As filed with the Securities and Exchange Commission on February 28, 1997
File No. 333-20769
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PROVIDENT BANCORP, INC. OHIO 31-0982792
PROVIDENT CAPITAL TRUST I DELAWARE 31-6541893
(EXACT NAME OF REGISTRANT (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
AS SPECIFIED OF INCORPORATION IDENTIFICATION
IN ITS CHARTER) OR 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 securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instructions G, check the following box. /__/
<PAGE>
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.
____________________________________________________________________________
PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 28, 1997
PROVIDENT CAPITAL TRUST I
Offer to Exchange its 8.60% Capital Securities
which have been registered under the Securities Act of 1933
for its Outstanding
8.60% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Fully and Unconditionally
Guaranteed to the extent set forth herein by
Provident Bancorp, Inc.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON APRIL __, 1997, UNLESS EXTENDED.
Provident Capital Trust I, a Delaware statutory business trust (the
"Trust"), hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus (as the same may be amended or supplemented from time to
time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to $100,000,000
aggregate liquidation amount of its 8.60% Capital Securities (the "New Capital
Securities") which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for a like
liquidation amount of its outstanding 8.60% Capital Securities (the "Old
Capital Securities"), of which $100,000,000 aggregate liquidation amount is
outstanding. As soon as practicable after the Exchange Offer, Provident
Bancorp, Inc., an Ohio corporation (the "Company"), will exchange its guarantee
of the payment of distributions and payments on liquidation or redemption of
the Old Capital Securities (the "Old Guarantee") for a like guarantee of
the New Capital Securities (the "New Guarantee") and all of its 8.60% Junior
Subordinated Debentures (the "Old Junior Subordinated Debentures"), of which
$103,093,000 aggregate principal amount is outstanding, for a like aggregate
principal amount of its 8.60% Junior Subordinated Debentures (the "New Junior
Subordinated Debentures"), which New Guarantee and New Junior Subordinated
Debentures also have been registered under the Securities Act (the exchange
of the Old Capital Securities for the New Capital Securities, the exchange of
the Old Guarantee for the New Guarantee and the exchange of the Old Junior
Subordinated Debentures for the New Junior Subordinated Debentures is referred
to collectively herein as the "Exchange"). The Old Capital Securities, the Old
Guarantee and the Old Junior Subordinated Debentures are collectively referred
to herein as the "Old Securities" and the New Capital Securities, the New
Guarantee and the New Junior Subordinated Debentures are collectively referred
to herein as the "New Securities."
The terms of the New Securities are identical in all material respects
to the respective terms of the Old Securities, except that the New Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Securities. See
"Description of the Old Securities."
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The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities") represent undivided beneficial ownership interests in the
assets of the Trust. The Company is the owner of all of the beneficial
ownership interests represented by common securities of the Trust (the "Common
Securities"; together with the Capital Securities, the "Trust Securities"). The
Trust exists for the sole purpose of issuing the Trust Securities and investing
the proceeds thereof in the Old Junior Subordinated Debentures, which will be
exchanged for New Junior Subordinated Debentures (together, the "Junior
Subordinated Debentures"). The Junior Subordinated Debentures will mature on
December 1, 2026. The terms of the Capital Securities provide that they 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 Capital Securities--Subordination of
Common Securities."
See "Risk Factors" commencing on page 13 for certain information that
should be considered by holders who tender Old Capital Securities in the
Exchange Offer.
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March __, 1997.
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Holders of the Capital Securities are entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable
semi-annually in arrears on the first day of June and December of each year,
commencing June 1, 1997, at the annual rate of 8.60% of the liquidation
amount of $1,000 per Capital Security ("Distributions"). The distribution
rate and the distribution payment dates and other payment dates for the
Capital Securities correspond to the interest rate and interest payment dates
and other payment dates on the Junior Subordinated Debentures, which are the
sole assets of the Trust. Pursuant to the Old Guarantee and the New Guarantee
(together, the "Guarantee"), the Company has guaranteed the payment of
Distributions and payments on liquidation of the Trust or redemption of the
Capital Securities, but only in each case to the extent of funds held by the
Trust, as described herein. 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
Capital Securities. 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 Capital
Securities), constitute a full and unconditional guarantee of all of the
Trust's obligations under the Capital 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 September 30, 1996,
approximately $2,533,000 aggregate principal amount of Indebtedness was
outstanding, and the Company's subsidiaries had approximately $663,046,000 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."
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 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), 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 Capital
Securities will also be deferred and 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, 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, (b) payments under the Guarantee and (c) any
declaration of a dividend in connection with the implementation of a
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shareholders' rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant
thereto, and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's benefit plans). During an
Extension Period, interest on the Junior Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of the
Capital Securities are entitled will accumulate) at the rate of 8.60% per
annum, compounded semi-annually to the extent permitted by applicable law,
and holders of the Capital 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--Interest Income and Original Issue
Discount."
The Junior Subordinated Debentures are not redeemable prior to
December 1, 2006 unless a Special Event (as defined herein) has occurred. 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 December 1, 2006, in whole or in part, at a redemption price
equal to 104.30% of the principal amount thereof on December 1, 2006,
declining ratably on each December 1 thereafter to 100% on or after
December 1, 2016, or (ii) at any time, in whole (but not in part), upon the
occurrence and continuation of a Special Event, at a redemption price equal
to the greater of (a) 100% of the principal amount thereof or (b) as
determined by a Quotation Agent (as hereinafter defined), the sum of the
present values of the principal amount and premium payable with respect to an
optional redemption of such Junior Subordinated Debentures on December 1,
2006, together with scheduled payments of interest from the prepayment date
to December 1, 2006, discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein) plus, in either case, accrued and unpaid
interest thereon to the date of prepayment, in each case subject to the
further conditions described under "Description of Junior Subordinated
Debentures--Redemption." The Capital 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 redemption price of such Junior
Subordinated Debentures, in each case plus accumulated and unpaid
Distributions thereon to the date of redemption.
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 dissolve the Trust and cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and the Common Securities in liquidation of the Trust. See
"Description of Capital 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 Capital Securities will be entitled to receive a liquidation
amount of $1,000 per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Junior Subordinated Debentures as described
above. If such liquidation amount can be paid only in part because the Trust
has insufficient assets available to pay in full the aggregate liquidation
amount, then the amounts payable directly by the Trust on the Capital
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Securities shall be paid on a pro rata basis. The holder(s) of the Common
Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that
if an Indenture Event of Default (as defined herein) has occurred and is
continuing, the Capital Securities will have a priority over the Common
Securities. See "Description of Capital Securities--Liquidation Distribution
Upon Dissolution."
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the Trust has sought its own
interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company and the Trust believe that New
Capital Securities issued pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the Company or the Trust (within
the meaning of Rule 405 under the Securities Act) or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from
the Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Old Capital Securities for New Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an "affiliate" of the Company or the Trust,
(ii) any New Capital Securities to be received by it are being acquired in
the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does
not intend to engage in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. In addition, the Company and the Trust
may require such holder, as a condition to such holder's eligibility to
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participate in the Exchange Offer, to furnish to the Company and the Trust
(or an agent thereof) in writing information as to the number of "beneficial
owners" (within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) on behalf of whom such holder holds
the Capital Securities to be exchanged in the Exchange Offer. Each broker-
dealer that receives New Capital Securities for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Company and the Trust believe that broker-dealers who acquired Old
Capital Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities
(other than Old Capital Securities which represent an unsold allotment from
the original sale of the Old Capital Securities) with this Prospectus, as it
may be amended or supplemented from time to time. Subject to certain
exceptions, the Company and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Trust (within the meaning of Rule 405 under the Securities Act) may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer--Resales of New Capital
Securities."
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the
Declaration (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Capital Securities will not be entitled to any increase in the
distribution rate thereon and will continue to be subject to all of the
existing restrictions upon transfer thereof and neither the Company nor the
Trust will have any further obligation to such holders (other than under
certain limited circumstances) to provide for registration under the
Securities Act of the Old Capital Securities held by them. To the extent that
Old Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities."
The New Capital Securities will be a new issue of securities for which
there currently is no established trading market. Accordingly, there can be
no assurance as to the development or liquidity of any market for the New
Capital Securities. The Company currently does not intend to apply for
listing of the New Capital Securities on any securities exchange or for
quotation through the National Association of Securities Dealers Automated
Quotation System.
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Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on April __, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Company and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum liquidation amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company or the Trust. The Company has
agreed to pay all expenses of the Exchange Offer. See "The Exchange Offer--
Fees and Expenses." This Prospectus, together with the Letter of Transmittal,
is being sent to all registered holders of Old Capital Securities as of
March __, 1997.
Neither the Company nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. No dealer-manager
is being used in connection with this Exchange Offer. See "Use of Proceeds"
and "Plan of Distribution."
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act, and in accordance therewith files reports and other
information with the Securities and Exchange 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.
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 Capital 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
Capital Securities are guaranteed by the Company to the extent described
herein. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference
is hereby made to the Registration Statement and the exhibits and schedules
thereto for further information with respect to the Company and the
securities offered hereby. Statements contained herein concerning the
provisions of any documents filed as an exhibit to the Registration Statement
or otherwise filed with the Commission are not necessarily complete, and in
each instance reference is made to the copy of such document so filed. Each
such statement is qualified in its entirety by such reference.
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, June 30 and September 30, 1996 and the Company's
Current Reports on Form 8-K dated September 19, September 26, October 3, 1996
and November 27, 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
<PAGE>
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.
This Prospectus incorporates documents by reference which are not
included herein or delivered herewith. These documents are available without
charge upon written or oral request from the Company's Investor Relations
Department, Linn Street, 855E, Cincinnati, Ohio 45203, telephone number
(513) 345-7102. In order to ensure timely delivery of such documents, any
request should be made at least five business days prior to the Expiration
Date.
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified by the more detailed information and financial
statements appearing elsewhere, or incorporated by reference, in this
Prospectus. Prospective investors are urged to read this Prospectus in its
entirety.
The Company
The Company is a Cincinnati-based bank holding company formed in 1980
under the laws of Ohio. The Company now offers financial services in 26
states and has personal property on lease in 14 other states. The Company's
banking subsidiaries have 72 branch offices: 57 in the greater Cincinnati
area (which includes 9 in northern Kentucky) 12 in the greater Dayton area, 1
in Columbus, Ohio and 2 in Cleveland, Ohio. At September 30, 1996, the
Company had total assets of $6.5 billion and total shareholders' equity of
$471 million. Its lead bank is The Provident Bank, a full-service commercial
bank that operates primarily in the greater Cincinnati area. At September
30, 1996, The Provident Bank's consolidated total assets constituted
approximately 96% of the consolidated assets of the Company.
The Company's executive offices are located at One East Fourth Street,
Cincinnati, Ohio 45202 and its telephone number is (513) 579-2000.
The Exchange Offer
The Exchange Offer . . . . . . Up to $100,000,000 aggregate liquidation amount
of New Capital Securities are being offered in
exchange for a like aggregate liquidation amount
of Old Capital Securities. The Company will
issue, promptly after the Expiration Date,
$1,000 liquidation amount of New Capital
Securities in exchange for each $1,000
liquidation amount of outstanding Old Capital
Securities tendered and accepted in connection
with the Exchange Offer. For a description of
the procedures for tendering Old Capital
Securities, see "The Exchange Offer--Procedures
for Tendering Old Capital Securities."
Expiration Date . . . . . . 5:00 p.m., New York City time, on April __, 1997
(such time on such date being hereinafter called
the "Expiration Date") unless the Exchange Offer
is extended by the Company and the Trust (in
which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange
Offer is extended). See "The Exchange Offer--
Expiration Date; Extensions; Amendments."
<PAGE>
Withdrawal Rights . . . . . . Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written notice
of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth
below under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering
Old Capital Securities . . . Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained
therein and forward the same by mail, facsimile
or hand delivery, together with any other
required documents, to the Exchange Agent,
either with the Old Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Old
Capital Securities. Certain brokers,
dealers, commercial banks, trust companies and
other nominees may also effect tenders by
book-entry transfer. Holders of Old Capital
Securities registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See
"The Exchange Offer--Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not
be sent to the Company or the Trust. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to
the Exchange Agent. See "The Exchange Offer--
Exchange Agent."
Resales of New Capital
Securities . . . . . . . . . The Company and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation Finance
of the Commission as set forth in certain
interpretive letters addressed to third parties
in other transactions. However, neither the
Company nor the Trust has sought its own
interpretive letter and there can be no
assurance that the staff of the Division of
Corporation Finance of the Commission would make
a similar determination with respect to the
Exchange Offer as it has in such interpretive
<PAGE>
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance, and subject to the two
immediately following sentences, the Company and
the Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that such New Capital Securities are
acquired in the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities
who is an "affiliate" of the Company or the
Trust or who intends to participate in the
Exchange Offer for the purpose of distributing
the New Capital Securities, or any broker-dealer
who purchased the Old Capital Securities from
the Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities
Act, (a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth
in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Old Capital Securities
unless such sale is made pursuant to an
exemption from such requirements. In addition,
as described below, if any broker-dealer holds
Old Capital Securities acquired for its own
account as a result of market-making or other
trading activities and exchanges such Old
Capital Securities for New Capital Securities,
then such broker-dealer must deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who wishes
to exchange Old Capital Securities for New
Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an
<PAGE>
affiliate" of the Company or the Trust, (ii) any
New Capital Securities to be received by it are
being acquired in the ordinary course of its
business, (iii) it has no arrangement or
understanding with any person to participate in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities,
and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not
intend to engage in, a distribution (within the
meaning of the Securities Act) of such New
Capital Securities. Each broker-dealer that
receives New Capital Securities for its own
account pursuant to the Exchange Offer must
acknowledge that it acquired the Old Capital
Securities for its own account as the result of
market-making activities or other trading
activities and must agree that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale of
such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and
by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on the position taken by
the staff of the Division of Corporation Finance
of the Commission in the interpretive letters
referred to above, the Company and the Trust
believe that broker-dealers who acquired Old
Capital Securities for their own accounts, as a
result of market-making activities or other
trading activities ("Participating Broker-
Dealers"), may fulfill their prospectus delivery
requirements with respect to the New Capital
Securities received upon exchange of such Old
Capital Securities (other than Old Capital
Securities which represent an unsold allotment
from the original sale of the Old Capital
Securities) with this Prospectus, as it may be
amended or supplemented from time to time.
Subject to certain limitations described below
under "The Exchange Offer--Resale of New Capital
Securities," the Company has agreed that this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of such New Capital Securities for a
period ending 180 days after the Registration
Statement of which this Prospectus constitutes a
part is declared effective. See "Plan of
Distribution." Any Participating Broker-Dealer
<PAGE>
who is an "affiliate" of the Company may not
rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See "The
Exchange Offer--Resales of New Capital
Securities."
Accrued Distributions . . . . Each New Capital Security will pay cumulative
Distributions from November 27, 1996. Holders of
the Old Capital Securities whose Old Capital
Securities are accepted for exchange will not
receive any accumulated Distributions on such
Old Capital Securities and will be deemed to
have waived the right to receive any
Distributions on such Old Capital Securities
accumulated from and after November 27, 1996.
Conditions to
the Exchange Offer . . . . . The Exchange Offer is subject to certain
conditions, which may be waived by the Company
and the Trust in their sole discretion. The
Exchange Offer is not conditioned upon any
minimum liquidation amount of Old Capital
Securities being tendered. See "The Exchange
Offer--Conditions to the Exchange Offer."
Exchange Agent . . . . . . . The exchange agent with respect to the Exchange
Offer is The Bank of New York (the "Exchange
Agent"). The addresses, and telephone and
facsimile numbers, of the Exchange Agent are set
forth below under "The Exchange Offer--Exchange
Agent" and in the Letter of Transmittal.
Use of Proceeds . . . . . . . Neither the Company nor the Trust will receive
any cash proceeds from the issuance of the New
Capital Securities offered hereby. The New
Capital Securities will be exchanged for Old
Capital Securities in like liquidation amount,
which will be retired and cancelled. The cash
proceeds from the sale of the Old Capital
Securities were used to purchase Old Junior
Subordinated Debentures. See "Use of Proceeds."
Certain United States
Federal Income Tax
Considerations . . . . . . . Holders of Old Capital Securities should review
the information set forth under "Certain United
States Federal Income Tax Considerations" prior
to tendering Old Capital Securities in the
Exchange Offer.
<PAGE>
Consequences of
Failure to Exchange . . . . Any Old Capital Securities not tendered and
accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same
rights and will be subject to the same
limitations applicable thereto under the
Declaration (except for those rights which
terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange
Offer, the holders of Old Capital Securities
will not be entitled to any increase in the
distribution rate thereon and will continue to
be subject to all of the existing restrictions
upon transfer thereof and neither the Company
nor the Trust will have any further obligation
to such holders (other than under certain
limited circumstances) to provide for
registration under the Securities Act of the Old
Capital Securities held by them. To the extent
that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's
ability to sell untendered Old Capital
Securities could be adversely affected. See
"Risk Factors--Consequences of a Failure to
Exchange Old Capital Securities."
The New Securities
The Trust . . . . . . . . . Provident Capital Trust I, a Delaware statutory
business trust. The sole assets of the Trust are
the Junior Subordinated Debentures.
Securities Offered . . . . . Up to $100,000,000 aggregate liquidation amount
of the Trust's 8.60% Capital Securities which
have been registered under the Securities Act
(liquidation amount $1,000 per Capital
Security). The terms of the New Capital
Securities are identical in all material
respects to the terms of the Old Capital
Securities, except that the New Capital
Securities have been registered under the
Securities Act and therefore are not subject to
certain restrictions on transfer applicable to
the Old Capital Securities. See "The Exchange
Offer--Purpose and Effect of the Exchange
Offer", "Description of Capital Securities"
and "Description of the Old Securities." The
Holders of the New Capital Securities will be
entitled to a preference in certain
circumstances with respect to Distributions and
amounts payable on redemption, liquidation or
otherwise over the Common Securities.
<PAGE>
Distributions . . . . . . . . Holders of the Capital Securities will be
entitled to receive cumulative cash
distributions at an annual rate of 8.60% of the
liquidation amount of $1,000 per New Capital
Security, accruing from the date of original
issuance and payable semi-annually in arrears on
the first day of June and December of each year
commencing on June 1, 1997. The distribution
rate and the distribution and other payment
dates for the New Capital Securities will
correspond to the interest rate and interest and
other payment dates on the Junior Subordinated
Debentures. See "Description of Capital
Securities."
Junior Subordinated
Debentures . . . . . . . . . The Trust has invested the proceeds from the
issuance of the Old Capital Securities and
Common Securities in an equivalent amount of Old
Junior Subordinated Debentures of the Company.
The Junior Subordinated Debentures mature on
December 1, 2026. The Junior Subordinated
Debentures 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 is structurally
subordinated to all existing and future
liabilities and obligations of its subsidiaries.
See "Risk Factors--Ranking of Subordinated
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 Capital 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 (as defined herein) on the Capital
Securities, in which event the Guarantee shall
not apply to such Distributions 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
<PAGE>
than with respect to the Capital` Securities),
constitute a full and unconditional guarantee of
all of the Trust's obligations under the Capital
Securities. See "Description of Guarantee" and
"Relationship Among the Capital 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 10 consecutive semiannual
periods. 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
Capital Securities will also be deferred for an
equivalent period and 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,
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, (b) payments under the Guarantee,
(c) any declaration of a dividend in connection
with the implementation of a shareholders'
rights plan, or the issuance of stock under any
such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto,
and (d) purchases of common stock related to the
issuance of common stock or rights under any of
the Company's benefit plans). During an
Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue
<PAGE>
(and the amount of Distributions to which
holders of the Capital Securities are entitled
will accumulate) at the rate of 8.60% per annum,
compounded semi-annually. During an Extension
Period, holders of Capital Securities will be
required to include the interest on their pro
rata share of the Junior Subordinated Debentures
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--Interest Income and Original
Issue Discount."
Redemption . . . . . . . . . . The Junior Subordinated Debentures are
redeemable by the Company in whole or in part on
or after December 1, 2006, or at any time, in
whole but not in part, upon the occurrence of a
Special Event, in either case subject to any
necessary prior approval 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 Capital Securities--Redemption--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 any necessary prior approval of the
Federal Reserve, to dissolve the Trust and cause
the Junior Subordinated Debentures to be
distributed to the holders of the Capital
Securities and the Common Securities in
liquidation of the Trust. See "Description of
Capital 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 Capital Securities will
be entitled to receive a liquidation amount of
$1,000 per Capital Security plus accumulated and
unpaid Distributions thereon to the date of
payment, which may be in the form of a
distribution of such amount in Junior
<PAGE>
Subordinated Debentures as described above. If
such Liquidation Distribution (as defined
herein) can be paid only in part because the
Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution,
then the amounts payable directly by the Trust
on the Capital Securities shall be paid on a pro
rata basis. The holder(s) of the Common
Securities will be entitled to receive
distributions upon any such liquidation pro rata
with the holders of the Capital Securities,
except that if an Indenture Event of Default has
occurred and is continuing, the Capital
Securities shall have a priority over the Common
Securities. See "Description of Capital
Securities--Liquidation Distribution Upon
Dissolution."
Ratings . . . . . . . . . . . It is expected that the New Capital Securities
will be rated BB by Standard & Poor's Ratings
Services ("S&P"), baa3 by Moody's Investors
Service, Inc. ("Moody's"), BBB by Fitch
Investors Service, L.P., BBB- by Duff and Phelps
Credit Rating Co. and BBB- by Thomson BankWatch,
Inc. A security rating is not a recommendation
to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by
the assigning rating organization.
Absence of Market for the
New Capital Securities . . . The New Capital Securities will be a new issue
of securities for which there currently is no
established trading market. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the New Capital
Securities. The Company currently does not
intend to apply for listing of the New Capital
Securities on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System.
<PAGE>
RISK FACTORS
Prospective purchasers of the New Capital Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. To the extent any of the
information contained or incorporated by reference in this Prospectus
constitutes a "forward-looking statement" as defined in Section 21E(i)(1) of
the Exchange Act, the risk factors set forth below are cautionary statements
identifying important factors that could cause actual results to differ
materially from those in the forward-looking statement.
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 Capital 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 September 30, 1996,
the Indebtedness of the Company aggregated approximately $2,533,000. 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 Provident Bank to pay dividends
or make other payments to the Company. At September 30, 1996, The Provident
Bank and the Company's other banking subsidiaries could pay an aggregate of
$131.9 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 Provident Bank, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability
of holders of the Capital Securities to benefit indirectly from such
distribution), will be subject to the prior claims of creditors of that
subsidiary, except to the extent that any claims of the Company as a creditor
of such subsidiary may be recognized as such. Accordingly, the Capital
Securities will effectively be subordinated to all existing and future
liabilities and obligations of the Company's subsidiaries, and holders of the
Capital Securities should look only to the assets of the Company for payments
on the Capital Securities. As of September 30, 1996, the Company's
subsidiaries had indebtedness and other liabilities of approximately
$663,046,000.
Enforcement of Certain Rights by Holders of Capital Securities
If a Trust Enforcement Event (as defined herein) occurs and is
continuing, then the holders of Capital Securities would rely on the
enforcement by the Property Trustee (as defined herein) of such Property
Trustee's rights as a holder of the Junior Subordinated Debentures against
the Company. The holders of a majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
to direct the exercise of any trust or power conferred upon the Property
Trustee under the Declaration (as defined herein), including the right to
<PAGE>
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 Capital 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 Capital
Securities or otherwise, and, in such event, holders of the Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. However, in the event the Company failed to pay interest on or
principal of the Junior Subordinated Debentures on any payment date on which
such payment is due and payable, then a holder of Capital Securities may
directly institute a proceeding against the Company under the Indenture 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 amount of the Capital 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 Capital Securities under the
Declaration to the extent of any payment made by the Company to such holder
of Capital Securities in such Direct Action. Except as set forth herein,
holders of Capital 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 Junior Subordinated Debentures--Indenture Events of
Default" and "--Enforcement of Certain Rights by Holders of Capital
Securities" and "Description of Guarantee". The Declaration provides that
each holder of Capital Securities by acceptance thereof agrees to the
provisions of the Indenture and the Guarantee.
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 10 consecutive semi-annual periods, 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, semi-annual Distributions on the Capital Securities by the Trust
will be deferred during any such Extension Period but would continue to
accumulate at the rate of 8.60% per annum, compounded (to the extent
permitted by applicable law) semi-annually 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 with or junior to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) payments under the Guarantee, (c) any declaration
of a dividend in connection with the implementation of a shareholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, and
<PAGE>
(d) purchases of common stock related to the issuance of common stock or
rights under any of the Company's benefit plans). Prior to the termination of
any such Extension Period, the Company may further extend the Extension
Period, provided that no Extension Period may exceed 10 consecutive
semiannual periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any 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 Capital 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 Capital Securities will be required to accrue income
(in the form of OID) for United States federal income tax purposes in respect
of its pro rata share of the Junior Subordinated Debentures held by the
Trust. As a result, a holder of Capital Securities will include such interest
income in gross income for United States federal income tax purposes in
advance of the receipt of cash attributable to such interest income, and will
not receive the cash related to such income from the Trust if the holder
disposes of the Capital Securities prior to the record date for the payment
of Distributions with respect to such Extension Period. See "Certain United
States Federal Income Tax Consequences--Interest Income and Original Issue
Discount" and "--Sales of Capital 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 Capital Securities is likely to
be adversely affected. A holder that disposes of its Capital Securities
during an Extension Period, therefore, might not receive the same return on
its investment as a holder that continues to hold its Capital Securities. In
addition, as a result of the Company's right to defer interest payments, the
market price of the Capital 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 issuer
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 any necessary prior approval of the Federal Reserve, to
redeem the Junior Subordinated Debentures in whole (but not in part) within
90 days following the occurrence of such Special Event and thereby cause a
mandatory redemption of the Capital Securities and Common Securities. A
"Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event (each as defined herein).
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill")
was introduced in the 104th Congress which would have, among other things,
generally denied interest deductions for interest or OID 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 issuer
or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. This provision of the Bill was proposed to be effective
generally for instruments issued on or after December 7, 1995. If this
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
<PAGE>
effect that it was their intention that the effective date of the Bill, if
enacted, 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 (the "Democrat Letters") to Treasury
Department officials concurring with the view expressed in the Joint
Statement. The 104th Congress adjourned without enacting the Bill. Moreover,
if the principles contained in the Joint Statement and the Democrat Letters
were followed, any similar legislation that is subsequently
enacted 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 Capital Securities or to dissolve the Trust and distribute
the Junior Subordinated Debentures to the holders of Trust Securities in
liquidation of the Trust upon receiving an opinion of counsel as described
more fully under "Description of Capital 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 has
the right, subject to any necessary prior approval of the Federal Reserve, to
dissolve the Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Capital Securities and the Common
Securities in liquidation of the Trust. In addition, upon liquidation of the
Trust and certain other events, the Junior Subordinated Debentures may be
distributed to such holders. Under current United States federal income tax
law and interpretations thereof and assuming, as expected, the Trust is
treated as a grantor trust for United States federal income tax purposes, a
distribution by the Trust of the Junior Subordinated Debentures pursuant to a
liquidation of the Trust will not be a taxable event to the Trust or to
holders of the Capital Securities, and will result in a holder of the Capital
Securities receiving directly such 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 as a result of the occurrence
of a Tax Event or otherwise, the distribution of Junior Subordinated
Debentures to holders of the Capital Securities by the Trust could be a
taxable event to the Trust and each holder, and holders of the Capital
Securities may be required to recognize gain or loss as if they had exchanged
their Capital Securities for the Junior Subordinated Debentures they received
upon the liquidation of the Trust. See "Certain United States Federal Income
Tax Consequences--Distribution of Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities
or Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Trust occurs. Accordingly, the
Capital Securities that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Junior Subordinated
Debentures that a holder of Capital Securities may receive on liquidation of
the Trust, may trade at a discount to the price that the investor paid to
purchase the Capital Securities offered hereby. Because holders of Capital
Securities may receive Junior Subordinated Debentures on termination of the
Trust, prospective purchasers of Capital Securities are also making an
<PAGE>
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 Capital Securities--
Redemption--Special Event Redemption or Distribution of Junior Subordinated
Debentures" and "Description of Junior Subordinated Debentures--General."
Limited Voting Rights
Holders of New Capital Securities generally will have limited voting
rights relating only to the modification of the New Capital Securities and
certain other matters described herein. Holders of New Capital 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 New Capital Securities to
ensure that the Trust will be classified as a grantor trust for United States
federal income tax purposes even if such action adversely affects the
interests of such holders. See "Description of Capital Securities--Voting
Rights; Amendment of the Declaration."
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
Capital Securities.
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant
to an exemption therefrom or in a transaction not subject thereto, and in
each case in compliance with certain other conditions and restrictions. Old
Capital Securities that remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Old Capital Securities that remain outstanding will not be entitled to any
increase in the distribution rate thereon or any rights to have such Old
Capital Securities registered under the Securities Act by the Company
(subject to certain limited exceptions). The Company and the Trust do not
intend to register under the Securities Act any Old Capital Securities that
remain outstanding after consummation of the Exchange Offer (subject to such
limited exceptions, if applicable).
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a small number of beneficial owners. Although the Old
Capital Securities have been designated for trading in the Private Offerings,
Resale and Trading through Automatic Linkages ("PORTAL") market, to the
extent that Old Capital Securities are tendered and accepted in connection
with the Exchange Offer, any trading market for Old Capital Securities that
remain outstanding after the Exchange Offer could be adversely affected.
Absence of Public Market for New Capital Securities
Although the New Capital Securities will generally be permitted to be
resold or otherwise transferred by the holders (who are not affiliates of the
Company or the Trust) without compliance with the registration requirements
<PAGE>
under the Securities Act, they will constitute a new issue of securities with
no established trading market. Accordingly, no assurance can be given that an
active public or other market will develop for the New Capital Securities or
as to the liquidity of or the trading market for the New Capital Securities.
The Company currently does not intend to apply for listing of the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System. If an active
public market does not develop, the market price and liquidity of the New
Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities,
future trading prices of such securities will depend on many factors,
including, among other things, prevailing interest rates, results of
operations and the market for similar securities. Depending on prevailing
interest rates, the market for similar securities and other factors,
including the financial condition of the Company, the New Capital Securities
may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of
the Securities Act) of the Company or the Trust may publicly offer for sale
or resell the New Capital Securities only in compliance with the provisions
of Rule 144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such New Capital Securities.
See "Plan of Distribution."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents.
Therefore, holders of the Old Capital Securities desiring to tender such Old
Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Trust is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. The New Capital
Securities will be exchanged for Old Capital Securities in like liquidation
amount, which will be retired and cancelled. The cash proceeds from the sale
of the Old Capital Securities were used to purchase Old Junior Subordinated
Debentures. The Company expects to use the proceeds from the sale of the Old
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. 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
material 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.
<PAGE>
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:
Nine Months
Ended
September 30, Year Ended December 31,
------------- -----------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
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 . . . 2.27 2.50 2.46 2.92 3.89 4.40 3.22
Including Interest
on Deposits . . . 1.41 1.39 1.40 1.50 1.60 1.46 1.22
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
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.
<PAGE>
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 Capital
Securities will be presented in the consolidated balance sheet of the Company
as "Long Term Debt" and appropriate disclosures about the Capital 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 Capital
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
Capital Securities will be treated as Tier 1 capital of the Company for such
purposes.
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 sale of the Old Capital Securities.
<TABLE>
<CAPTION>
Actual As Adjusted
------ -----------
(Dollars in Thousands)
<S> <C> <C>
Long-Term Debt<F1>:
Company . . . . . . . . . . . . . . . . $ 2,533 $ 102,533
Subsidiaries . . . . . . . . . . . . . 663,046 663,046
Total . . . . . . . . . . . . . . . 665,579 765,579
---------- ----------
Shareholders' equity:
Preferred stock . . . . . . . . . . . . 7,000 7,000
Common stock . . . . . . . . . . . . . 11,730 11,730
Capital surplus . . . . . . . . . . . . 138,672 138,672
Retained earnings . . . . . . . . . . . 308,615 308,615
Reserve for retirement of capital
securities . . . . . . . . . . . . . . 6,333 6,333
Net unrealized loss on marketable
securities . . . . . . . . . . . . . . (1,188) (1,188)
Total shareholders' equity . . . . . . 471,162 471,162
---------- ----------
Total capitalization . . . . . . . . . . . $1,136,741 $1,236,741
========== ==========
Capital ratios:
Tier 1 Capital . . . . . . . . . . . . . 7.71% 9.23%
Total Capital . . . . . . . . . . . . . . 11.70% 13.16%
Tier 1 Leverage Ratio . . . . . . . . . . 7.18% 8.60%
________________
<FN>
<F1> As described herein, the sole assets of the Trust are $103,093,000
principal amount of Junior Subordinated Debentures issued by the Company
to the Trust. The Junior Subordinated Debentures will bear interest at
the rate of 8.60% per annum and will mature on December 1, 2026. The
Company owns all of the Common Securities of the Trust.
</TABLE>
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the sale of the Old Capital Securities, the Company
and the Trust entered into a Registration Rights Agreement (the "Registration
Rights Agreement") with the Initial Purchasers of the Old Capital Securities
(the "Initial Purchasers"), pursuant to which the Company and the Trust
agreed to file and to use their reasonable efforts to cause to become
effective with the Commission a registration statement with respect to the
exchange of the Old Capital Securities for Capital Securities with terms
identical in all material respects to the terms of the Old Capital
Securities. A copy of the Registration Rights Agreement is an exhibit to the
Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Company and the Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same as the form and
terms of the Old Capital Securities except that the New Capital Securities
have been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer applicable to the Old Capital
Securities. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the distribution rate
thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Risk Factors--
Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Capital Securities."
As soon as practicable after the Expiration Date, the Company will
exchange the Old Guarantee for the New Guarantee and all of the Old Junior
Subordinated Debentures, of which $103,093,000 aggregate principal amount is
outstanding, for a like aggregate principal of the New Junior Subordinated
Debentures. The New Guarantee and New Junior Subordinated Debentures have
been registered under the Securities Act.
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not
be in compliance with the securities or blue sky laws of such jurisdiction.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Old Capital Securities are held of record by The Depository
Trust Company who desires to deliver such Old Capital Securities by book-
entry transfer at The Depository Trust Company.
Terms of the Exchange
The Company hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal,
to exchange up to $100,000,000 aggregate liquidation amount of New Capital
Securities for a like aggregate liquidation amount of Old Capital Securities
properly tendered on or prior to the Expiration Date (as defined below) and
not properly withdrawn in accordance with the procedures described below. The
Company will issue, promptly after the Expiration Date, $1,000 liquidation
amount of New Capital Securities in exchange for each $1,000 liquidation
<PAGE>
amount of outstanding Old Capital Securities tendered and accepted in
connection with the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum liquidation
amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $100,000,000 aggregate liquidation amount of the Old Capital
Securities is outstanding.
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set
forth herein or otherwise, certificates for any such unaccepted Old Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange
Offer. See "--Fees and Expenses."
Each holder who tenders Old Capital Securities will warrant and agree in
the Letter of Transmittal that it has full power and authority to tender,
exchange, sell, assign and transfer Old Capital Securities, that the Trust
will acquire good, marketable and unencumbered title to the tendered Old
Capital Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Old Capital Securities tendered for exchange are not
subject to any adverse claims or proxies. The holder also will warrant and
agree that it will, upon request, execute and deliver any additional
documents deemed by the Trust or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
The Trust reserves the right in its sole discretion to (a) purchase or
make offers for any Old Capital Securities that remain outstanding subsequent
to the Expiration Date, or, as set forth under "--Expiration Date;
Extensions; Amendments," to terminate the Exchange Offer and (b) to the
extent permitted by applicable law, purchase Old Capital Securities in the
open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers may differ from the terms of the Exchange Offer.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on
April __, 1997 unless the Exchange Offer is extended by the Company and
the Trust (in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended).
The Company and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Capital Securities for exchange
or to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Company and the Trust
determine, in their sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have
occurred or exist or have not been satisfied, (ii) to extend the Expiration
Date of the Exchange Offer and retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject, however, to the right of holders of
Old Capital Securities to withdraw their tendered Old Capital Securities as
described under "--Withdrawal Rights," and (iii) to waive any condition or
otherwise amend the terms of the Exchange Offer in any respect deemed by them
to be advantageous to the holders of the Old Capital Securities. If the
Exchange Offer is amended in a manner determined by the Company and the Trust
<PAGE>
to constitute a material change, or if the Company and the Trust waive a
material condition of the Exchange Offer, the Trust will promptly disclose
such amendment by means of a prospectus supplement that will be distributed
to the registered holders of the Old Capital Securities, and the Company and
the Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent
and by making a public announcement thereof, and such announcement in the
case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Trust may choose to make any
public announcement and subject to applicable law, the Trust shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
Resales of New Capital Securities
The Trust is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Company nor the
Trust sought its own interpretive letter and there can be no assurance that
the staff of the Division of Corporation Finance of the Commission would make
a similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company and the Trust believe that New
Capital Securities issued pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the Company or the Trust (within
the meaning of Rule 405 under the Securities Act ) or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from
the Trust to resell pursuant to Rule 144A or any other available exemption
under the Securities Act, (a) will not be able to rely on the interpretations
of the staff of the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will not be permitted
or entitled to tender such Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to an exemption from
such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an "affiliate" of the Company or the Trust,
<PAGE>
(ii) any New Capital Securities to be received by it are being acquired in
the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does
not intend to engage in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. In addition, the Company and the Trust
may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Company and the Trust
(or an agent thereof) in writing information as to the number of "beneficial
owners" (within the meaning of Rule 13d-3 under the Exchange Act) on behalf
of whom such holder holds the Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it
acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken by the staff
of the Division of Corporation Finance of the Commission in the interpretive
letters referred to above, the Company and the Trust believe that broker-
dealers who acquired Old Capital Securities for their own accounts, as a
result of market-making activities or other trading activities
("Participating Broker-Dealers"), may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities
which represent an unsold allotment from the original sale of the Old Capital
Securities) with this Prospectus, as it may be amended or supplemented from
time to time. Subject to certain provisions set forth in the Registration
Rights Agreement, the Company and the Trust have agreed that this Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Company or the Trust may not rely on such interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
Each Participating Broker-Dealer who surrenders Old Capital Securities
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company or
the Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to
state a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-
Dealer will suspend the sale of New Capital Securities pursuant to this
Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies
of the amended or supplemented Prospectus to such Participating Broker-Dealer
or the Company or the Trust has given notice that the sale of the New Capital
Securities may be resumed, as the case may be.
<PAGE>
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Old
Capital Securities validly tendered and not withdrawn as, if and when the
Trust gives oral or written notice to the Exchange Agent of the Trust's
acceptance of such Old Capital Securities for exchange pursuant to the
Exchange Offer. The Exchange Agent will act as agent for the Trust for the
purpose of receiving tenders of Old Capital Securities, Letters of
Transmittal and related documents, and as agent for tendering holders for the
purpose of receiving Old Capital Securities, Letters of Transmittal and
related documents and transmitting New Capital Securities to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange
of any Old Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Trust's acceptance for exchange of Old
Capital Securities) or the Company and the Trust extend the Exchange Offer or
is unable to accept for exchange or exchange Old Capital Securities tendered
pursuant to the Exchange Offer, then, without prejudice to the Trust's rights
set forth herein, the Exchange Agent may, nevertheless, on behalf of the
Trust and subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Old Capital Securities and such Old Capital Securities may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "--Withdrawal Rights."
Procedures for Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other required documents, must
be received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent," and one of the following must apply: (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation must be received by
the Exchange Agent, in each case on or prior to the Expiration Date, or (iii)
the guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in
the appropriate box on the Letter of Transmittal. The entire amount of Old
Capital Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERTY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at The Depository Trust Company ("DTC")
for purposes of the Exchange Offer within two business days after the date of
this Prospectus. Any financial institution that is a participant in DTC's
book-entry transfer facility system may make a book-entry delivery of the Old
<PAGE>
Capital Securities by causing DTC to transfer such Old Capital Securities
into the Exchange Agent's account at DTC in accordance with DTC's procedures
for transfers. However, although delivery of Old Capital Securities may be
effected through book-entry transfer into the Exchange Agent's account at
DTC, the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any other required
documents, must in any case be delivered to and received by the Exchange
Agent at its address set forth under "--Exchange Agent" on or prior to the
Expiration Date, or the guaranteed delivery procedure set forth below must be
complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (b) such registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (a) or (b) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly
executed bond power, with the endorsement or signature on the bond power and
on the Letter of Transmittal guaranteed by a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii)
a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or before the Expiration
Date, or the procedures for book-entry transfer cannot be completed on a
timely basis, such Old Capital Securities may nevertheless be tendered,
provided that all of the following guaranteed delivery procedures are
complied with.
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided below, on or
prior to Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within five New York Stock Exchange trading days after
the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, transmitted
by facsimile or mailed to the Exchange Agent and must include a guarantee by
an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provisions hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
<PAGE>
entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Old Capital Securities will be determined by the Trust, in
its sole discretion, whose determination shall be final and binding on all
parties. The Trust reserves the absolute right, in its sole and absolute
discretion, to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Trust, be unlawful. The Trust also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the
Exchange Offer as set forth under "--Conditions to the Exchange Offer" or any
condition or irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or irregularities are
waived in the case of other holders.
The Trust's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding. No tender of Old Capital Securities will be deemed to
have been validly made until all irregularities with respect to such tender
have been cured or waived. Neither the Trust, any affiliates or assigns of
the Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in tenders or incur any liability
for failure to give such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
unless waived by the Trust, proper evidence satisfactory to the Trust, in its
sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex
or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent" on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Capital
Securities to be withdrawn, the aggregate principal amount of Old Capital
Securities to be withdrawn, and (if certificates for such Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth in the Old Capital Securities, if different
<PAGE>
from that of the person who tendered such Old Capital Securities. If Old
Capital Securities have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth above under "--Procedures for
Tendering Old Capital Securities," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of
Old Capital Securities, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex
or facsimile transmission. Withdrawals of tenders of Old Capital Securities
may not be rescinded. Old Capital Securities properly withdrawn will not be
deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Trust, in
its sole discretion, whose determination shall be final and binding on all
parties. Neither the Trust, any affiliates or assigns of the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned
to the holder thereof promptly after withdrawal.
Distributions on the New Capital Securities
Each New Capital Security will pay cumulative Distributions from the
most recent Distribution Date on the Old Capital Securities surrendered in
exchange for such New Capital Securities or, if no Distributions have been
paid on such Old Capital Securities, from November 27, 1996. Holders of the
Old Capital Securities whose Old Capital Securities are accepted for exchange
will not receive accumulated Distributions on such Old Capital Securities for
any period from and after the last Distribution Date on such Old Capital
Securities prior to the original issue date of the New Capital Securities or,
if no such Distributions have been paid, will not receive any accumulated
Distributions on such Old Capital Securities, and will be deemed to have
waived the right to receive any Distributions on such Old Capital Securities
accumulated from and after November 27, 1996.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been
satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to
be offered for resale, resold and otherwise transferred by holders
thereof (other than broker-dealers and any such holder which is an
<PAGE>
"affiliate" of the Company or the Trust within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Capital
Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with
respect to the Exchange Offer which, in the Trust's judgment, would
reasonably be expected to impair the ability of the Trust to proceed
with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Trust's judgment, would reasonably be expected to
impair the ability of the Trust to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Ohio state authorities which, in the Company's judgment,
would reasonably be expected to impair the ability of the Company to
proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the over-
the-counter market shall have been suspended by order of the Commission
or any other governmental authority which, in the Trust's judgment,
would reasonably be expected to impair the ability of the Trust to
proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated or, to
the knowledge of the Company or the Trust, threatened for that purpose
any governmental approval has not been obtained, which approval the
Trust shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its
subsidiaries has occurred which, in the sole judgment of the Trust,
might materially impair the ability of the Trust to proceed with the
Exchange Offer.
If the Company and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or
exists or has not been satisfied, the Company and the Trust may, subject to
applicable law, terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been accepted for exchange) or may waive any such
condition or otherwise amend the terms of the Exchange Offer in any respect.
If such waiver or amendment constitutes a material change to the Exchange
Offer, the Company and the Trust will promptly disclose such waiver by means
of a prospectus supplement that will be distributed to the registered holders
of the Old Capital Securities, and the Company and the Trust will extend the
Exchange Offer to the extent and in the manner required by Rule 14e-1 under
the Exchange Act.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed
to the Exchange Agent as follows:
<PAGE>
The Bank of New York
101 Barclay Street - 7E
New York, New York 10286
Attention: Reorganization Section, Arwen Gibbens
Telephone: (212) 815-6333
Facsimile: (212) 571-3080
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Company has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection therewith. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of
this Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Neither the Company nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
<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 (as amended and restated, the "Declaration") and the filing of a
certificate of trust with the Secretary of State of the State of Delaware.
The Company acquired 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 Capital 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 (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. 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 Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Capital
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 has paid and will pay all fees and expenses related to the
organization and operations 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 other domestic taxing
authority upon the Trust) and the offering of the Capital Securities and the
Exchange Offer and be responsible for all debts and obligations of the Trust
(other than with respect to the Capital Securities).
For so long as the Capital Securities remain outstanding, the Company
covenants (i) to maintain directly or indirectly 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
<PAGE>
purposes of the Investment Company Act of 1940, as amended, 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 Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Act. See "Description of Capital Securities." The
Declaration and the 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.
<PAGE>
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Regular Trustees on behalf
of the Trust have issued the Old Capital Securities and the Common
Securities. The Old Capital Securities represent, and the New Capital
Securities will represent, undivided beneficial ownership 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 Capital 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.
General
The Capital Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities except as described under "--
Subordination of Common Securities." Legal title to the Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of
the holders of the Capital Securities and the Common Securities. The
Guarantee executed by the Company for the benefit of the holders of the
Capital Securities will be a guarantee on a subordinated basis with respect
to the Capital Securities but will not guarantee payment of Distributions or
amounts payable on redemption or liquidation of the Capital Securities when
the Trust does not have sufficient funds available to make such payments. See
"Description of Guarantee." 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 Common Securities
and the Capital Securities), constitute a full and unconditional guarantee of
all of the Trust's obligations under the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
Distributions
Distributions on each Capital Security will be payable at the annual
rate of 8.60% of the liquidation amount of $1,000, payable semi-annually in
arrears on the first day of June and December of each year. Distributions
will accumulate from the date of original issuance and commence on June 1,
1997. 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 Capital 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 Capital 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 Capital 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 Capital 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
<PAGE>
time for a period not exceeding 10 consecutive semi-annual periods (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. Accordingly, there
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures. As a consequence of any such extension,
semi-annual Distributions on the Capital Securities will be deferred by the
Trust during any such Extension Period. Distributions to which holders of the
Capital Securities are entitled will accumulate and compound semi-annually
(to the extent permitted by applicable law) at the rate per annum of 8.60%
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 Junior Subordinated Debentures
(other than (a) dividends or distributions in common stock of the Company,
(b) payments under the Guarantee, (c) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). Prior to the termination of any such Extension
Period, the Company may further extend the Extension Period, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any 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 foregoing requirements. See "Description of
Junior Subordinated Debentures--Option to Extend Interest Payment Period."
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
Capital Securities is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a
Business Day (and without any additional Distributions or other payment in
respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable (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 Capital 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 shall be the
15th day of the month prior to the relevant Distribution Date. Distributions
payable on any Capital Securities that are not punctually paid on any
Distribution Date will cease to be payable to the person in whose name such
Capital Securities are registered on the relevant record date, and such
<PAGE>
defaulted Distribution will instead be payable to the person in whose name
such Capital Securities are registered on the special record date or other
specified date determined in accordance with the Declaration.
Redemption
Mandatory Redemption. Unless a Special Event has occurred, the Capital
Securities will not be redeemable prior to December 1, 2006. Upon the
repayment or redemption, in whole or in part, of the Junior Subordinated
Debentures, whether at Stated Maturity 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 Capital Securities and Common
Securities, on a pro rata basis, upon not less than 30 nor more than 60 days'
notice prior to the date fixed for repayment or redemption. If less than all
of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Capital Securities and the Common
Securities.
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 within 90 days following the
occurrence of such Special Event the Junior Subordinated Debentures on the
date of redemption (the "Redemption Date") in whole (but not in part) and
thereby cause a mandatory redemption of the Capital Securities in whole (but
not in part) at a redemption price with respect to the Capital Securities
equal to the redemption price in respect of the Junior Subordinated
Debentures or (ii) to dissolve 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
Capital 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
Capital 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 Capital Securities.
See "Certain United States Federal Income Tax Consequences--Distribution of
Junior Subordinated Debentures or Cash upon Liquidation of the Trust."
If the Company does not elect either option described above, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures, whether at maturity or redemption, 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, a Regulatory Capital Event or an
Investment Company Event. "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 applying such laws or regulations, which
amendment or change is adopted or which proposed change, pronouncement or
decision is announced on or after the date of original issuance of the
Capital Securities, 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
<PAGE>
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. A
"Regulatory Capital Event" means that the Company shall have received an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to or change (including any
announced prospective change) in the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of the Federal Reserve
or (b) any official administrative pronouncement or judicial decision for
interpreting or applying such laws or regulations, which amendment or change
is effective or such pronouncement or decision is announced on or after the
date of original issuance of the Capital Securities, the Capital Securities
do not constitute, or within 90 days of the date thereof, will not constitute
Tier I capital (or its then equivalent); provided, however, that the
distribution of the Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Company shall not in and of itself constitute
a Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event. "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 Capital
Securities.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be redeemed at
the redemption price in respect of the Junior Subordinated Debentures (the
"Redemption Price") with the applicable proceeds from the contemporaneous
redemption or payment at Stated Maturity of the Junior Subordinated
Debentures. Redemptions of the Capital Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has sufficient funds available for the payment of such
Redemption Price. See also "--Subordination of Common Securities."
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 Capital Securities
to be redeemed at its registered address. If the Trust gives a notice of
redemption in respect of the Capital Securities, then, by 12:00 noon, New
York City time, on the Redemption Date, to the extent funds are available,
the Property Trustee will deposit irrevocably with The Depository Trust
Company ("DTC") or its nominee funds sufficient to pay the applicable
Redemption Price and will give DTC irrevocable instructions and authority to
pay the Redemption Price to the holders of the Capital Securities. See
"Book-Entry Issuance." If any Capital Securities are held in certificated
form, the Trust, to the extent funds are available, will irrevocably deposit
with the paying agent for such Capital 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 Capital Securities.
<PAGE>
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Security called for redemption shall be
payable to the holders of such Capital 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 Capital Securities so called for redemption
will cease, except the right of the holders of such Capital Securities to
receive the Redemption Price, but without interest on such Redemption Price,
and such Capital Securities will cease to be outstanding. In the event that
any date fixed for redemption of Capital Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business
Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in 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 Capital 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 Capital Securities will
continue to accrue at the then applicable rate, from the Redemption Date
originally established by the Trust for the Capital Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption. If less than all of the Capital Securities
and Common Securities issued by the Trust are to be redeemed on a Redemption
Date, then the aggregate amount of such Capital Securities and Common
Securities to be redeemed shall be allocated pro rata among the Capital
Securities and the Common Securities. If the Capital Securities are in
book-entry form, they will be redeemed as described below under "Book-Entry
Issuance." If not, the particular Capital Securities to be redeemed shall be
selected on a pro rata basis not more than 60 days prior to the Redemption
Date by the Property Trustee from the outstanding Capital Securities not
previously called for redemption, 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 $1,000 or an integral multiple of $1,000 in
excess thereof) of the liquidation amount of Capital Securities of a
denomination larger than $1,000. The Property Trustee shall promptly notify
the Trust registrar in writing of the Capital Securities selected for
redemption and, in the case of any Capital Security selected for partial
redemption, the liquidation amount thereof to be redeemed. For all purposes
of the Declaration, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Security redeemed or to be redeemed only in part, to the portion
of the aggregate liquidation amount of Capital Securities which has been or
is to be redeemed.
<PAGE>
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default (as defined herein) shall have occurred
and be continuing, no payment of any Distribution on, or Redemption Price of,
any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding Capital Securities for all
Distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price the full amount of such Redemption Price on
all of the outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Capital Securities then due
and payable.
Liquidation Distribution Upon Dissolution
Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve 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 Capital Securities and Common Securities; (iii) the repayment of all of
the Capital Securities in connection with the maturity or 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 dissolution 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 Capital 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 practicable, in which event such
holders will be entitled to receive out of the assets of the Trust available
for distribution to holders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to, in the case
of holders of Capital Securities, the aggregate of the liquidation amount
plus 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 Capital Securities shall be
paid on a pro rata basis. The holder(s) of the Common Securities will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of the Capital Securities, except that if an Indenture Event of
Default has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Capital Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee, as a record holder of Capital Securities, will receive a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing Capital Securities held in certificated form will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to
<PAGE>
the liquidation amount of such Capital Securities, and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid Distributions on
such Capital Securities until such certificates are presented for
cancellation whereupon the Company will issue to such holder, and the
Indenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
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 Capital
Securities have been cured, waived or otherwise eliminated. Until such Trust
Enforcement Event with respect to the Capital 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 Capital Securities and only the
holders of the Capital 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 and 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
Capital 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 Capital Securities may, on or after the
respective due dates specified in the Junior Subordinated Debentures,
institute a proceeding directly against the Company under the Indenture for
enforcement of payment on Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation amount of the Capital Securities
held by such holder. In connection with such Direct Action, the Company will
be subrogated to the rights of such record holder of Capital Securities to
the extent of any payment made by the Company to such record holder of
Capital 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 Capital 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
<PAGE>
annul a 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 amount of all outstanding Capital Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of each
holder of Capital Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Capital
Securities except pursuant to a subsequent vote of the holders of the Capital
Securities. The Property Trustee shall notify each holder of record of the
Capital 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 Capital 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 Trustees (and in certain circumstances the Property
Trustee and the Delaware Trustee), without the consent of the holders of the
Capital 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 as a grantor trust for United States
federal income tax purposes at all times that any Capital 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 Capital Securities or Common
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of Capital Securities and Common
Securities. The Declaration may be amended by the Company and a majority of
the Regular Trustees with (i) the consent of holders representing not less
than a majority (based upon liquidation amounts) of the outstanding Capital
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 as an
"investment company" under the Investment Company Act, provided, further that
without the consent of each holder of Capital Securities and Common
Securities affected thereby, the Declaration may not be amended to (i) change
the amount or timing of any Distribution on the Capital Securities and Common
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Capital Securities and Common
Securities as of a specified date or (ii) restrict the right of a holder of
Capital Securities or Common Securities to institute suit for the enforcement
of any such payment on or after such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or
pursuant to written consent. The Regular Trustees will cause a notice of any
<PAGE>
meeting at which holders of Capital Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of Capital Securities in the
manner set forth in the Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with
the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the 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, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Capital 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.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the 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 Capital 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 Capital Securities so selected
for redemption, except in the case of any Capital Securities being redeemed
in part, any portion thereof not to be redeemed.
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
Capital Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Trust
<PAGE>
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
Capital 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 Capital
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 Global Capital Securities (as defined herein)
shall be made to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if the Capital Securities are held in
certificated form, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register
maintained by the Property Trustee. 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
Capital Securities, the Delaware Trustee or the Property Trustee, 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
(if not the Trust) either (a) expressly assumes all of the obligations of the
Trust with respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same terms as
the Capital Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Capital Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) if the Trust is not the successor entity, 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) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in any material
respect, (v) such successor entity has a purpose identical to that of the
Trust, (vi) 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,
<PAGE>
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
(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, (vii) 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
(viii) such successor entity (if not the Trust) 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 amount of the Capital 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.
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 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 Capital Securities.
The Trust may not borrow money, issue debt, mortgage nor pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New 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
<PAGE>
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture.
General
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in Old Junior Subordinated Debentures
issued by the Company. Pursuant to the Exchange Offer, the Company will
exchange the Old Junior Subordinated Debentures for the New Junior
Subordinated Debentures as soon as practicable after the Expiration Date. No
Old Junior Subordinated Debentures will remain outstanding after such
exchange. The following is a description of the Junior Subordinated
Debentures.
The Junior Subordinated Debentures are outstanding in an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities plus the Company's investment in the Common Securities. The Junior
Subordinated Debentures will bear interest at the annual rate of 8.60% of the
principal amount thereof, payable semi-annually in arrears on the first day
of June and December of each year (each, an "Interest Payment Date"),
commencing June 1, 1997, to the person in whose name each Junior Subordinated
Debenture is registered, subject to certain exceptions, at the close of
business on the 15th day of the month preceding 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 trust for the benefit of the holders of the Capital 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), with the
same force and effect as if made on the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 8.60% thereof, compounded
semi-annually. The term "interest" as used herein shall include semi-annual
interest payments and interest on semi-annual interest payments not paid on
the applicable Interest Payment Date, as applicable.
The Junior Subordinated Debentures will mature on December 1, 2026 (the
"Stated Maturity").
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. 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 10
consecutive semi-annual periods with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of
<PAGE>
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 8.60%, compounded semi-annually, 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 Capital Securities while the Capital 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--
Interest Income and 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 with or junior
in interest to the Junior Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company, (b) payments under the
Guarantee, (c) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans).
Prior to the termination of any such Extension Period, the Company may
further extend the Extension Period, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any
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 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 Capital
Securities.
Redemption
The Junior Subordinated Debentures are not redeemable prior to
December 1, 2006 unless a Special Event has occurred. 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, on or after December 1, 2006, in whole or in part at any time at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest, if any, to the date of redemption, if
redeemed during the twelve-month period beginning on December 1 of the years
indicated below:
<PAGE>
Year Percentage
---- ----------
2006 104.30%
2007 103.87%
2008 103.44%
2009 103.01%
2010 102.58%
2011 102.15%
2012 101.72%
2013 101.29%
2014 100.86%
2015 100.43%
On or after December 1, 2016, the redemption price will be 100%, plus
accrued and unpaid interest, if any, to the date of redemption.
The Junior Subordinated Debentures are also redeemable at any time in
whole (but not in part), within 90 days of the occurrence of a Special Event,
at a redemption price (the "Special Event Prepayment Price") equal to the
greater of (i) 100% of the principal amount of such Junior Subordinated
Debentures or (ii) as determined by a Quotation Agent (as defined below), the
sum of the present values of the principal amount and premium payable with
respect to an optional redemption on such Junior Subordinated Debentures on
December 1, 2006, together with scheduled payments of interest from the
prepayment date to December 1, 2006 (the "Remaining Life") discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year consisting of
30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and
unpaid interest thereon to the date of prepayment.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
Treasury Rate plus (i) 1.25% if such prepayment date occurs on or before
December 1, 1997 or (ii) 0.50% if such prepayment date occurs after
December 1, 1997.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the Remaining Life, yields
for the two published maturities most closely corresponding to the Remaining
Life shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such prepayment date. The Treasury
Rate shall be calculated on the third business day preceding the prepayment
date.
<PAGE>
"Comparable Treasury Issue" means with respect to any prepayment date
the United States Treasury security selected by the Quotation Agent as having
a maturity comparable to the Remaining Life that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States treasury security has a maturity which is
within a period from three months before to three months after December 1,
2006, the two most closely corresponding United States Treasury securities
shall be used as the Comparable Treasury Issue, and the Treasury Rate shall
be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
"Quotation Agent" means (i) Lehman Brothers Inc. and its successors;
provided, however, that if the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury
Dealer; and (ii) any other Primary Treasury Dealer selected by the Indenture
Trustee after consultation with the Company.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such prepayment date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Indenture Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined
by the Indenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Indenture Trustee by such Reference Treasury
Dealer at 5:00 p.m. New York City time, on the third business day preceding
such prepayment date.
If the Junior Subordinated Debentures are redeemed, the Trust must
redeem Common Securities and Capital Securities, on a pro rata basis, having
an aggregate liquidation preference equal to the aggregate principal amount
of Junior Subordinated Debentures so redeemed. See "Description of Capital
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, as
borrower, will pay to the Trust all fees and expenses related to the Trust
and the offering of the Capital 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
Capital Securities.
<PAGE>
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 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 with or
junior in interest to the Junior Subordinated Debentures (other than
(a) dividends or distributions in common stock of the Company, (b) payments
under the Guarantee (c) any declaration of a dividend in connection with the
implementation of a shareholders' rights plans, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, and (d) purchases of common stock related to
the issuance of common stock or rights under any of the Company's benefit
plans) 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 of the Company upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency,
debt restructuring or similar proceedings in connection with any insolvency
or bankruptcy proceeding of the Company, 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
Capital 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; provided, however, that holders of
Indebtedness shall not be entitled to receive payment of any such amounts to
the extent that such holders would be required by the subordination
provisions of such Indebtedness to pay such amounts over to the obligees on
trade accounts payable or other liabilities arising in the ordinary course of
the Company's business.
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
<PAGE>
of all amounts then 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 and premium, if
any, or interest, if any, on the Junior Subordinated Debentures; provided,
however, that holders of Indebtedness shall not be entitled to receive
payment of any such amounts to the extent that such holders would be required
by the subordination provisions of such Indebtedness to pay such amounts over
to the obligees on trade accounts payable or other liabilities arising in the
ordinary course of the Company's business.
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) every obligation 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; and (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;
provided that "Indebtedness" shall not include (i) any 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, (ii) any Indebtedness of the Company which when incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(iii) any Indebtedness of the Company to any of its subsidiaries, (iv)
Indebtedness to any employee of the Company, or (v) 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 in connection with the issuance of such financing
entity of securities that are similar to the Capital Securities.
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
September 30, 1996, Indebtedness of the Company aggregated approximately
$2,533,000, and the Company's subsidiaries had indebtedness and other
liabilities of approximately $663,046,000 to which the Junior Subordinated
Debentures would be effectively subordinated.
<PAGE>
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; or
(iii) failure to observe or perform in any material respect any other
covenant 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 amount of the Capital 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 amount of the
Capital Securities shall have such right.
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 amount of the
Capital 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.
<PAGE>
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.
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 and the
Company's other banking subsidiaries could pay an aggregate of $131.9 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 Capital
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 as a creditor of such subsidiary may be recognized
as such. Accordingly, the Capital Securities will effectively be subordinated
to all existing and future liabilities and obligations of the Company's
subsidiaries, and holders of the Capital Securities should look only to the
assets of the Company for payments on the Capital Securities. As of
September 30, 1996, the Company's subsidiaries had indebtedness and other
liabilities of approximately $663,046,000.
Enforcement of Certain Rights by Holders of Capital 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 Capital 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 Capital Securities. Notwithstanding any
payment made to such holder of Capital 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 Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by the Company to
such holder in any Direct Action. The holders of Capital 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
<PAGE>
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 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 Capital 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.
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 or any outstanding Capital Securities) 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 Capital Securities remain outstanding, no such modification
may be made that adversely affects the holders of such Capital Securities in
any material respect, and no termination of the Indenture may occur, and no
waiver of any 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 amount of the
outstanding Capital 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.
<PAGE>
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, 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 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 an opinion of counsel to the effect that the deposit and related
defeasance would not cause the holders of the Junior Subordinated Debentures
to recognize income, gain or loss for United States 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 Revenue Service or revenue ruling
pertaining to a comparable form of transaction to such effect published by
the United States Internal Revenue Service.
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
Capital 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 Capital Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of global
securities and certificated securities. DTC, or any successor depositary,
will act as depositary for such global securities. It is anticipated that the
depositary arrangements for such global securities would be substantially
identical to those in effect for the Capital Securities. For a description of
global securities and certificated securities, see "Book-Entry Issuance."
There can be no assurance as to the market price of any Junior
Subordinated Debentures that may be distributed to the holders of Capital
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 Capital 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
<PAGE>
Debentures shall thereafter look, as a general unsecured creditor, only to
the Company for payment thereof.
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.
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 Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit
of the holders from time to time of the Capital Securities. As soon as
practicable after the Expiration Date, the Old Guarantee will be exchanged by
the Company for the New Guarantee. The Bank of New York will act as indenture
trustee ("Guarantee Trustee") under the Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of
the Guarantee, including the definitions therein of certain terms. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Capital Securities.
General
The Company has irrevocably and unconditionally agreed (and under the
New Guarantee 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 Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust
may have or assert other than the defense of payment. The following payments
with respect to the Capital 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 Capital Securities, to the extent that the Trust has sufficient funds
available therefor at the time, (ii) the redemption price with respect to any
Capital Securities called for redemption, to the extent that the Trust has
sufficient funds 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 Capital
Securities), the lesser of (a) the aggregate liquidation amount of the
Capital Securities and all accrued and unpaid Distributions thereon to the
date of payment and (b) the amount of assets of the Trust remaining available
for distribution to holders of Capital Securities. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the applicable Capital
Securities or by causing the Trust to pay such amounts to such holders.
<PAGE>
The Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the Capital Securities, but will apply only
to the extent that the Trust has sufficient funds available to make such
payments.
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 Capital 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 Capital Securities. No
single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full
and unconditional guarantee of the Trust's obligations under the Capital
Securities. See "Relationship Among the Capital 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 Indebtedness 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
Capital 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
Capital Securities in exchange for all of the Capital Securities.
The obligations of the Company under the Guarantee will be structurally
subordinated to all liabilities and obligations of the Company's
subsidiaries. See "Risk Factors--Status of Company as Holding Company."
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of holders of the Capital Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate
liquidation amount of the outstanding Capital Securities. The manner of
obtaining any such approval will be as set forth under "Description of
Capital Securities--Voting Rights; Amendment of 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 registered holders of the Capital
Securities then outstanding.
<PAGE>
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 a majority in aggregate liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect
of the Guarantee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the 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.
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 Capital 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 all of the Capital 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 Capital
Securities in exchange for all of the Capital Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Capital Securities must restore payment of any sums
paid under the Capital Securities or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respect to
the New Securities, except that the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances). Holders of Old Capital Securities should review the
information set forth under "Risk Factors--Certain Consequences of a Failure
to Exchange Old Capital Securities."
<PAGE>
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
Payments of Distributions and other amounts due on the Capital
Securities (to the extent the Trust has funds available for the payment of
such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantee." If and to the extent that
the Company does not make payments under the Junior Subordinated Debentures,
the Trust will not pay Distributions or other amounts due on the Capital
Securities. The Guarantee does not cover payment of Distributions when the
Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of Capital Securities may institute a legal proceeding
directly against the Company under the Indenture 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 Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee of the Trust's
obligations under the Capital 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 Capital Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate stated liquidation
amount of the Capital Securities and 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 Capital Securities; (iii) the Company will pay
for all and any costs, expenses and liabilities of the Trust except the
Trust's obligations under the Capital 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 related payment under the
Guarantee.
Enforcement Rights of Holders of Capital Securities
A holder of Capital 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
<PAGE>
Subordinated Debentures would constitute an Indenture Event of Default under
the Indenture.
Limited Purpose of Trust
The Capital Securities evidence a beneficial interest in the Trust, and
the Trust exists for the sole purpose of issuing the Capital Securities and
the Common Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a
holder of a Capital 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 Capital Securities is
entitled to receive 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 Capital Securities will be entitled to receive, out of
assets held by the Trust, the liquidation distribution in cash. See
"Description of Capital 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 Capital
Securities), the positions of a holder of Capital 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.
BOOK-ENTRY ISSUANCE
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. In addition, transfer of beneficial
interests in the Global Capital Securities will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants, which
may change from time to time. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
<PAGE>
Depositary Procedures
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of each security
held by or on behalf of DTC are recorded on the records of the Participants
and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants designated by the
Initial Purchasers with portions of the principal amount of the Global
Capital Securities and (ii) ownership of such interests in the Global Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system. The
laws of some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Capital Security to such persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and
certain banks, the ability of a person having beneficial interests in a
Global Capital Security to pledge such interests to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such interests, may be affected by the lack of a physical certificate
evidencing such interests.
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will
not received physical delivery of Capital Securities in certificated form and
will not be considered the registered owners or holders thereof for any
purpose.
Payments in respect of the Global Capital Security registered in the
name DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder. The Property Trustee will treat the
persons in whose names the Capital Securities, including the Global Capital
Securities, are registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever. Consequently,
neither the Property Trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Capital
Securities, or for maintaining, supervising or reviewing any of DTC's records
or any Participant's or Indirect Participant's records relating to the
<PAGE>
beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the
Company that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date unless DTC has
reason to believe it will not receive payment on such payment date. Payments
by the Participants and the Indirect Participants to the beneficial owners of
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee
or the Trust. Neither the Trust nor the Property Trustee will be liable for
any delay by DTC or any of its Participants in identifying the beneficial
owners of the Capital Securities, and the Trust and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from
DTC or its nominee for all purposes.
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its participants. Transfers
between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction
of one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited. However, if there is an Event of Default,
DTC reserves the right to exchange the Global Capital Securities for legended
Capital Securities in certificated form and to distribute such Capital
Securities to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interest in the Global Capital Securities among participants in
DTC, it is under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trust nor the Property Trustee will have any responsibility for the
performance by DTC, or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company in its sole discretion elects to cause the issuance of the Capital
Securities in certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or lapse of
time or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Capital Security may be exchanged for
certificated Capital Securities upon request but only upon at least 20 days'
prior written notice given to the Property Trustee by or on behalf of DTC in
accordance with customary procedures. In all cases, certificated Capital
Securities delivered in exchange for any Global Capital Security or
beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures).
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Company believe to be
<PAGE>
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett, special United States
federal income 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 Capital Securities. Unless otherwise stated, this summary
deals only with Capital Securities held as capital assets by United States
Holders (defined below) who purchase the Capital Securities upon original
issuance at their original offering price. 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 Capital Securities. 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 the opinions of Tax Counsel are not binding on the
Internal Revenue Service ("IRS") or the courts, either of which could take a
contrary position. Moreover, no rulings have been or will be sought from the
IRS with respect to the transactions described herein. Accordingly, there can
be no assurance that the IRS will not challenge the opinions expressed herein
or that a court would not sustain such a challenge. Nevertheless, Tax Counsel
has advised that it is of the view that, if challenged, the opinions
expressed herein would be sustained by a court with jurisdiction in a
properly presented case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED
STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION
OF THE CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE
"DESCRIPTION OF CAPITAL SECURITIES--REDEMPTION--SPECIAL EVENT REDEMPTION OR
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES."
<PAGE>
Exchange of Capital Securities
The Exchange will not constitute a taxable event for United States
federal income tax purposes. Consequently, no gain or loss will be recognized
by a United States Holder upon receipt of a New Capital Security, the holding
period of the New Capital Security will include the holding period of the Old
Capital Security and the adjusted tax basis of the New Capital Security will
be the same as the adjusted tax basis of the Old Capital Security immediately
before the Exchange.
Classification of the Trust
In connection with the issuance of the Capital 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 and not as an association taxable as a corporation for
United States federal income tax purposes. Accordingly, for United States
federal income tax purposes, each holder of Capital Securities will be
treated as owning an undivided beneficial interest in the Junior Subordinated
Debentures and, thus, will be required to include in its gross income its pro
rata share of interest income or original issue discount that is paid or
accrued 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
Capital Security, each holder covenants to treat the Junior Subordinated
Debentures as indebtedness for all United States tax purposes. The remainder
of this discussion assumes that the Junior Subordinated Debentures will be
classified as indebtedness of the Company.
Interest Income and Original Issue Discount
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the
time it is paid or accrued in accordance with such holder's regular method of
tax accounting.
The Company believes that, under the applicable Treasury regulations,
the Junior Subordinated Debentures will not be treated as issued with
"original issue discount" ("OID") within the meaning of section 1273(a) of
the Code. If, however, the Company exercises 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 of the
Junior Subordinated Debentures and, consequently, holders of the Capital
Securities will be required to accrue their pro rata share of OID (which will
include both the stated interest and de minimus OID on the Junior
Subordinated Debentures) on a daily economic accrual 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 to include the stated interest on the Junior
Subordinated Debentures in income on a daily basis, regardless of their
method of tax accounting and in advance of receipt of the cash attributable
to such interest income. 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
<PAGE>
Debentures, and actual cash payments of interest on the Junior Subordinated
Debentures would not be reported separately as taxable income. Any amount of
OID included in a holder's gross income (whether or not during an Extension
Period) with respect to a Capital Security will increase such holder's tax
basis in such Capital Security, and the amount of Distributions received by a
holder in respect of such accrued OID will reduce the tax basis of such
Capital Security.
The Treasury regulations described above have not yet been addressed in
any rulings or other interpretations by the IRS, and it is possible that the
IRS could take a contrary position. If the IRS were to assert successfully
that the stated interest on the Junior Subordinated Debentures was OID
regardless of whether the Company exercises its option to defer payments of
interest on such debentures, all holders of Capital Securities would be
required to include such stated interest in income on a daily economic
accrual basis as described above.
Corporate holders of Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized by such
holders with respect to the Capital Securities.
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
Capital 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, with a holding period and aggregate tax
basis equal to the holding period and aggregate tax basis such holder had in
its Capital Securities before such distribution. 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 Capital Securities for the Junior Subordinated Debentures it
received upon liquidation of the Trust. A holder would accrue interest in
respect of the Junior Subordinated Debentures received from the Trust in the
manner described above under "--Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of
Capital 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 Capital Securities. Under current law, such a redemption
would constitute a taxable disposition of the redeemed Capital Securities for
United States federal income tax purposes, and a holder would recognize gain
or loss as if it sold such redeemed Capital Securities for cash. See "--Sales
of Capital Securities."
<PAGE>
Sales of Capital Securities
A holder that sells Capital Securities will recognize gain or loss equal
to the difference between the amount realized by such holder on the sale of
the Capital Securities (except to the extent that such amount realized is
characterized as a payment in respect of accrued but unpaid interest on such
holder's allocable share of the Junior Subordinated Debentures that the
holder had not included in gross income previously) and the holder's adjusted
tax basis in the Capital Securities sold. Such gain or loss generally will be
a capital gain or loss and generally will be taxable as a long-term capital
gain or loss if the Capital 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, the Bill was introduced in the 104th Congress which
would have, among other things, generally denied interest deductions for
interest or OID 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 issuer or, where the instrument is issued to a
related party (other than a corporation) where the holder or some other
related party issues a related instrument that is not shown as indebtedness
on the issuer's consolidated balance sheet. This provision of the Bill was
proposed to be effective generally for instruments issued on or after
December 7, 1995. If this 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 the Joint Statement
to the effect that it was their intention that the effective date of the
Bill, if enacted, 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 the Democrat Letters to Treasury Department
officials concurring with the views expressed in the Joint Statement. The
104th Congress adjourned without enacting the Bill. Moreover, if the
principles contained in the Joint Statement and the Democrat Letters were
followed, any similar legislation that is subsequently proposed or enacted
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 the
redemption of the Capital Securities or to terminate the Trust and distribute
the Junior Subordinated Debentures to the holders of Trust Securities in
liquidation of the Trust upon receiving an opinion of counsel, as described
more fully under "Description of Capital Securities--Redemption--Special
Event Redemption or Distribution of Junior Subordinated Debentures."
<PAGE>
Non-United States Holders
As used herein, the term "Non-United States Holder" means any holder
that is not a United States Holder (as defined above). As discussed above,
the Capital Securities will be treated as evidence of an indirect beneficial
ownership interest in the Junior Subordinated Debentures. See "--
Classification of the Trust" above. 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 Trust or the Company or any
paying agent of principal or interest (which for purposes of this
discussion includes any OID) on the Capital Securities or the Junior
Subordinated Debentures to a Non-United States Holder, provided (i) that
the beneficial owner of the Capital 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 realized by a Non-United States Holder
upon the sale or other disposition of the Capital Securities (or the
Junior Subordinated Debentures.)
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Capital 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
Capital 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.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of interest
the Trust or made to such Non-United States Holder will be subject to a 30%
<PAGE>
withholding tax unless the Beneficial Owner provides the Trust or the Company
or any paying agent, as the case may be, with a properly executed (1) IRS
Form 1001 (or successor form) claiming an exemption from, or a reduction of,
such withholding tax 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. In addition, Liquidated Damages may not be eligible for the
"portfolio interest" exception described in (a) above. Consequently, the
Company intends to withhold 30% of the amount of any Liquidated Damages that
are payable to a Non-United States Holder unless such Non-United States
Holder can establish (to the satisfaction of the Company) another exemption
from United States withholding tax.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest 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
income 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 interest income would be included in such foreign corporation's
earnings and profits.
Any gain realized upon the sale or other disposition of the Capital
Securities (or the Junior Subordinated Debentures) generally will not be
subject to United States federal income tax unless (i) such gain is
effectively connected with a trade or business in the United States of the
Non-United States Holder, (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, and (iii) in the case of any gain
representing accrued interest on the Junior Subordinated Debentures, the
requirements described above are not satisfied.
As discussed above, legislation was introduced in the 104th Congress that
would have denied an interest deduction to the Company for the interest payable
on the Junior Subordinated Debentures. Such legislation also may have caused
the Junior Subordinated Debentures to have been classified as equity (rather
than indebtedness) of the Company for United States federal income purposes
and, thus, caused the income derived from the Junior Subordinated Debentures to
be characterized as dividend, rather than interest, income for such purposes.
Dividend income is not eligible for the "portfolio interest" exception
described in (a) above. Therefore, if such legislation had been enacted, income
derived by a Non-United States Holder on the Capital Securities may have been
subject to the 30% United States federal withholding tax described above,
unless a reduction or elimination of such tax was available under an
applicable tax treaty or such dividend income was effectively connected with a
trade or business carried on in the United States by such Non-United States
Holder. The 104th Congress adjourned without enacting such legislation.
However, it is possible that legislation could be enacted in the future that
could affect the characterization of income paid on the Capital Securities (or
the Junior Subordinated Debt Securities) or otherwise adversely affect a Non-
United States Holder. See "--Proposed Tax Law Changes".
<PAGE>
Non-United States Holders should note that the tax treatment described in
the preceding paragraph also will apply if the Internal Revenue Service were to
assert successfully that, under current law, the Junior Subordinated Debentures
should be classified as equity (rather than indebtedness) of the Company for
United States federal income tax purposes.
Information Reporting and Backup Withholding
Income on the Capital Securities (or the Junior Subordinated Debentures)
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 Capital 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.
In addition, backup withholding and information reporting will not apply
if payments of the principal, interest, OID or premium on the Capital
Securities (or 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 Capital
Securities (or the Junior Subordinated Debentures) 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 Capital Securities (or the
Junior Subordinated Debentures) 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 Capital 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.
<PAGE>
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Code ("Plans"), may purchase Capital Securities, subject to the
investing fiduciary's determination that the investment in Capital Securities
satisfies ERISA's fiduciary standards and other requirements applicable to
investments by the Plan.
The Department of Labor ("DOL") has issued a regulation (29 C.F.R.
Section 2510.3-101) (the "DOL Regulation") concerning the definition of what
constitutes the assets of a Plan. The DOL Regulation provides that as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a plan makes an
"equity" investment will be deemed for purposes of ERISA to be assets of the
investing plan unless certain exceptions apply.
There can be no assurance that any of the exceptions set forth in the
DOL regulation will apply to the purchase of Capital Securities offered
hereby and, as a result, an investing Plan's assets could be considered to
include an undivided interest in the Junior Subordinated Debentures held by
the Trust. In the event that assets of the Trust are considered assets of an
investing Plan, the Company, the Trustees and other persons, in providing
services with respect to the Junior Subordinated Debentures, may be
considered fiduciaries to such Plan and subject to the fiduciary
responsibility provisions of Title I of ERISA (including the prohibited
transaction provisions thereof). In addition, the prohibited transaction
provisions of Section 4975 of the Code could apply with respect to
transactions engaged in by any "disqualified person," as defined below,
involving such assets unless a statutory or administrative exemption applies.
Even if they are not fiduciaries, the Company and/or any of its
affiliates may be considered a "party in interest" (within the meaning of
ERISA) or a "disqualified person" (within the meaning of Section 4975 of the
Code) with respect to certain Plans. The acquisition and ownership of Capital
Securities by a Plan (or by an individual retirement arrangement or other
plan described in Section 4975(e)(1) of the Code) may constitute or result in
a prohibited transaction under ERISA or Section 4975 of the Code, unless such
Capital Securities are acquired pursuant to and in accordance with an
applicable exemption. As a result, Plans with respect to which the Company or
any of its affiliates is a party in interest or a disqualified person should
not acquire Capital Securities unless such Capital Securities are acquired
pursuant to and in accordance with an applicable prohibited transaction
exemption.
Notwithstanding the foregoing, it is possible that the New Capital
Securities may qualify as "publicly offered securities" under the DOL
Regulation if, in addition to the Exchange Offer, they are also "widely held"
and "freely transferable" at the time of the Exchange Offer. Under the DOL
Regulation, a class of securities is "widely held" only if it is a class of
securities owned by 100 or more investors independent of the issuer and each
other. Although it is possible that at the time of the Exchange Offer the New
Capital Securities will be "widely held", no assurances can be given that
that will be true. If the New Capital Securities are "publicly offered
securities" at the time of the Exchange Offer, the assets of the Trust would
not be assets of the Investing Plans as of such time. If the New Capital
Securities did not qualify as "publicly offered securities", the foregoing
discussion about plan assets in the preceding paragraphs would also be
applicable to the New Capital Securities.
<PAGE>
Any Plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Capital Securities or
New Capital Securities should consult with their own counsel.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time
to time, may be used by Participating Broker-Dealers during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities if such Old Capital
Securities were acquired by such Participating Broker-Dealers for their own
accounts as a result of market-making activities or other trading activities.
The Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
180 days after the Registration Statement of which this Prospectus
constitutes a part is declared effective. See "The Exchange Offer--Resales of
New Capital Securities." The Company will not receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. New Capital
Securities received by broker-dealers for their own accounts in connection
with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Capital Securities or a combination
of such methods of resale, at market prices prevailing at the time of resale,
at prices related to such prevailing market prices or at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Capital Securities. Any broker-dealer that resells New Capital Securities
that were received by it for its own account in connection with the Exchange
Offer and any broker or dealer that participates in a distribution of such
New Capital Securities may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New
Capital Securities and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
<PAGE>
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon for the Trust by Morris, Nichols, Arsht &
Tunnell, Wilmington, Delaware. 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. Keating,
Muething & Klekamp, P.L.L. will rely as to certain matters of Delaware law on
the opinion of Morris, Nichols, Arsht & Tunnell. Certain United States
federal income taxation matters also will be passed upon for the Company and
the Trust by Simpson Thacher & Bartlett 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.
INDEPENDENT AUDITORS
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 . . . . . . . . . . . . . . . . . . . . . . . . . 10
Incorporation of Certain Information by Reference . . . . . . . . . . . 10
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends . . . . . . . . . . . . . 28
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 29
Regulatory Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 29
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 30
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Description of Capital Securities . . . . . . . . . . . . . . . . . . . 42
Description of Junior Subordinated Debentures . . . . . . . . . . . . . 52
Description of Guarantee . . . . . . . . . . . . . . . . . . . . . . . 63
Description of the Old Securities . . . . . . . . . . . . . . . . . . . 65
Relationship Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee . . . . . . . . . . . . . . . . . . . . 66
Book-entry Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Certain United States Federal Income Tax Consequences . . . . . . . . . 70
Erisa Considerations . . . . . . . . . . . . . . . . . . . . . . . . . 77
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 78
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . 79
Until June __, 1997 (90 days after the date of this Prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus
when acting as Underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
Provident Capital Trust I
Offer to Exchange its 8.60% Capital
Securities which have been registered
under the Securities Act of 1933
for its Outstanding
8.60% Capital Securities
(Liquidation Amount $1,000 per
Capital Security)
Fully Unconditionally
Guaranteed to the extent set
forth herein by
PROVIDENT BANCORP,
INC.
PROSPECTUS
March __, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Company to any person made or threatened to be made a party to any
proceedings, other than a proceeding by or in the right of the Company, by
reason of the fact that he is or was a director, officer, employee or agent
of the Company, against expenses, including judgment and fines, if he acted
in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to criminal actions, in
which he had no reasonable cause to believe that his conduct was unlawful.
Similar provisions apply to actions brought by or in the right of the
Company, except that no indemnification shall be made in such cases when the
person shall have been adjudged to be liable for negligence or misconduct to
the Company unless deemed otherwise by the court. Indemnification is to be
made by a majority vote of a quorum of disinterested directors or the written
opinion of independent counsel or by the shareholders or by the court. The
Company's Code of Regulations extends such indemnification.
Under the Declaration, the Company agreed to indemnify each Company
Indemnified Person (as defined therein) who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorney fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
ITEM 21. EXHIBITS
4.1 Junior Subordinated Indenture, dated as of November 27, 1996, between
the Company and The Bank of New York, as Indenture Trustee
(incorporated by reference to Exhibit 4.1 to Current Report on Form 8-
K dated November 27, 1996)
4.2 Certificate of Trust of Provident Capital Trust I (incorporated by
reference to Exhibit 4.2 to Current Report on Form 8-K dated November
27, 1996)
4.3 Amended and Restated Declaration of Trust of Provident Capital Trust
I, dated as of November 27, 1996 (incorporated by reference to Exhibit
4.3 to Current Report on Form 8-K dated November 27, 1996)
4.4 Form of Capital Security Certificate for Provident Capital Trust I
(included in Exhibit 4.3) (incorporated by reference to Exhibit 4.3 to
Current Report on Form 8-K dated November 27, 1996)
4.5 Form of Junior Subordinated Debenture of the Company (included in
Exhibit 4.1) (incorporated by reference to Exhibit 4.1 to Current
Report on Form 8-K dated November 27, 1996)
4.6 Guarantee Agreement, dated as of November 27, 1996, between the
Company and The Bank of New York, as Guarantee Trustee (incorporated
by reference to Exhibit 4.4 to Current Report on Form 8-K dated
November 27, 1996)
4.7 Registration Rights Agreement, dated as of November 27, 1996, among
Provident Capital Trust I, the Company, Lehman Brothers Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation, Keefe Bruyette &
Woods, Inc. and McDonald & Company Securities, Inc. (incorporated by
<PAGE>
reference to Exhibit 4.6 to Current Report on Form 8-K dated November
27, 1996)
4.8 Form of Guarantee Agreement to be entered into by the Company and The
Bank of New York, as Guarantee Trustee, and registered under the
Securities Act of 1933, as amended<F2>
5.1 Opinion of Keating, Muething & Klekamp, P.L.L. relating to the
legality of the Junior Subordinated Debentures and the Guarantee to be
issued by the Company<F1>
5.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware counsel,
relating to the legality of the Capital Securities to be issued by
Provident Capital Trust I<F1>
8.1 Opinion of Simpson Thacher & Bartlett, special tax counsel, as to
certain United States federal income tax matters<F2>
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges<F2>
12.2 Statement re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends<F2>
23.1 Consent of Ernst & Young LLP<F2>
23.2 Consent of Keating, Muething & Klekamp, P.L.L. (included in Exhibit
5.1 hereto)
23.3 Consent of Morris, Nichols, Arsht & Tunnell, special Delaware counsel
(included in Exhibit 5.2 hereto)
23.4 Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1 hereto)
24.1 Powers of Attorney<F2>
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<F2>
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<F2>
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<F2>
99.1 Form of Letter of Transmittal<F2>
99.2 Form of Notice of Guaranteed Delivery<F2>
99.3 Form of Exchange Agent Agreement<F2>
_______________________
[FN]
<F1> Filed herewith
<F2> Previously Filed
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants, hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of a Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of each Registrant pursuant to the provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange
<PAGE>
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by each
Registrant of expenses incurred or paid by a director, officer of controlling
person of each Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each Registrant will, unless
in the opinion of its counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Provident
Bancorp, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Cincinnati, Ohio on
February 28, 1997.
Provident Bancorp, Inc.
By: /s/ Allen L. Davis
-----------------------------
Name: 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 February 28, 1997 in the
capacities indicated.
SIGNATURE TITLE
--------- -----
/s/ Allen L. Davis As Attorney-in-Fact President, Chief Executive Officer
- --------------------------------------- and Director (principal executive
(Allen L. Davis) officer)
/s/ Mark E. Magee As Attorney-in-Fact Vice President and Chief Financial
- --------------------------------------- Officer (principal financial
(John R. Farrenkopf) officer and principal accounting
officer)
/s/ Mark E. Magee As Attorney-in-Fact Director
- ---------------------------------------
(Jack M. Cook)
/s/ Mark E. Magee As Attorney-in-Fact Director
- ---------------------------------------
(Thomas D. Grote)
/s/ Mark E. Magee As Attorney-in-Fact Director
- ---------------------------------------
(Sidney A. Peerless)<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Provident Capital
Trust I has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Cincinnati, Ohio on
February 28, 1997.
Provident Capital Trust I
By: /s/ Allen L. Davis
----------------------------
Title: Regular Trustee
By: /s/ Mark E. Magee
----------------------------
Title: Regular Trustee
EXHIBIT 5.1
[Letterhead of Keating, Muething & Klekamp, P.L.L.]
CONFORMED COPY
FACSIMILE (513) 579-6457
February 27, 1997
Direct Dial: (513) 579-6468
E-Mail: [email protected]
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Provident Capital Trust I
c/o Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Re: Provident Bancorp, Inc.
Registration Statement on Form S-4
File No. 333-20769
Gentlemen:
We have acted as counsel to Provident Bancorp, Inc., an Ohio corporation
(the "Company") and sponsor of Provident Capital Trust I, a Delaware business
trust (the "Trust"), in connection with a Registration Statement on Form S-4
(the "Registration Statement") relating to (i) the proposed issuance by the
Trust of up to $100,000,000 aggregate liquidation amount of the Trust's 8.60%
Capital Securities due December 1, 2026 (the "New Capital Securities")
registered under the Securities Act of 1933 (the "Securities Act") in
exchange for up to $100,000,000 aggregate liquidation amount of the Trust's
outstanding 8.60% Capital Securities due December 1, 2026 (the "Old Capital
Securities"); (ii) the proposed issuance by the Company to the Trust of
$103,093,000 aggregate principal amount of the Company's 8.60% Junior
Subordinated Debentures (the "New Junior Subordinated Debentures") registered
under the Securities Act in exchange for up to $103,093,000 aggregate
principal of the Company's outstanding 8.60% Junior Subordinated Debentures
(the "Old Junior Subordinated Debentures"); and (iii) the Company's guarantee
(the "New Guarantee"), which guarantees the payment of distributions and
payments on liquidation or redemption of the New Capital Securities,
registered under the Securities Act in exchange for the guarantee (the "Old
Guarantee") which guarantees the payment of distributions and payments on
liquidation or redemption of the Old Capital Securities.
The New Capital Securities are issuable under the Amended and Restated
Trust Agreement dated as of November 27, 1996 (the "Trust Agreement") among
the Company, as sponsor, The Bank of New York (Delaware), as Delaware
Trustee, The Bank of New York, as Property Trustee, and the initial Regular
Trustees named therein. The New Junior Subordinated Debentures are issuable
under an Indenture dated as of November 27, 1996 (the "Indenture") between
the Company and The Bank of New York, as Indenture Trustee. The New
Guarantee is issuable under the Guarantee Agreement to be entered into
between the Company and The Bank of New York, as Guarantee Trustee (the
"Guarantee Agreement").
<PAGE>
We have examined such documents and have reviewed such questions of law
as we have considered necessary and appropriate for the purposes of our
opinions set forth below. In rendering our opinions, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all
parties to agreements or instruments relevant hereto other than the Company
and the Trust, that such parties had the requisite power and authority
(corporate or otherwise) to execute, deliver and perform such agreements or
instruments, that such agreements or instruments have been duly authorized by
all requisite action (corporate or otherwise), executed and delivered by such
parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties. As to questions of fact material to
our opinions, we have relied upon certificates of officers of the Company and
the Trust and of public officials. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Trust Agreement, the Indenture and the Guarantee Agreement, as applicable.
Based on the foregoing, we are of the opinion that:
1. The New Junior Subordinated Debentures have been duly authorized by
all requisite corporate action and, when executed and authenticated as
specified in the Indenture and delivered against surrender and cancellation
of a like amount of Old Junior Subordinated Debentures in the manner
described in the Registration Statement, the New Junior Subordinated
Debentures will constitute valid and binding obligations of the Company,
entitled to the benefits provided in the Indenture and enforceable in
accordance with their terms.
2. The New Guarantee has been duly authorized by all requisite
corporate action and, when executed as specified in the Guarantee Agreement
and when delivered against surrender and cancellation of the Old Guarantee in
the manner described in the Registration Statement, the New Guarantee will
constitute the valid and binding obligation of the Company, enforceable in
accordance with its terms.
The opinions set forth above are subject to the following qualifications
and exceptions:
(i) the legality, validity and enforceability of any rights and
remedies provided in the Indenture, the New Junior Subordinated
Debentures or the New Guarantee are subject to exceptions provided
by bankruptcy, insolvency, reorganization, receivership,
moratorium, assignment for the benefit of creditors' laws or
similar laws now or hereafter in effect affecting the validity,
legality and binding effect and enforceability of creditors' rights
generally, including, without limitation, statutory or other laws
regarding fraudulent transfers and conveyances or preferential
transfers;
(ii) specific performance, injunctive relief or other traditional
equitable remedies may not be available as they are subject to the
discretion of the court before which any proceeding with respect
thereto may be brought;
<PAGE>
(iii) rights to indemnification may be limited by federal or state
securities laws: accordingly, we express no opinion as to the
enforceability of any indemnity provisions contained in the
Indenture, the New Junior Subordinated Debentures or the New
Guarantee;
(iv) we express no opinion as to the enforceability of any provisions in
the Indenture, New Junior Subordinated Debentures or the New
Guarantee providing for the recovering of attorneys' fees or other
costs of collection; and,
(v) we express no opinion with respect to any provision for submission
to jurisdiction or related waivers of defenses to such jurisdiction
contained in the Indenture, the New Junior Subordinated Debentures
or the New Guarantee.
Our opinions expressed above are limited to the laws of the State of
Ohio and the federal laws of the United States of America.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in the Prospectus, without admitting that we are "experts"
under the Securities Act of the rules and regulations of the Commission
issued thereunder with respect to any part of the Registration Statement,
including this exhibit thereto.
Sincerely yours,
KEATING, MUETHING & KLEKAMP, P.L.L.
By: /s/ Edward E. Steiner
Edward E. Steiner
EXHIBIT 5.2
CONFORMED COPY
[Letterhead of Morris, Nichols, Arsht & Tunnell]
February 28, 1997
Provident Capital Trust I
c/o Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Re: Provident Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel to Provident Capital
Trust I, a Delaware statutory business trust (the "Trust"), in connection
with certain matters relating to the creation of the Trust and the proposed
issuance of New Capital Securities to beneficial owners pursuant to and as
described in Registration Statement No. 333-20769 (and the Prospectus forming
a part thereof) on Form S-4 filed with the Securities and Exchange Commission
(the "Commission") on January 30, 1997, as amended by Pre-Effective Amendment
No. 1 thereto to be filed with the Commission on or about the date hereof (as
so amended, the "Registration Statement"). Capitalized terms used herein and
not otherwise herein defined are used as defined in the Amended and Restated
Declaration of Trust of the Trust dated as of November 27, 1996 (the
"Governing Instrument").
In rendering this opinion, we have examined and relied upon copies
of the following documents in the forms provided to us: the Certificate of
Trust of the Trust as filed in the Office of the Secretary of State of the
State of Delaware (the "State Office") on October 31, 1996 (the "Certificate
of Trust"); a Declaration of Trust of the Trust dated as of October 31, 1996
(the "Original Governing Instrument"); the Governing Instrument; the
Indenture dated as of November 27, 1996 between Provident Bancorp, Inc., an
Ohio corporation ("Provident") and The Bank of New York, as Trustee; the
Guarantee Agreement to be entered into between Provident and The Bank of New
York, as Trustee, relating to the New Capital Securities; the Registration
Rights Agreement dated November 27, 1996 among the Trust, Provident and the
Initial Purchasers (the "Registration Rights Agreement"); the Registration
Statement; and a certificate of good standing of the Trust obtained as of a
recent date from the State Office. In such examinations, we have assumed the
genuineness of all signatures, the conformity to original documents of all
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documents submitted to us as drafts or copies or forms of documents to be
executed and the legal capacity of natural persons to complete the execution
of documents. We have further assumed for purposes of this opinion: (i) the
due formation or organization, valid existence and good standing of each
entity (other than the Trust) that is a party to any of the documents
reviewed by us under the laws of the jurisdiction of its respective formation
or organization; (ii) the due authorization, execution and delivery by, or on
behalf of, each of the parties thereto of the above-referenced documents
(including, without limitation, the due authorization, execution and delivery
of the Governing Instrument and the Registration Rights Agreement prior to
the first issuance of New Capital Securities); (iii) that no event has
occurred, or prior to the issuance of the New Capital Securities will occur,
that would cause a dissolution or liquidation of the Trust under the Original
Governing Instrument or the Governing Instrument, as applicable; (iv) that
the activities of the Trust have been and will be conducted in accordance
with the Original Governing Instrument or the Governing Instrument, as
applicable, and the Delaware Business Trust Act, 12 Del. C. Sections 3801 et
seq. (the "Delaware Act"); (v) that each Person that will acquire New Capital
Securities in the Exchange Offer (as defined in the Registration Statement
and as used herein, the "Exchange Offer") will validly tender Transfer
Restricted Capital Securities in exchange therefor, that such Transfer
Restricted Capital Securities will be duly accepted, and that each such
Person will duly receive New Capital Security Certificates in consideration
thereof, all in accordance with the terms and conditions of the Governing
Instrument, the Registration Statement and the Registration Rights Agreement,
and that the New Capital Securities are otherwise issued and sold to the New
Capital Securities Holders in accordance with the terms, conditions,
requirements and procedures set forth in the Governing Instrument, the
Registration Statement and the Registration Rights Agreement; and (vi) that
the documents examined by us are in full force and effect, express the entire
understanding of the parties thereto with respect to the subject matter
thereof and have not been modified, supplemented or otherwise amended, except
as herein referenced. We have not reviewed any documents other than those
identified above in connection with this opinion, and we have assumed that
there are no other documents that are contrary to or inconsistent with the
opinions expressed herein. Further, we express no opinion with respect to,
and assume no responsibility for the contents of, the Registration Statement
or any other offering material relating to the New Capital Securities. No
opinion is expressed herein with respect to the requirements of, or
compliance with, federal or state securities or blue sky laws. As to any
fact material to our opinion, other than those assumed, we have relied
without independent investigation on the above-referenced documents and on
the accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects
to matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing business
trust in good standing under the laws of the State of Delaware.
2. The New Capital Securities, upon issuance pursuant to the
Exchange Offer, will constitute validly issued and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
beneficial interests in the assets of the Trust.
3. Under the Delaware Act and the terms of the Governing
Instrument, each New Capital Security Holder of the Trust, in such capacity,
<PAGE>
will be entitled to the same limitation of personal liability as that
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware; provided, however, we
express no opinion with respect to the liability of any New Capital Security
Holder who is, was or may become a named Trustee of the Trust.
Notwithstanding the foregoing, we note that pursuant to Section 10.4 of the
Governing Instrument, the Trust may withhold amounts otherwise distributable
to a Holder and pay over such amounts to the applicable jurisdictions in
accordance with federal, state and local law and any amount withheld will be
deemed to have been distributed to such Holder and that, pursuant to the
Governing Instrument, New Capital Security Holders may be obligated to make
payments or provide indemnity or security under the circumstances set forth
therein.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of our name and reference to our
opinion under the heading "LEGAL MATTERS" in the Prospectus forming a part
thereof. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. This opinion speaks only as
of the date hereof and is based on our understandings and assumptions as to
present facts, and on our review of the above-referenced documents and the
application of Delaware law as the same exist as of the date hereof, and we
undertake no obligation to update or supplement this opinion after the date
hereof for the benefit of any person or entity with respect to any facts or
circumstances that may hereafter come to our attention or any changes in
facts or law that may hereafter occur or take effect. This opinion is
intended solely for the benefit of the addressee hereof in connection with
the matters contemplated hereby and may not be relied on by any other person
or entity or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/Morris, Nichols, Arsht & Tunnell
