures--Option to Extend Interest Payment Period" and "Certain
United States Federal Income Tax Consequences--Original Issue Discount". The
Company has no current intention of exercising its right to defer payments of
interest by extending the interest payment period of the Junior Subordinated
Debentures.
In the event that any date on which Distributions are payable on the
Preferred Securities is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a Business
Day (and without any additional Distributions or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on 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 Indenture Trustee (as defined herein) is closed
for business.
Distributions on the Preferred Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on the
register of the Trust on the relevant record dates, which, as long as the
Preferred Securities remain in book-entry form, will be the close of business
one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment will be made as described under "--Book-Entry Issuance". In the
event the Preferred Securities are not in book-entry form, the relevant record
date for the Preferred Securities shall be the 15th day of the month of the
relevant Distribution Date. Distributions payable on any Preferred Securities
that are not punctually paid on any Distribution Date will cease to be payable
to the person in whose name such Preferred Securities are registered on the
relevant record date, and such defaulted distribution will instead be payable
to the person in whose name such Preferred Securities are registered on the
special record date or other specified date determined in accordance with the
Declaration.
Redemption
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of the Junior Subordinated Debentures, whether at Stated Maturity (as
defined herein) or upon earlier redemption as provided in the Indenture, the
proceeds from such repayment or redemption shall be applied by the Property
Trustee to redeem Preferred Securities and Common Securities, upon not less
<PAGE>
than 30 nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price (the "Redemption Price"), with respect to the
Preferred Securities, equal to the aggregate liquidation amount of such
Preferred Securities plus accrued and unpaid Distributions thereon to the date
of redemption (the "Redemption Date"). If less than all of the Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the Preferred Securities and the Common Securities.
The Company will have the right to redeem the Junior Subordinated
Debentures, subject to the receipt of any necessary prior approval of the
Federal Reserve, (i) on or after ________ ___, 2001, in whole at any time or in
part from time to time, at a redemption price equal to the principal amount of
the Junior Subordinated Debentures so redeemed plus the accrued and unpaid
interest thereon to the date fixed for redemption, or (ii) at any time, in
whole (but not in part), upon the occurrence and continuation of a Special
Event, at such redemption price, subject to the further conditions described
under "Description of Junior Subordinated Debentures--Redemption" and
"Description of Junior Subordinated Debentures--Redemption".
Special Event Redemption or Distribution of Junior Subordinated Debentures.
If a Special Event shall occur and be continuing, the Company will have the
right, subject to the receipt of any necessary prior approval of the Federal
Reserve, to either (i) redeem the Junior Subordinated Debentures in whole (but
not in part) and thereby cause a mandatory redemption of the Preferred
Securities in whole (but not in part) at the Redemption Price within 90 days
following the occurrence of such Special Event or (ii) to terminate the Trust
and, after satisfaction of the claims of creditors of the Trust as provided by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Preferred Securities in liquidation of the Trust. Under
current United States federal income tax law and interpretations thereof and
assuming, as expected, the Trust is treated as a grantor trust, a distribution
of the Junior Subordinated Debentures should not be a taxable event to holders
of the Preferred Securities. Should there be a change in law, a change in legal
interpretation, certain Tax Events or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain United States Federal Income Tax Consequences--Distribution of
Junior Subordinated Debentures to Holders of Preferred Securities".
If the Company does not elect either option described above, the Preferred
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures, and in the event a Tax Event has occurred and is
continuing, the Company will be obligated to pay any additional taxes, duties,
assessments and other governmental charges (other than withholding taxes) to
which the Trust has become subject as a result of a Tax Event.
A "Special Event" means a Tax Event or an Investment Company Event. A "Tax
Event" means the receipt by the Trust of an opinion of counsel, rendered by a
law firm having a recognized national tax practice, to the effect that, as a
result of any amendment to, change in or announced proposed change in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
<PAGE>
applying such laws or regulations, which amendment or change is adopted or such
proposed change, pronouncement or decision is announced on or after the date of
issuance of the Preferred Securities under the Declaration, there is more than
an insubstantial risk that (i) the Trust is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Debentures, (ii)
interest payable by the Company on such Junior Subordinated Debentures is not,
or within 90 days of the date of such opinion, will not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. "Investment Company Event" means the receipt by the Trust
of an opinion of counsel, rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption or payment at Stated Maturity (as defined below) of the Junior
Subordinated Debentures. Redemptions of the Preferred Securities shall be made
and the Redemption Price shall be payable on each Redemption Date only to the
extent that the Trust has funds on hand available for the payment of such
Redemption Price. See also "--Subordination of Common Securities".
If the Trust gives a notice of redemption in respect of the Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. See "--Book-Entry Issuance". Notice of any
redemption will be mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Preferred Securities to be redeemed at its
registered address. If the Preferred Securities are no longer in book-entry
form, the Trust, to the extent funds are available, will irrevocably deposit
with the paying agent for the Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give the paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Security called for redemption shall be
payable to the holders of such Preferred Security on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Preferred Securities so called for redemption
will cease, except the right of the holders of such Preferred Securities to
<PAGE>
receive the Redemption Price, but without interest on such Redemption Price,
and such Preferred Securities will cease to be outstanding. In the event that
any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (and 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 each case with the same force and effect as if made
on the date such payment was originally payable. In the event that payment of
the Redemption Price in respect of Preferred Securities called for redemption
is improperly withheld or refused and not paid either by the Trust or by the
Company pursuant to the Guarantee as described under "Description of
Guarantee", Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
the Trust for the Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption. If less than all of the Preferred Securities
and Common Securities issued by the Trust are to be redeemed on a Redemption
Date, then the aggregate amount of such Preferred Securities and Common
Securities to be redeemed shall be allocated pro rata among the Preferred
Securities and the Common Securities. If the Preferred Securities are in book-
entry form, they will be redeemed as described below under "Book-Entry
Issuance". If not, the particular Preferred Securities to be redeemed shall be
selected on a pro rata basis not more than 60 days prior to the Redemption Date
by the Property Trustee from the outstanding Preferred Securities not
previously called for redemption, by such method as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to $25 or an integral multiple of $25 in excess
thereof) of the liquidation preference of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify the
trust registrar in writing of the Preferred Securities selected for redemption
and, in the case of any Preferred Security selected for partial redemption, the
liquidation preference thereof to be redeemed. For all purposes of the
Declaration, unless the context otherwise requires, all provisions relating to
the redemption of Preferred Securities shall relate, in the case of any
Preferred Security redeemed or to be redeemed only in part, to the portion of
the aggregate liquidation preference of Preferred Securities which has been or
is to be redeemed.
<PAGE>
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and the Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default 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 Preferred 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 Preferred Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Preferred
Securities then due and payable.
Liquidation Distribution Upon Dissolution
Pursuant to the Declaration, the Trust shall automatically terminate upon
expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of the Junior Subordinated Debentures to the holders of the
Preferred Securities and Common Securities; (iii) the redemption of all of the
Preferred Securities in connection with the redemption of all of the Junior
Subordinated Debentures and (iv) the entry by a court of competent jurisdiction
of an order for the dissolution of the Trust.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Preferred Securities and Common Securities their pro rata
interest in the Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the 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 Preferred Securities, the aggregate of the liquidation preference
plus accrued 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 Preferred 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
Preferred Securities, except that if an Indenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities.
<PAGE>
Trust Enforcement Events
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities, provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Trust Enforcement Event with respect to the Common Securities until
all Trust Enforcement Events with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Trust Enforcement Event with
respect to the Preferred Securities has been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf
of the holders of the Preferred Securities and only the holders of the
Preferred Securities will have the right to direct the Property Trustee with
respect to certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee (as
defined herein) or the Property Trustee as the holder of the Junior
Subordinated Debentures will have the right under the Indenture to declare the
principal of an interest on the Junior Subordinated Debentures to be
immediately due and payable. Each of the Company and the Trust is required to
file annually with the Property Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of
Preferred Securities may institute legal proceedings directly against the
Company to enforce the Property Trustee's rights under such Junior Subordinated
Debentures without first instituting any legal proceedings against such
Property Trustee or any other person or entity. In addition, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of the Company to pay interest, principal or other required
payments on the Junior Subordinated Debentures issued to the Trust on the date
such interest, principal or other payment is otherwise payable, then a record
holder of Preferred Securities may, on or after the respective due dates
specified in the Junior Subordinated Debentures, institute a proceeding
directly against the Company for enforcement of payment on Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities held by such holder. In connection with such Direct
Action, the Company will be subrogated to the rights of such record holder of
Preferred Securities to the extent of any payment made by the Company to such
record holder of Preferred Securities.
Voting Rights; Amendment of the Declaration
Except as provided below and under "Description of Guarantee--Amendments
and Assignment" and as otherwise required by law and the Declaration, the
holders of the Preferred Securities will have no voting rights.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
<PAGE>
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or such Junior Subordinated Debentures, where such
consent shall be required, without, in each case, obtaining the prior approval
of the holders of a majority in aggregate liquidation preference of all
outstanding Preferred Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of Preferred Securities. The
Trustees shall not revoke any action previously authorized or approved by a
vote of the holders of the Preferred Securities except pursuant to a subsequent
vote of the holders of the Preferred Securities. The Property Trustee shall
notify each holder of record of the Preferred Securities of any notice of
default which it receives with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the holders of the
Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall receive an opinion of counsel experienced in such matters to the
effect that the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes on account of such action.
The Declaration may be amended from time to time by the Company and a
majority of the Regular Trustee (and in certain circumstances the Property
Trustee and the Delaware Trustee), without the consent of the holders of the
Preferred Securities, (i) to cure any ambiguity, correct or supplement any
provisions 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 that shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Preferred Securities and Common
Securities are outstanding or to ensure that the Trust will not be required to
register as an "investment company" under the Investment Company Act, provided,
however, that such action shall not adversely affect in any material respect
the interests of any holder of Preferred Securities or Common Securities, and
any amendments of the Declaration shall become effective when notice thereof is
given to the holders of Preferred Securities and Common Securities. The
Declaration may be amended by the Company and a majority of the Regular Trustee
with (i) the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding Preferred Securities and Common
Securities and (ii) receipt by the Regular Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Regular Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status of an "investment company" under the Investment
Company Act, provided, further that without the consent of each holder of
Preferred Securities and Common Securities affected thereby, the Declaration
may not be amended to (i) change the amount or timing of any Distribution on
the Preferred Securities and Common Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Preferred
Securities and Common Securities as of a specified date or (ii) restrict the
right of a holder of Preferred Securities or Common Securities to institute
suit for the enforcement of any such payment on or after such date.
<PAGE>
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred 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 Preferred Securities in the manner set
forth in the Declaration.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel its Preferred Securities in accordance with
the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Trustees or any affiliate of the
Company or any Trustees, shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
Expenses and Taxes
In the Indenture, the Company has agreed to pay all debts and other
obligations (other than with respect to 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 Trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Company 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
Company directly against the Company, and the Company 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 Company. The
Company has also agreed in the Indenture to execute such additional agreements
as may be necessary or desirable to give full effect to the foregoing.
Book-Entry Issuance
DTC will act as securities depositary for all of the Preferred Securities.
The Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred
Securities, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
<PAGE>
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable
to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the Preferred
Securities of the Trust is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of the Preferred Securities are
being redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts such Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
<PAGE>
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC,
the Property Trustee, the Trust or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities at any time by giving reasonable
notice to the Property Trustee and the Company. In the event that a successor
securities depositary is not obtained, definitive Preferred Securities
certificates representing such Preferred Securities are required to be printed
and delivered. The Company, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After
an Indenture Event of Default, the holders of a majority in liquidation
preference of Preferred Securities may determine to discontinue the system of
book-entry transfers through DTC. In any such event, definitive certificates
for the Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trust or the Company believe to be
accurate, but the Trust and the Company assume no responsibility for the
accuracy thereof. None of the Trustees, the Trust or the Company has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but 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 (i) to register or cause to be
registered the transfer or exchange of the Preferred Securities during a period
beginning at the opening of business 15 days before the day of the mailing of
the relevant notice of redemption and ending at the close of business on the
day of mailing of such notice of redemption or (ii) to register or cause to be
registered the transfer or exchange of any Preferred Securities so selected for
redemption, except in the case of any Preferred Securities being redeemed in
part, any portion thereof not to be redeemed.
<PAGE>
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, 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
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Trust
Enforcement Event 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 Preferred
Securities are entitled under the Declaration to vote, then the Property
Trustee may, but shall be under no duty to, take such action as is directed by
the Company and, if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Preferred Securities
and the Common Securities and will have no liability except for its own bad
faith, negligence or willful misconduct.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities 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")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Regular Trustees and the Company. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Company. In the event that the Property
Trustee shall no longer be the Paying Agent, the Regular Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the Regular
Trustees and the Company) to act as Paying Agent.
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. The Trust may, at the request of the Company, with the consent
of the Regular Trustees and without the consent of the holders of the Preferred
Securities, merge with or into, consolidate, amalgamate, 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
that (i) such successor entity either (a) expressly assumes all of the
obligations of the Trust with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities rank in
<PAGE>
priority with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Company 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 Debentures, (iii) the Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred 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 Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer, or lease, the
Company 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 Preferred
Securities (including any Successor Securities) in any material respect and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, (1) neither the Trust nor such successor entity will be
required to register as an investment company under the Investment Company Act
and (2) the Trust or the successor entity will continue to be classified as a
grantor trust for United States federal income tax purposes, (viii) the Company
or any permitted successor or assignee owns all of the Common Securities of
such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee
and (ix) such successor entity expressly assumes all of the obligations of the
Trust with respect to the Trustees. Notwithstanding the foregoing, the Trust
shall not, except with the consent of holders of 100% in aggregate liquidation
preference of the Preferred Securities, consolidate, amalgamate, merge with or
into, be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
Merger or Consolidation of Trustees
Any corporation into which the Property Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Trustee, shall be the successor of such Trustee under the
Declaration, provided such corporation shall be otherwise qualified and
eligible.
<PAGE>
Miscellaneous
The Regular 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 other than a grantor trust for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Company and the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of Trust or the Declaration, that the Company and the
Regular 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 Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust may not borrow money nor issue debt nor mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under a Junior
Subordinated Indenture (the "Indenture"), between the Company and The Bank of
New York, as trustee (the "Indenture Trustee"). This summary of certain terms
and provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Whenever particular defined terms of the Indenture are referred
to herein, such defined terms are incorporated herein by reference.
General
Concurrently with the issuance of the Preferred Securities, the Trust will
invest the proceeds thereof and the consideration paid by the Company for the
Common Securities in the Junior Subordinated Debentures issued by the Company.
The Junior Subordinated Debentures will be in the principal amount equal to the
aggregate liquidation preference of the Preferred Securities plus the Company's
concurrent investment in the Common Securities. The Junior Subordinated
Debentures will bear interest at the annual rate of % of the principal
amount thereof, payable quarterly in arrears on the last day of March, June,
September and December of each year (each, an "Interest Payment Date"),
commencing ________ ___, 199__, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date
(other than interest payable on a Redemption Date or the maturity date). In the
event the Junior Subordinated Debentures are not in book-entry form, the
relevant record date for the Junior Subordinated Debentures shall be the 15th
day of the month in which occurs the relevant Interest Payment Date. It is
anticipated that, until the liquidation, if any, of the Trust, each Junior
Subordinated Debenture will be held in the name of the Property Trustee in
<PAGE>
trust for the benefit of the holders of the Preferred Securities and the Common
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Junior Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the date such payment was originally payable. Accrued interest
that is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate per
annum of % thereof, compounded quarterly. The term "interest" as used herein
shall include quarterly interest payments and interest on quarterly interest
payments not paid on the applicable Interest Payment Date, as applicable.
The Junior Subordinated Debentures will mature on ___________ ___, 2026,
which date may be extended at any time at the election of the Company for one
or more periods, but in no event to a date later than ___________ ___, 2045
(such date, as it may be so extended, the "Stated Maturity"), provided that at
the time such election is made and at the time of extension (i) the Company is
not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is
not in default in the payment of any interest or principal on the Junior
Subordinated Debentures, (iii) the Trust is not in arrears on payments of
Distributions on the Preferred Securities and no deferred Distributions are
accumulated, (iv) the Junior Subordinated Debentures are rated not less than
BBB- by Standard & Poor's Ratings Services or Baa3 by Moody's Investors
Service, Inc. or the equivalent by any other nationally recognized statistical
rating organization and (v) the extended Stated Maturity is no later than the
49th anniversary of the initial issuance of the Preferred Securities. Investors
in the Preferred Securities should assume that the Company will exercise its
option to extend the term if the Company is unable to refinance at a lower
interest rate or it is otherwise in the interest of the Company to defer the
maturity of the Subordinated Debentures.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Indebtedness (as defined below)
of the Company. See "Description of Junior Subordinated Debentures--
Subordination". The Indenture does not limit the incurrence or issuance of
other secured or unsecured debt of the Company, whether under the Indenture or
any existing or other indenture that the Company may enter into in the future
or otherwise. See "--Subordination".
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
Option to Extend Interest Payment Period
So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
at any time or from time to time for a period not exceeding 20 consecutive
<PAGE>
interest periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at the
annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures (or holders of Preferred
Securities while the Preferred Securities are outstanding) will be required to
accrue interest income (as OID) for United States federal income tax purposes.
See "Certain United States Federal Income Tax Consequences--Original Issue
Discount".
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company and (b) payments under the
Guarantee). Prior to the termination of any such Extension Period, the Company
may further extend the Extension Period, provided that no Extension Period may
exceed 20 consecutive quarters or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due on any Interest Payment Date,
the Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Property Trustee, the
Regular Trustees and the Indenture Trustee notice of its election of such
Extension Period at least one Business Day prior to the earlier of (i) the date
the Distributions on the Preferred Securities would have been payable except
for the election to begin such Extension Period or (ii) the date the Regular
Trustees are required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but
in any event not less than one Business Day prior to such record date. The
Property Trustee shall give notice of the Company's election to begin a new
Extension Period to the holders of the Preferred Securities.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company, subject to the receipt of any necessary prior approval
of the Federal Reserve, (i) on or after _______ ___, 2001, in whole at any time
or in part from time to time, at a redemption price equal to the principal
amount of the Junior Subordinated Debentures so redeemed plus the accrued and
unpaid interest thereon to the date fixed for redemption, or (ii) at any time
in whole (but not in part), within 90 days of the occurrence of a Special
Event, at such redemption price. Investors in the Preferred Securities should
<PAGE>
assume that the Company will exercise its redemption option if the Company is
able to refinance at a lower interest rate or it is otherwise in the interest
of the Company to redeem the Junior Subordinated Debentures. If Junior
Subordinated Debentures are redeemed, the Trust must redeem Preferred
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of Junior Subordinated Debentures so redeemed. See
"Description of the Preferred Securities--Mandatory Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
Certain Covenants of the Company
The Company will covenant in the Indenture that if and so long as the Trust
is the holder of all Junior Subordinated Debentures, the Company will pay to
the Trust all fees and expenses related to the Trust and the offering of the
Preferred Securities and will pay, directly or indirectly, all ongoing costs,
expenses and liabilities of the Trust (including any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States or any domestic taxing authority upon the Trust
but excluding obligations under the Preferred Securities).
The Company will also covenant that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with the Junior Subordinated Debentures (other than
(a) dividends or distributions in common stock of the Company and (b) payments
under the Guarantee) if at such time (x) there shall have occurred any event of
which the Company has actual knowledge that (I) with the giving of notice or
the lapse of time, or both, would constitute an Indenture Event of Default with
respect to Junior Subordinated Debentures and (II) in respect of which the
Company shall not have taken reasonable steps to cure, (y) the Company shall be
in default with respect to its payment of any obligations under the Guarantee
or (z) the Company shall have given notice of its election of an Extension
Period as provided in the Indenture and shall not have rescinded such notice,
or such Extension Period, or any extension thereof, shall be continuing.
Subordination
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon any liquidation,
<PAGE>
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Indebtedness will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Indebtedness before the holders of Junior
Subordinated Debentures or the Property Trustee on behalf of the holders of
Preferred Securities will be entitled to receive or retain any payment in
respect of the principal of and premium, if any, or interest, if any, on the
Junior Subordinated Debentures.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Indebtedness 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
Junior Subordinated Debentures will be entitled to receive or retain any
payment in respect of the principal of or premium, if any, or interest, if any,
on the Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Indebtedness, or an event of default with respect to any Indebtedness resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default.
"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed; (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) any
indebtedness in respect of debt securities issued to any trust, or a trustee of
such trust, partnership or other entity affiliated with the Company that is a
financing entity of the Company (a "financing entity") in connection with the
issuance of such financing entity of securities that are similar to the
Preferred Securities; (vii) every obligation of the type referred to in clauses
(i) through (vi) of another person and all dividends of another person the
payment of which, in either case, such person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise; and (viii) all
indebtedness of such person for claims (as defined in Section 101(4) of the
United States Bankruptcy Code of 1978, as amended) in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements, except in any such case for obligations
which, by their terms, are expressly stated to rank pari passu in right of
payment with, or to not be superior in right of payment to, the Junior
Subordinated Debentures.
<PAGE>
The Indenture places no limitation on the amount of additional Indebtedness
that may be incurred by the Company or any indebtedness or other liabilities
that may be incurred by the Company's Subsidiaries. As of ________ ___, 1996,
Indebtedness of the Company aggregated approximately $__________, and the
Company's consolidated subsidiaries had indebtedness and other liabilities of
approximately $__________ to which the Junior Subordinated Debentures would be
effectively subordinated.
Indenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Indenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures when due (subject to the deferral of any due date in
the case of an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
Debentures when due whether at maturity, upon redemption by declaration or
otherwise, provided, however, that an extension of the maturity of the Junior
Subordinated Debentures in accordance with the terms of the Indenture shall not
constitute an Indenture Event of Default; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of outstanding Junior Subordinated
Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
the Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of Junior Subordinated Debentures may declare the
principal due and payable immediately upon an Indenture Event of Default, and,
should the Indenture Trustee or such holders of such Junior Subordinated
Debentures fail to make such declaration, the holders of at least 25% in
aggregate liquidation preference of the Preferred Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures may annul such declaration and waive the default
if the default (other than the non-payment of the principal of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Indenture Trustee, and should the holders of such Junior Subordinated
Debentures fail to annul such declaration and waive such default, the holders
of a majority in aggregate liquidation preference of the Preferred Securities
shall have such right.
<PAGE>
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past default, except a
default in the payment of principal or 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
Indenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debentures, and should the
holders of such Junior Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate liquidation preference of the Preferred
Securities shall have such right. The Company is required to file annually with
the Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Junior Subordinated Debentures 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 such Junior Subordinated Debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, a holder of Preferred Securities may institute
a Direct Action for payment. The Company may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Preferred Securities. Notwithstanding any payment
made to such holder of Preferred Securities by the Company in connection with a
Direct Action, the Company shall remain obligated to pay the principal of or
interest on the Junior Subordinated Debentures held by the Trust or the
Property Trustee and the Company shall be subrogated to the rights of the
holder of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action. The holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Indenture Event of
<PAGE>
Default, and no event which, after notice or lapse of time or both, would
become an Indenture Event of Default, shall have happened and be continuing;
(iii) if at the time any Preferred Securities are outstanding, such transaction
is permitted under the Declaration and Guarantee and does not give rise to any
breach or violation of the Declaration or Guarantee, (iv) any such lease shall
provide that it will remain in effect so long as any Junior Subordinated
Debentures are outstanding, and (v) certain other conditions as prescribed in
the Indenture are met.
Satisfaction and Discharge
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Junior Subordinated Debentures (except in
each case to register the transfer or exchange of the Junior Subordinated
Debentures, replace stolen, lost or mutilated Junior Subordinated Debentures,
maintain paying agencies and hold moneys for payment in trust) if the Company
deposits with the Indenture Trustee, in trust, moneys or Government Obligations
(as defined in the Indenture), or a combination thereof, in an amount
sufficient to pay all the principal of, and interest on, the Junior
Subordinated Debentures on the dates such payments are due in accordance with
the terms of the Junior Subordinated Debentures. Such discharge may occur only
if, among other things, the Company has delivered to the Indenture Trustee an
Opinion of Counsel to the effect that the holders of the Junior Subordinated
Debentures will not recognize gain, loss or income for federal income tax
purposes as a result of the satisfaction and discharge of the Indenture and
such holders will be subject to federal income taxation on the same amounts and
in the same manner and at the same times as if such satisfaction and discharge
had not occurred.
Modification of Indenture
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of outstanding Junior
Subordinated Debentures affected, to modify the Indenture in a manner affecting
the rights of the holders of such Junior Subordinated Debentures; provided that
no such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debentures so affected, (i) change the stated maturity of
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (except such
extension as is contemplated hereby) or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Indenture, provided that, so long as
any Preferred Securities remain outstanding, no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
<PAGE>
Indenture Event of Default or compliance with any covenant under the Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate liquidation preference of the Preferred Securities
unless and until the principal of the Junior Subordinated Debentures and all
accrued and unpaid interest thereon have been paid in full and certain other
conditions are satisfied.
Distributions of Junior Subordinated Debentures; Book-Entry Issuance
Under certain circumstances involving the termination of the Trust, Junior
Subordinated Debentures may be distributed to the holders of the Preferred
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of Preferred Securities in liquidation, the Junior Subordinated Debentures will
initially be issued in the form of one or more global securities and DTC, or
any successor depositary for the Preferred Securities, will act as depositary
for the Junior Subordinated Debentures. It is anticipated that the depositary
arrangements for the Junior Subordinated Debentures would be substantially
identical to those in effect for the Preferred Securities. For a description of
DTC and the terms of the depositary matters, see "Description of Preferred
Securities--Book-Entry Issuance".
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of the Trust, the Company will use
its best efforts to list the Junior Subordinated Debentures on the New York
Stock Exchange or such other stock exchanges, if any, on which the Preferred
Securities are then listed. There can be no assurance as to the market price of
any Junior Subordinated Debentures that may be distributed to the holders of
Preferred Securities.
Payment and Paying Agents
The Company initially will act as Paying Agent with respect to the Junior
Subordinated Debentures except that, if the Junior Subordinated Debentures are
distributed to the holders of the Preferred Securities in liquidation of such
holders' interests in the Trust, the Indenture Trustee will act as the Paying
Agent. The Company at any time may designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required
to maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any Junior Subordinated Debentures and
remaining unclaimed for two years after such principal and premium, if any, or
interest has become due and payable shall, at the request of the Company, be
repaid to the Company and the holder of such Junior Subordinated Debentures
shall thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
<PAGE>
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
Defeasance and Discharge
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the Junior
Subordinated Debentures (except for certain obligations to register the
transfer or exchange of Junior Subordinated Debentures replace stolen, lost or
mutilated Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture (including that described in the second paragraph
under "Certain Covenants of the Company"), in each case if the Company
deposits, in trust with the Indenture Trustee or the Defeasance Agent, money or
U.S. Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest and premium, if any, on the Junior Subordinated
Debentures on the dates such payments are due in accordance with the terms of
such Junior Subordinated Debentures. To exercise any such option, the Company
is required to deliver to the Indenture Trustee and the Defeasance Agent, if
any, an opinion of counsel to the effect that (i) the deposit and related
defeasance would not cause the holders of the Junior Subordinated Debentures to
recognize income, gain or loss for U.S. federal income tax purposes and, in the
case of a discharge pursuant to clause (a), such opinion shall be accompanied
by a private letter ruling to the effect received by the Company from the
United States Internal Service or revenue ruling pertaining to a comparable
form of transaction to the effect published by the United States Internal
Revenue Service, and (ii) if listed on any national securities exchange, such
Junior Subordinated Debentures would not be delisted from such exchange as a
result of the exercise of such option.
Information Concerning the Indenture Trustee
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture 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 Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture 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 Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Trust of the Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities. The Bank of New
<PAGE>
York will act as indenture trustee ("Guarantee Trustee") under the Guarantee
for the purposes of compliance with the Trust Indenture Act and the Guarantee
will be qualified as an Indenture 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 form of the Guarantee has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities.
General
The Company will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Preferred 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 Preferred Securities, to the extent not paid by or on behalf of
the Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that the Trust has funds on hand available therefor
at the time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption, to the extent that the Trust has funds on hand available
therefor at such time, or (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Preferred Securities), the lesser
of (a) the aggregate of the liquidation preference and all accrued and unpaid
Distributions to the date of payment and (b) the amount of assets of the Trust
remaining available for distribution to holders of Preferred Securities. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the applicable
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Preferred Securities, but will apply only to
the extent that the Trust has funds on hand available to make such payments,
and is not a guarantee of collection.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay Distributions
on the Preferred Securities and will not have funds legally available therefor.
The Guarantee will rank subordinate and junior in right of payment to all
general liabilities of the Company. See "--Status of the Guarantee". The
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under the Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise.
The Company has, through the Guarantee, the Junior Subordinated Debentures
and the Indenture, taken together, fully and unconditionally guaranteed all of
the Trust's obligations under the Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
<PAGE>
documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full and unconditional
guarantee of the Trust's obligations under the Preferred Securities. See
"Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee--General".
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all general liabilities
of the Company. The Guarantee does not place a limitation on the amount of
additional Indebtedness that may be incurred by the Company.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Preferred
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 of the Junior Subordinated Debentures to the holders of the
Preferred Securities in exchange for all of the Preferred Securities.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Preferred 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 preference
of the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred 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 Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate liquidation preference of the
Preferred 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 Preferred Securities may institute a legal proceeding
directly against the Company 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.
<PAGE>
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in each 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 any Preferred Security 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 Preferred Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Preferred
Securities in exchange for all of the Preferred Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Preferred Securities must restore payment of any sums
paid under the Preferred Securities or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guarantee". If and to the extent that the
Company's obligations under the Junior Subordinated Debentures, the Trust will
not pay Distributions or other amounts due on the Preferred Securities. In such
event, a holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce payment of such Distributions to such
holder after the respective due dates. Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Indenture and the
Guarantee provide, in the aggregate, a full and unconditional guarantee of
payments of distributions and other amounts due on the Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full and
<PAGE>
unconditional guarantee of the Trust's obligations under the Preferred
Securities. The obligations of the Company under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Indebtedness of the Company.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate stated liquidation amount
of the Preferred Securities and the Common Securities; (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
related Preferred Securities; (iii) the Company shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations
under the Preferred Securities; and (iv) the Declaration further provides that
the Trust will not engage in any activity that is not consistent with the
limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
Enforcement Rights of Holders of Preferred Securities
A holder of Preferred Securities may institute a legal proceeding directly
against the Company 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 Indebtedness of the Company will
not constitute a default or Indenture Event of Default. In addition, in the
event of payment defaults under, or acceleration of, Indebtedness of the
Company, the subordination provisions of the Indenture provide that no payments
may be made in respect of the Junior Subordinated Debentures until such
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the Junior Subordinated
Debentures would constitute an Indenture Event of Default under the Indenture.
Limited Purpose of Trust
The Preferred Securities evidence a beneficial interest in the Trust, and
the Trust exists for the sole purpose of issuing the Preferred Securities and
the Common Securities and investing the proceeds thereof in Junior Subordinated
Debentures. A principal difference between the rights of a holder of a
Preferred Securities and a holder of a Junior Subordinated Debentures is that a
holder of a Junior Subordinated Debentures is entitled to receive from the
Company the principal amount of and interest accrued on Junior Subordinated
Debentures held, while a holder of Preferred Securities is entitled to receive
<PAGE>
Distributions from the Trust (or from the Company under the Guarantee) if and
to the extent the Trust has funds available for the payment of such
Distributions.
Rights Upon Termination
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debentures, the
holders of the Preferred Securities will be entitled to receive, out of assets
held by the Trust, the liquidation distribution in cash. See "Description of
Preferred Securities--Liquidation Distribution Upon Dissolution". Upon any
voluntary or involuntary liquidation or bankruptcy of the Company, the Property
Trustee, as holder of the Junior Subordinated Debentures, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Indebtedness, but entitled to receive payment in full of principal and interest
before any stockholders of the Company receive payments or distributions. Since
the Company 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 the Preferred Securities), the positions of a
holder of Preferred Securities and a holder of the Junior Subordinated
Debentures relative to other creditors and to stockholders of the Company in
the event of liquidation or bankruptcy of the Company would be substantially
the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of tax counsel to the Company and the Trust ("Tax Counsel"),
the following summary accurately describes the material United States federal
income tax consequences that may be relevant to the purchase, ownership and
disposition of the Preferred Securities. Unless otherwise stated, this summary
deals only with Preferred Securities held as capital assets by United States
Holders (defined below) who purchase the Preferred Securities upon original
issuance. As used herein, a "United States Holder" means (i) a person that is a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a trust the income of which is subject to United States federal income tax
regardless of its source; provided, however, that for taxable years beginning
after December 31, 1996 (or if a trustee so elects, for taxable years ending
after August 20, 1996), a "United States Holder" shall include any trust if a
court within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States fiduciaries have the
authority to control all the substantial decisions of such trust. The tax
treatment of a holder may vary depending on his, her or its particular
situation. This summary does not address all the tax consequences that may be
relevant to a particular holder or to holders who may be subject to special tax
treatment, such as banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, or tax-
exempt investors. In addition, this summary does not include any description of
any alternative minimum tax consequences or the tax laws of any state, local or
foreign government that may be applicable to a holder of Preferred Securities.
<PAGE>
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. The authorities on which
this summary is based are subject to various interpretations and it is
therefore possible that the federal income tax treatment of the purchase,
ownership and disposition of the Preferred Securities may differ from the
treatment described below.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION
OF THE PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE
"DESCRIPTION OF THE PREFERRED SECURITIES--REDEMPTION--SPECIAL EVENT REDEMPTION
OR DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES".
Classification of the Trust
In connection with the issuance of the Preferred Securities, Tax Counsel is
of the opinion that under current law and assuming full compliance with the
terms of the Declaration and other documents, and based upon certain facts and
assumptions contained in such opinion, the Trust will be classified as a
grantor trust for United States federal income tax purposes and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of Preferred Securities generally will be
considered the owner of an undivided interest in the Junior Subordinated
Debentures and, thus, will be required to include in its gross income its
allocable share of income on the Junior Subordinated Debentures.
Classification of the Junior Subordinated Debentures
The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law and, by acceptance of a Preferred
Security, each holder covenants to treat the Junior Subordinated Debentures as
indebtedness. The remainder of this discussion assumes that the Junior
Subordinated Debentures will be classified as indebtedness of the Company.
Payments of Interest
Except as set forth below, stated interest on the Junior Subordinated
Debentures will generally be taxable to a holder as ordinary income at the time
it is paid or accrued in accordance with such holder's method of accounting for
tax purposes. Corporate holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
<PAGE>
Original Issue Discount
Under applicable Treasury regulations, the Company believes that the Junior
Subordinated Debentures will not be treated as issued with original issue
discount ("OID").
Under the Indenture, the Company has the right to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. Should the Company
exercise its right to defer payments of interest on the Junior Subordinated
Debentures, the Junior Subordinated Debentures will become OID instruments at
such time and all holders will be required to accrue interest on a daily basis
during the Extension Period even though the Company will not pay such interest
until the end of the Extension Period, and even though some holders may use the
cash method of tax accounting. Moreover, thereafter the Junior Subordinated
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of an Extension Period, all holders would
be required to continue accruing interest income on the Junior Subordinated
Debentures on a daily basis, regardless of their method of tax accounting.
Under the OID economic accrual rules, a holder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the Junior Subordinated Debentures, and actual cash
payments of interest on the Junior Subordinated Debentures would not be
reported separately as taxable income.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the Internal Revenue Service ("IRS"), and
it is possible that the IRS could take a contrary position.
Distribution of Junior Subordinated Debentures or Cash upon Liquidation of the
Trust
As described under the caption "Description of Junior Subordinated
Debentures--Distribution of Junior Subordinated Debentures" Junior Subordinated
Debentures may be distributed to holders in exchange for the Preferred
Securities and in liquidation of the Trust. Under current law, such a
distribution would be non-taxable, and will result in the holder receiving
directly its pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust. Each holder would receive an aggregate tax
basis in the Junior Subordinated Debentures equal to such holder's aggregate
tax basis in its Preferred Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Preferred Securities were held by such holder. If,
however, the liquidation of the Trust were to occur because the Trust is
subject to United States federal income tax with respect to income accrued or
received on the Junior Subordinated Debentures, the distribution of the Junior
Subordinated Debentures to holders would be a taxable event to the Trust and to
each holder and a holder would recognize gain or loss as if the holder had
exchanged its Preferred Securities for the Junior Subordinated Debentures it
received upon liquidation of the Trust.
<PAGE>
A holder would accrue interest in respect of the Junior Subordinated
Debentures received from the Trust in the manner described above under "--
Payments of Interest" and "--Original Issue Discount".
Under certain circumstances described herein (see "Description of the
Preferred Securities--Special Event Redemption or Distribution of Junior
Subordinated Debentures"), the Junior Subordinated Debentures may be redeemed
for cash, with the proceeds of such redemption distributed to holders in
redemption of their Preferred Securities. Under current law, such a redemption
would constitute a taxable disposition of the redeemed Preferred Securities for
United States federal income tax purposes, and a holder would recognize gain or
loss as if it sold such redeemed Preferred Securities for cash. See "--Sales of
Preferred Securities".
Sales of Preferred Securities
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities
and the amount realized on the sale of such Preferred Securities. Except to the
extent attributable to accrued and unpaid interest (which will be taxed as
such), such gain or loss generally will be a capital gain or loss and generally
will be a long-term capital gain or loss if the Preferred Securities have been
held for more than one year. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
Proposed Tax Law Changes
On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that would, among other things, deny interest deductions for
interest or OID on an instrument issued by a corporation that has a maximum
weighted average maturity of more than 40 years. The Proposed Legislation would
also treat as equity, instruments issued by a corporation that have a maximum
term of more than 20 years and that are not shown as indebtedness on the
consolidated balance sheet of the issuer. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
would be treated as exercised. The above-described provisions of the Proposed
Legislation were proposed to be effective generally for instruments issued on
or after December 7, 1995. However, on March 29, 1996, the Chairmen of the
Senate Finance and House Ways and Means Committees issued a joint statement
(the "Joint Statement") to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, would be
no earlier than the date of appropriate Congressional action. In addition,
subsequent to the publication of the Joint Statement, Senator Daniel Patrick
Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters
to Treasury Department officials concurring with the views expressed in the
Joint Statement (the "Democrat Letters"). If the principles contained in the
Joint Statement and Democrat Letters were followed and the Proposed Legislation
were enacted, such legislation would not apply to the Junior Subordinated
Debentures. There can be no assurance that current or future legislative
proposals, adverse judicial decisions, final legislation or official
<PAGE>
administrative pronouncements will not adversely affect the ability of the
Company to deduct interest on the Junior Subordinated Debentures or otherwise
affect the tax treatment of the transactions described herein. If legislation
were enacted that prohibited the Company from deducting the interest on the
Junior Subordinated Debentures, the enactment of such legislation would give
rise to a Tax Event which would permit the Company to cause the redemption of
the Preferred Securities, as described more fully under "Description of
Preferred Securities--Special Event Redemption or Distribution of Junior
Subordinated Debentures".
Non-United States Holders
As used herein, the term "Non-United States Holder" means any person that
is not a United States Holder (as defined above). As discussed above, the
Preferred Securities will be treated as evidence of an indirect beneficial
ownership interest in the Junior Subordinated Debentures. See "--Classification
of the Trust". Thus, assuming the Junior Subordinated Debentures are classified
as indebtedness of the Company for United States federal income tax purposes,
under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of this discussion includes any
OID) on the Junior Subordinated Debentures to a Non-United States Holder,
provided (i) that the beneficial owner of the Preferred Securities
("Beneficial Owner") does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote within the meaning of section 871(h)(3) of the Code and
the regulations thereunder, (ii) the Beneficial Owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the Beneficial Owner is not a bank whose receipt of interest on the
Junior Subordinated Debentures is described in section 881(c)(3)(A) of the
Code and (iv) the Beneficial Owner satisfies the statement requirement
(described generally below) set forth in section 871(h) and section 881(c)
of the Code and the regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a Non-United States
Holder upon the sale or other disposition of the Preferred Securities.
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Preferred Securities on behalf of
such owner, must provide, in accordance with specified procedures, to the Trust
or its paying agent, a statement to the effect that the Beneficial Owner is not
a United States Holder. Pursuant to current temporary Treasury regulations,
these requirements will be met if (1) the Beneficial Owner provides his name
and address, and certifies, under penalties of perjury, that it is not a United
States person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the Preferred Securities on
behalf of the Beneficial Owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent with a copy
thereof.
<PAGE>
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including any OID) made to such Non-United States Holder
will be subject to a 30% withholding tax unless the Beneficial Owner provides
the Company or its paying agent, as the case may be, with a properly executed
(1) IRS Form 1001 (or successor form) claiming an exemption from withholding
under the benefit of a tax treaty or (2) IRS Form 4224 (or successor form)
stating that interest paid on the Junior Subordinated Debentures is not subject
to withholding tax because it is effectively connected with the Beneficial
Owner's conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and premium, if any, or interest (including any OID) on the
Junior Subordinated Debentures is effectively connected with the conduct of
such trade or business, the Non-United States Holder, although exempt from the
withholding tax discussed above, will be subject to United States federal
income tax on such interest and OID, if any, on a net income basis in the same
manner as if it were a United States Holder. In addition, if such holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such premium, if any, and interest (including
any OID) on the Junior Subordinated Debentures will be included in such foreign
corporation's earnings and profits.
Any gain or income realized upon the sale or other disposition of the
Preferred Securities generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with a trade
or business in the United States of the Non-United States Holder, or (ii) in
the case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange or retirement, and certain other conditions are met.
Information Reporting and Backup Withholding
Income on the Preferred Securities held of record by United States Holders
(other than corporations and other exempt holders) will be reported annually to
such holders and to the IRS. The Regular Trustees currently intend to deliver
such reports to holders of record prior to January 31 following each calendar
year. It is anticipated that persons who hold Preferred Securities as nominees
for beneficial holders will report the required tax information to beneficial
holders on Form 1099.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States Holders unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
No information reporting or backup withholding will be required with
respect to payments made by the Trust or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
<PAGE>
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on the Junior Subordinated
Debentures are paid or collected by a foreign office of a custodian, nominee or
other foreign agent on behalf of the Beneficial Owner, or if a foreign office
of a broker (as defined in applicable Treasury regulations) pays the proceeds
of the sale of the Preferred Securities to the owner thereof. If, however, such
nominee, custodian, agent or broker is, for United States federal income tax
purposes, a United States person, a controlled foreign corporation or a foreign
person that derives 50% or more of its gross income for certain periods from
the conduct of a trade or business in the United States, such payments will not
be subject to backup withholding but will be subject to information reporting,
unless (1) such custodian, nominee, agent or broker has documentary evidence in
its records that the Beneficial Owner is not a United States person and certain
other conditions are met or (2) the Beneficial Owner otherwise establishes an
exemption.
Payment of the proceeds from disposition of Preferred Securities to or
through a United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a holder of the Preferred Securities under the
backup withholding rules will be allowed as a refund or a credit against such
holder's United States federal income tax liability, provided the required
information is furnished to the IRS.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company and the Trust have agreed that the Trust will sell to
each of the Underwriters named below, and each of such Underwriters, for whom
Lehman Brothers Inc. are acting as representatives (the "Representatives"), has
severally agreed to purchase from the Trust the respective number of Preferred
Securities set forth opposite its name below:
Number of
Underwriter Preferred Securities
Lehman Brothers Inc. . . . . . . .
Total . . . . . . . . ===========
Under the terms and conditions set forth in the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Preferred Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus and in part to certain securities dealers at such price less
<PAGE>
a concession of $ per Preferred Security. The Underwriters may allow, and
such dealers may reallow, a concession not to exceed $ per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued
by the Company, the Underwriting Agreement provides that the Company will pay
as Underwriters' Compensation for the Underwriters' arranging the investment
therein of such proceeds an amount of $ per Preferred Security for the
accounts of the several Underwriters.
The Company and the Trust have agreed that, during the period beginning
from the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the termination of trading restrictions on the Preferred
Securities, as communicated to the Company by the Representatives, and (ii) 90
days following the Closing Date, they will not offer, sell, contract to sell or
otherwise dispose of any additional securities of the Trust or the Company
substantially similar to the Preferred Securities or any securities convertible
into or exchangeable for or that represent the right to receive any such
similar securities, without the consent of the Representatives, which consent
shall not be unreasonably withheld.
Prior to this offering, there has been no public market for the Preferred
Securities. The Preferred Securities have been approved for listing on the New
York Stock Exchange (the "NYSE"), subject to notice of issuance. In order to
meet one of the requirements for listing the Preferred Securities on the NYSE,
the Underwriters will undertake to sell lots of 100 or more Preferred
Securities to a minimum of 400 beneficial holders. Trading of the Preferred
Securities on the NYSE is expected to commence within 30 days after the initial
delivery of the Preferred Securities. The Representatives have advised the
Company that they intend to make a market in the Preferred Securities prior to
commencement of trading on the NYSE, but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of or the existence of the trading market for the Preferred
Securities.
The Company and the Trust have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Company and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
LEGAL MATTERS
The validity of the Junior Subordinated Debentures and the Guarantee will
be passed upon for the Company and the Trust by Keating, Muething & Klekamp,
P.L.L., Cincinnati, Ohio and for the Underwriters by Simpson Thacher & Bartlett
(a partnership which includes professional corporations), New York, New York.
<PAGE>
Certain United States federal income taxation matters also will be passed upon
for the Company and the Trust by Simpson Thacher & Bartlett (a partnership
which includes professional corporations) as special tax counsel to the
Company. Attorneys in the Keating, Muething & Klekamp P.L.L., law firm hold
shares of common stock of the Company. Certain matters of Delaware law relating
to the validity of the Preferred Securities will be passed upon for the Trust
by Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware.
EXPERTS
The consolidated financial statements incorporated herein by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
have been audited by Ernst & Young, LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities
described in this Prospectus or an offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any
time subsequent to the date of such information.
------------------------
TABLE OF CONTENTS
PAGE
Available Information . . . . . . . . . . . . . . . . . . . . . 9
Incorporation of Certain Information by Reference . . . . . . . 10
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . 11
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 17
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 22
Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges and Preferred Stock Dividends . . 22
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . 23
Regulatory Treatment . . . . . . . . . . . . . . . . . . . . . 23
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 24
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Description of Preferred Securities . . . . . . . . . . . . . . 26
Description of Junior Subordinated Debentures . . . . . . . . . 40
Description of Guarantee . . . . . . . . . . . . . . . . . . . 49
Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee . . . . . . 52
Certain United States Federal Income Tax Consequences . . . . . 54
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . 60
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . 61
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
<PAGE>
Trust Preferred Securities
Provident Capital Trust I
% Trust Preferred Securities
(Liquidation Amount $25 per
Preferred Security)
Guaranteed to the Extent Set Forth Herein by
PROVIDENT BANCORP, INC.
-----------------------------
PROSPECTUS
-----------------------------
Lehman Brothers
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the Securities covered by this Registration Statement, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<S> <C>
SEC registration fee (actual) . . . . . . . . . . . . . $ <F1>
Printing fees and expenses . . . . . . . . . . . . . . <F1>
Legal fees and expenses . . . . . . . . . . . . . . . . <F1>
Accounting fees and expenses . . . . . . . . . . . . . <F1>
Blue Sky fees and expenses . . . . . . . . . . . . . . <F1>
New York Stock Exchange Listing Fee . . . . . . . . . . <F1>
Rating Agency Fees . . . . . . . . . . . . . . . . . . <F1>
Trustees' Fees . . . . . . . . . . . . . . . . . . . . <F1>
Other . . . . . . . . . . . . . . . . . . . . . . . . . <F1>
Total . . . . . . . . . . . . . . . . . . . . $ <F1>
________________________
<FN>
<F1> To be included by amendment.
</TABLE>
ITEM 16. EXHIBITS
1.1 Proposed form of Underwriting Agreement for Preferred Securities<F1>
4.1 Form of Junior Subordinated Indenture between the Company and Bank of
New York, as Debenture Trustee<F1>
4.2 Certificate of Trust of Provident Capital Trust I
4.3 Form of Amended and Restated Declaration of Trust of Provident
Capital Trust I<F1>
4.4 Form of Preferred Security Certificate for Provident Capital Trust I
(included in Exhibit 4.3)<F1>
4.5 Form of Guarantee Agreement<F1>
5.1 Opinion of Keating, Muething & Klekamp, P.L.L. relating to the
legality of the Junior Subordinated Debentures and the Guarantee<F1>
5.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel, relating to the legality of the Preferred Securities of
Provident Capital Trust I<F1>
8.1 Opinion of Simpson Thacher & Bartlett, special tax counsel, as to
certain United States federal income tax matters<F1>
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges<F1>
12.2 Statement re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends<F1>
23.1 Consent of Ernst & Young, LLP
<PAGE>
23.2 Consent of Keating, Muething & Klekamp, P.L.L. (included in Exhibit
5.1 hereto)<F1>
23.3 Consent of Norris, Nichols, Arsht & Tunnell, special Delaware counsel
(included in Exhibit 5.2 hereto)<F1>
23.4 Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1
hereto)<F1>
24.1 Powers of Attorney (included on the signature pages hereto)
25.1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of The Bank of New York, as Trustee for the Junior
Subordinated Indenture<F1>
25.2 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of The Bank of New York, as Property Trustee for the
Amended and Restated Declaration of Provident Capital Trust I<F1>
25.3 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of The Bank of New York, as Guarantee Trustee for the
Guarantee for Provident Capital Trust I<F1>
_______________________
<F1> To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Provident Bancorp,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cincinnati, Ohio on October 31, 1996.
Provident Bancorp, Inc.
By: /s/ Allen L. Davis
Title: President, Chief Executive and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons on October 31, 1996 in the
capacities indicated. Each person below hereby constitutes and appoints each of
Allen L. Davis, John R. Farrenkopf and Mark E. Magee, his true and lawful
attorney and agent, to do any and all acts and execute any and all instruments
for him and in his name in the capacity indicated below, which said attorneys
and agents, or any of them, may deem necessary or advisable to enable Provident
Bancorp, Inc. to comply with the Securities Act of 1933, and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically, but
without limitation, power and authority to sign amendments (including post
effective amendments) and any related Registration Statement, or amendment
thereto, filed pursuant to Rule 462(b) promulgated under the Securities Act of
1933.
SIGNATURE TITLE
/s/ Allen L. Davis President, Chief Executive Officer and
(Allen L. Davis) Director
/s/ John R. Farrenkopf Vice President and Chief Financial
(John R. Farrenkopf) Officer
/s/Jack M. Cook Director
(Jack M. Cook)
/s/ Thomas D. Grote Director
(Thomas D. Grote)
/s/ Philip R. Myers Director
(Philip R. Myers)
/s/ Joseph A. Pedoto Director
(Joseph A. Pedoto)
<PAGE>
SIGNATURE TITLE
/s/ Sidney A. Peerless Director
(Sidney A. Peerless)
/s/ Joseph A. Steger Director
(Joseph A. Steger)
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Provident Capital
Trust I certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Cincinnati, Ohio on October 31, 1996.
Provident Capital Trust I
By: /s/ Allen L. Davis
Title: Regular Trustee
Each person below hereby constitutes and appoints each of Allen L. Davis, John
R. Farrenkopf and Mark E. Magee, his true and lawful attorney and agent, to do
any and all acts and execute any and all instruments for him and in his name in
his capacity as Regular Trustee, which said attorneys and agents, or any of
them, may deem necessary or advisable to enable Provident Capital Trust I to
comply with the Securities Act of 1933, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without limitation, power
and authority to sign amendments (including post effective amendments) and any
related Registration Statement, or amendment thereto, filed pursuant to Rule
462(b) promulgated under the Securities Act of 1933.
SIGNATURE
/s/ Allen L. Davis
(Allen L. Davis)
/s/ John R. Farrenkopf
(John R. Farrenkopf)
/s/ Mark E. Magee
(Mark E. Magee)
Exhibit 4.2
CERTIFICATE OF TRUST
OF
PROVIDENT CAPITAL TRUST I
This Certificate of Trust is being executed as of October 31, 1996
for the purpose of organizing a business trust pursuant to the Delaware
Business Trust Act, 12 DEL. C. Section 3801 ET SEQ. (the "Act").
The undersigned hereby certifies as follows:
1) NAME. The name of the business trust is "Provident Capital Trust
I" (the "Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711.
3) EFFECTIVE. This Certificate of Trust, which may be executed in
counterparts, shall be effective immediately upon filing in the Office of the
Secretary of State of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year
first above written.
THE BANK OF NEW YORK (Delaware),
as Delaware Trustee
By: /s/ Melissa J. Beneduce
Name: Melissa J. Beneduce
Title: Assistant Vice President
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Mary Jane Morrissey
Name: Mary Jane Morrissey
Title: Vice President
/s/ Allen L. Davis
Allen L. Davis, as Regular Trustee
/s/ John R. Farrenkopf
John R. Farrenkopf, as Regular Trustee
/s/ Mark E. Magee
Mark E. Magee, as Regular Trustee
Exhibit 23.1
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3 (No. 333- ) and related Prospectus of
Provident Bancorp, Inc. and Provident Capital Trust I for the registration of
40,000 shares of the preferred stock of Provident Capital Trust I and to the
incorporation by reference therein of our report dated January 18, 1996, with
respect to the consolidated financial statements of Provident Bancorp, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
Ernst & Young, LLP
October 30, 1996
