<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
File No. 333-93603
PROSPECTUS SUPPLEMENT
(To prospectus dated February 4, 2000)
$12,500,000
PROVIDENT CAPITAL TRUST III
10 1/4% TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
PROVIDENT FINANCIAL GROUP, INC.
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MATURITY DATE: December 31, 2030.
DISTRIBUTIONS: Payable quarterly, beginning
December 31, 2000. Distributions
may be postponed for up to five
years but not past the maturity
date.
SUBORDINATION: The 10 1/4% Trust Preferred
Securities are referred to in
this prospectus supplement as
the "capital securities". The
capital securities are
effectively subordinated to all
existing and future senior debt
of Provident Financial Group,
Inc. and all liabilities of its
subsidiaries.
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LISTING: The capital securities have been
approved for listing on the New York
Stock Exchange.
ISSUER: Provident Capital Trust III, which is
issuing the capital securities, will
have no assets other than junior
subordinated debentures issued by
Provident Financial Group, Inc. These
debentures will have essentially the
same terms as the capital securities.
As a result, Provident Capital Trust
III can only make payments on the
capital securities if Provident
Financial Group, Inc. first makes
payments on the junior subordinated
debentures.
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INVESTING IN THE CAPITAL SECURITIES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE
S-6.
These securities are not deposits or other obligations of a bank. They are not
insured by the FDIC or any other government agency.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
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<CAPTION>
PER CAPITAL
SECURITY TOTAL
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Public Offering Price....................................... $25 $ 12,500,000
Proceeds, before expenses, to Provident Financial Group,
Inc....................................................... $25 $ 12,500,000
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Provident Financial Group, Inc. will pay underwriting commissions of $0.7875 per
capital security, which total $393,750.
Accrued distributions on the capital securities from November 13, 2000 should be
added to the public offering price.
Lehman Brothers expects the capital securities to be ready for delivery in
book-entry form only through The Depository Trust Company on or about November
27, 2000.
------------------------
(LEAD MANAGER AND SOLE BOOK-RUNNING MANAGER)
LEHMAN BROTHERS
(CO-MANAGERS)
A.G. EDWARDS & SONS, INC. PRUDENTIAL SECURITIES
(JUNIOR CO-MANAGERS)
MCDONALD INVESTMENTS INC.
J.P. MORGAN & CO.
STEPHENS INC.
November 20, 2000
<PAGE> 2
TABLE OF CONTENTS
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PROSPECTUS SUPPLEMENT
PAGE
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Summary Information Q&A............... S-3
Risk Factors.......................... S-6
Forward-Looking Statements............ S-8
Provident Financial Group, Inc........ S-9
Provident Capital Trust III........... S-9
Consolidated Ratio of Earnings to
Fixed Charges....................... S-10
Use of Proceeds....................... S-11
Accounting Treatment.................. S-11
Regulatory Treatment.................. S-11
Capitalization........................ S-11
Selected Consolidated Financial
Data................................ S-12
Certain Terms of the Capital
Securities.......................... S-13
Certain Terms of the Junior
Subordinated Debentures............. S-19
Relationship Among the Capital
Securities, the Junior Subordinated
Debentures and the Guarantee........ S-21
Book-Entry Issuance................... S-23
United States Federal Income Tax
Consequences........................ S-25
ERISA Considerations.................. S-29
Underwriting.......................... S-32
Legal Opinions........................ S-34
Experts............................... S-34
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS
PAGE
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Prospectus Summary..................... 3
Provident Financial Group, Inc......... 3
The Securities We May Offer............ 3
The Trusts............................. 4
The Securities the Trusts May Offer.... 4
Where You Can Find More Information.... 5
Forward-Looking Statements............. 6
Use of Proceeds........................ 6
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 7
Description of Common Stock............ 7
Description of Preferred Stock......... 7
Description of Depositary Shares....... 9
Description of Debt Securities......... 12
Description of Warrants................ 19
Warrant Units.......................... 21
Stock Purchase Contracts and Stock
Purchase Units....................... 21
Description of the Trust Preferred
Securities........................... 22
Description of the Guarantees.......... 28
Description of Capital Securities...... 31
Certain Tax Considerations............. 32
Plan of Distribution................... 32
ERISA Considerations................... 34
Legal Matters.......................... 34
Experts................................ 34
</TABLE>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the prospectus. This prospectus
supplement and the prospectus may be used only for the purpose for which they
have been prepared. No one is authorized to give information other than that
contained in this prospectus supplement and the prospectus and in the documents
referred to in this prospectus supplement and the prospectus and which are made
available to the public. We have not, and the underwriters have not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it.
We are not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information appearing in this prospectus supplement,
the prospectus or any document incorporated by reference is accurate as of any
date other than the date of the applicable document. Our business, financial
condition, results of operations and prospects may have changed since that date.
This prospectus supplement and the accompanying prospectus do not constitute an
offer, or an invitation on our behalf or on behalf of the underwriters, to
subscribe for and purchase, any of the capital securities, and may not be used
for or in connection with an offer or solicitation by anyone, in any
jurisdiction in which such an offer or solicitation is not authorized or to any
person to whom it is unlawful to make such an offer or solicitation.
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<PAGE> 3
SUMMARY INFORMATION Q&A
This summary highlights selected information from this prospectus
supplement and the accompanying prospectus to help you understand the capital
securities. It may not contain all the information that is important to you. You
should carefully read this entire prospectus supplement and the accompanying
prospectus to understand fully the terms of the capital securities and the
related guarantees and junior subordinated debentures, as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the capital securities. You should pay special attention to
the "Risk Factors" section of this prospectus supplement to determine whether an
investment in the capital securities is appropriate for you.
WHAT IS PROVIDENT FINANCIAL GROUP, INC.?
We are a Cincinnati-based commercial banking and financial services company
organized under the laws of the State of Ohio. We have full service banking
operations in Ohio, northern Kentucky and southwestern Florida.
At September 30, 2000, we had total assets of $13.1 billion, loans and
leases of $8.4 billion, deposits of $8.2 billion and shareholders' equity of
$980.7 million. We also service an additional $6.1 billion of loans and leases.
WHAT IS PROVIDENT CAPITAL TRUST III?
Provident Capital Trust III is a Delaware business trust. It was created by
us for the sole purpose of issuing the capital securities and common securities
to us in exchange for the 10 1/4% junior subordinated debentures due 2030 and
engaging in the other transactions described below.
There will be five trustees of Provident Capital Trust III. The three
regular trustees are our officers. The Chase Manhattan Bank will act as the
property trustee of Provident Capital Trust III, and Chase Manhattan Bank USA,
National Association will act as the Delaware trustee of Provident Capital Trust
III.
WHAT ARE THE 10 1/4% TRUST PREFERRED SECURITIES?
We sold $100,000,000 aggregate liquidation amount of 10 1/4% trust
preferred securities issued by Provident Capital Trust III on November 13, 2000.
The 10 1/4% trust preferred securities described in this prospectus supplement
are part of the same series of 10 1/4% trust preferred securities sold on
November 13, 2000. The 10 1/4% trust preferred securities are referred to in
this prospectus supplement as the "capital securities". Each capital security
will represent an undivided beneficial ownership interest in the assets of
Provident Capital Trust III. Each capital security will entitle the holders to
receive quarterly cash distributions as described below.
WHAT ARE PROVIDENT CAPITAL TRUST III'S ASSETS?
Provident Capital Trust III will hold the junior subordinated debentures
that it receives from us in exchange for the issuance of capital securities and
common securities to us. We will sell the capital securities to the public and
retain the common securities that we receive from Provident Capital Trust III in
exchange for the junior subordinated debentures. We will pay interest on the
junior subordinated debentures at the same rate and at the same times as
Provident Capital Trust III makes payments on the capital securities. Provident
Capital Trust III will use the payments it receives on the junior subordinated
debentures to make the corresponding payments on the capital securities. We will
guarantee payments made on the capital securities to the extent described below.
Both the junior subordinated debentures and the guarantee will be subordinated
to our and our subsidiaries' existing and future creditors.
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS AND HOW MUCH WILL YOU BE PAID?
If you purchase the capital securities, as an undivided beneficial owner in
the junior subordinated debentures, you will be entitled to receive cumulative
cash distributions at an annual rate of 10 1/4%. Interest on the junior
subordinated debentures will accrue, and, as a result, distributions on the
capital securities will accumulate from November 13, 2000, and will be paid
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, beginning December 31, 2000, unless they are deferred as described below.
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WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
We can, on one or more occasions, defer the quarterly interest payments on
the junior subordinated debentures for up to twenty consecutive quarterly
periods. In other words, we may declare at our discretion up to a five year
interest payment moratorium on the junior subordinated debentures and may choose
to do that on more than one occasion. A deferral of interest payments cannot
extend, however, beyond the maturity date of the junior subordinated debentures,
nor can we begin a new interest deferral period until we have paid all accrued
interest on the junior subordinated debentures from the previous interest
deferral period.
If we defer interest payments on the junior subordinated debentures,
Provident Capital Trust III will also defer distributions on the capital
securities. Any deferred interest on the junior subordinated debentures will
accrue additional interest at an annual rate of 10 1/4%, and, as a result, any
deferred distributions will accumulate additional amounts at an annual rate of
10 1/4%, compounded quarterly. Once we pay all deferred interest payments on the
junior subordinated debentures, with accrued interest, we can again postpone
interest payments on the junior subordinated debentures as described above, but
not beyond the maturity date of the junior subordinated debentures.
During any period in which we defer interest payments on the junior
subordinated debentures, we will not and our subsidiaries will not do any of the
following, with certain limited exceptions:
- pay a dividend or make any other payment or distribution on our capital
stock;
- redeem, purchase or make a liquidation payment on any of our capital
stock;
- make an interest, principal or premium payment on, or repay, repurchase
or redeem, any of our debt securities that rank equally with or junior to
the junior subordinated debentures; or
- make any guarantee payment regarding debt securities of any of our
subsidiaries, if the guarantee ranks equally with or junior to the junior
subordinated debentures.
If we defer payments of interest on the junior subordinated debentures, the
junior subordinated debentures will at that time be treated as being issued with
original issue discount for United States federal income tax purposes. This
means you would be required to accrue interest income in an amount equal to the
deferred distributions on your capital securities even though you will not be
receiving any cash distributions on your capital securities. These amounts will
be included in your gross income for United States federal income tax purposes.
For more information, see below under the caption "United States Federal Income
Tax Consequences" in this prospectus supplement.
WHEN CAN PROVIDENT CAPITAL TRUST III REDEEM THE CAPITAL SECURITIES?
Provident Capital Trust III will redeem all of the outstanding capital
securities when the junior subordinated debentures are repaid at maturity. The
junior subordinated debentures are scheduled to mature on December 31, 2030. In
addition, if we redeem any junior subordinated debentures before their maturity,
Provident Capital Trust III will use the cash it receives on the redemption of
the junior subordinated debentures to redeem, on a proportionate basis, the
capital securities and the common securities.
We can redeem the junior subordinated debentures before their maturity at
100% of their principal amount plus accrued and unpaid interest:
- in whole or in part on one or more occasions any time on or after
December 31, 2005; and
- in whole at any time, if certain changes occur in tax or investment
company laws and regulations or in the treatment of the capital
securities for bank regulatory purposes.
These circumstances are more fully described below under the caption
"Certain Terms of the Capital Securities -- Redemption" in this prospectus
supplement.
We will not redeem the junior subordinated debentures unless we obtain the
prior approval of the Board of Governors of the Federal Reserve System to do so,
if then required under the Federal Reserve Board's capital rules.
HOW ARE THE CAPITAL SECURITIES GUARANTEED?
We will fully and unconditionally guarantee the payments of all amounts due
on the capital
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securities to the extent Provident Capital Trust III has funds available for
payment of such distributions.
We also are obligated to pay most of the expenses and obligations of
Provident Capital Trust III (other than Provident Capital Trust III's
obligations to make payments on the capital securities and common securities,
which are covered only by the guarantee).
The guarantee does not cover payments when Provident Capital Trust III does
not have sufficient funds to make payments on the capital securities. In other
words, if we do not make a payment on the junior subordinated debentures,
Provident Capital Trust III will not have sufficient funds to make payments on
the capital securities, and the guarantee will not obligate us to make those
payments on Provident Capital Trust III's behalf. In addition, our obligations
under the guarantee are subordinate to our obligations to other creditors to the
same extent as the junior subordinated debentures. For more information, see
"Description of the Guarantees" in the accompanying prospectus.
WHEN COULD THE JUNIOR SUBORDINATED DEBENTURES BE DISTRIBUTED TO YOU?
We can dissolve Provident Capital Trust III at any time, subject to
obtaining:
- the prior approval of the Federal Reserve Board to do so, if then
required under the Federal Reserve Board's capital rules; and
- an opinion of independent counsel stating that the distribution of the
junior subordinated debentures will not be taxable to you.
If we dissolve Provident Capital Trust III, or if Provident Capital Trust
III dissolves because of certain other specified events (such as our
bankruptcy), Provident Capital Trust III will distribute the junior subordinated
debentures to holders of the capital securities and the common securities on a
proportionate basis.
Upon any dissolution, winding-up or liquidation of Provident Capital Trust
III involving the liquidation of the junior subordinated debentures, the holders
of the capital securities will be entitled to receive, out of assets held by
Provident Capital Trust III, subject to the rights of any creditors of Provident
Capital Trust III, the liquidation distribution in cash. Provident Capital Trust
III will be able to make this distribution of cash only if we redeem the junior
subordinated debentures.
WILL THE CAPITAL SECURITIES BE LISTED ON A STOCK EXCHANGE?
The capital securities have been approved for listing on the New York Stock
Exchange. You should be aware that the listing of the capital securities will
not necessarily ensure that an active trading market will be available for the
capital securities or that you will be able to sell your capital securities at
the price you originally paid for them.
If Provident Capital Trust III distributes the junior subordinated
debentures, we will use our best efforts to list them on the New York Stock
Exchange or wherever the capital securities are then listed.
IN WHAT FORM WILL THE CAPITAL SECURITIES BE ISSUED?
The capital securities will be represented by one or more global securities
that will be deposited with and registered in the name of The Depository Trust
Company, New York, New York. This means that you will not receive a certificate
for your capital securities and the capital securities will not be registered in
your name. For more details, see the information under the caption "Book-Entry
Issuance" in this prospectus supplement.
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RISK FACTORS
Before purchasing any capital securities, you should read carefully this
prospectus supplement and the accompanying prospectus and pay special attention
to the following risk factors.
Because Provident Capital Trust III will rely on the payments it receives
on the junior subordinated debentures to fund all payments on the capital
securities, and because Provident Capital Trust III may distribute the junior
subordinated debentures in exchange for the capital securities, you are making
an investment regarding the junior subordinated debentures as well as the
capital securities. You should carefully review the information in this
prospectus supplement and the accompanying prospectus about the capital
securities, the guarantee and the junior subordinated debentures.
HOLDERS OF OUR SENIOR INDEBTEDNESS WILL GET PAID BEFORE YOU WILL GET PAID UNDER
THE GUARANTEE
Our obligations to you under the junior subordinated debentures and the
guarantee will be junior in right of payment to all of our existing and future
senior debt. This means that we cannot make any payments to you on the junior
subordinated debentures or the guarantee if we are in default on any of our
senior debt. Therefore, in the event of our bankruptcy, liquidation or
dissolution, our assets must be used to pay off our senior obligations in full
before any payments may be made on the junior subordinated debentures or the
guarantee.
As of September 30, 2000, we had outstanding senior debt of approximately
$248.3 million. The indenture pursuant to which the junior subordinated
debentures will be issued, the guarantee and the declaration of trust which
created Provident Capital Trust III do not limit our ability to incur additional
senior debt.
For more information, see below under the captions "Certain Terms of the
Junior Subordinated Debentures -- Ranking" in this prospectus supplement and
"Description of the Guarantees -- Ranking" in the accompanying prospectus.
OUR RESULTS OF OPERATIONS DEPEND UPON THE RESULTS OF OPERATIONS OF OUR
SUBSIDIARIES
We are a holding company which conducts substantially all of our operations
through our bank and other subsidiaries. As a result, our ability to make
payments on the junior subordinated debentures and the guarantee will depend
primarily upon the receipt of dividends and other distributions from our
subsidiaries.
There are various regulatory restrictions on the ability of our banking
subsidiaries, including our principal subsidiary, to pay dividends or make other
payments to us. At September 30, 2000, our banking subsidiaries could pay a
total of approximately $239.0 million in dividends to us without prior
regulatory approval.
In addition, our right to participate in any distribution of assets of any
of our subsidiaries, including our principal subsidiary, upon the subsidiary's
liquidation or otherwise, and thus your ability as a holder 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 of
our claims as a creditor of such subsidiary may be recognized. As a result, the
capital securities will effectively be subordinated to all existing and future
liabilities and obligations of our subsidiaries. Therefore, holders of the
capital securities should look only to our assets for payments on the capital
securities. Further, the junior subordinated debentures and the guarantee also
will be effectively subordinated to all existing and future obligations of our
subsidiaries.
At September 30, 2000, our subsidiaries had outstanding debt and other
liabilities, including deposits, of approximately $11.6 billion.
IF WE DO NOT MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES, PROVIDENT
CAPITAL TRUST III WILL NOT BE ABLE TO PAY DISTRIBUTIONS AND OTHER PAYMENTS ON
THE CAPITAL SECURITIES AND THE GUARANTEE WILL NOT APPLY
Provident Capital Trust III's ability to make timely distribution and
redemption payments on the capital securities is completely dependent upon our
making timely payments on the junior subordinated debentures. If we default on
the junior subordinated debentures, Provident Capital Trust III will lack funds
for the payments on the capital securities. If this happens, holders of capital
securities will not be able to rely upon the guarantee for payment of such
amounts because the guarantee only guaran-
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tees that we will make distribution and redemption payments on the capital
securities if Provident Capital Trust III has the funds to do so itself but does
not.
Instead, you or the property trustee may proceed directly against us for
payment of any amounts due on the capital securities of such holder.
For more information, see below under the caption "Certain Terms of the
Capital Securities -- Trust Enforcement Events" in this prospectus supplement.
DISTRIBUTIONS ON THE CAPITAL SECURITIES COULD BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH
As long as the junior subordinated debentures are not in default, we can,
on one or more occasions, defer interest payments on the junior subordinated
debentures for up to twenty consecutive quarters, but not beyond the maturity
date of the junior subordinated debentures. Because interest payments on the
junior subordinated debentures fund the distributions on the capital securities,
each such deferral would result in a corresponding deferral of distributions on
the capital securities.
We do not intend to defer interest payments on the junior subordinated
debentures. However, if we do so in the future, the capital securities may trade
at a price that does not reflect fully the value of the accrued but unpaid
distributions. Even if we do not do so, our right to defer interest payments on
the junior subordinated debentures could mean that the market price for the
capital securities may be more volatile than that of other securities without
interest deferral rights.
If we defer interest payments on the junior subordinated debentures, you
will be required to accrue interest income for United States federal income tax
purposes in respect of your proportionate share of the accrued but unpaid
interest on the junior subordinated debentures held by Provident Capital Trust
III, even if you normally report income when received. As a result, you will be
required to include the accrued interest in your gross income for United States
federal income tax purposes prior to your receiving any cash distribution. If
you sell your capital securities prior to the record date for the first
distribution after a deferral period, you will never receive the cash from us
related to the accrued interest that you reported for tax purposes.
For more information regarding the tax consequences of purchasing the
capital securities, see below under the caption "United States Federal Income
Tax Consequences -- Interest Income and Original Issue Discount" and " -- Sales
of Capital Securities or Redemption of Junior Subordinated Debentures" in this
prospectus supplement.
THE CAPITAL SECURITIES MAY BE REDEEMED PRIOR TO MATURITY; YOU MAY BE TAXED ON
THE PROCEEDS AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR A
HIGHER RATE OF RETURN
Generally, the junior subordinated debentures (and therefore the capital
securities) may not be redeemed prior to December 31, 2005. However, if certain
special events occur relating to changes in tax law, the Investment Company Act
of 1940 or the treatment of the capital securities for bank regulatory capital
purposes, then we will be able, subject to receipt of any necessary Federal
Reserve Board approval, to redeem all of the junior subordinated debentures at a
price equal to 100% of their principal amount plus any accrued and unpaid
interest. If such a redemption happens, Provident Capital Trust III must use the
redemption price it receives to redeem all of the capital securities.
The redemption of the capital securities would be a taxable event to you
for United States federal income tax purposes.
In addition, you may not be able to reinvest the money that you receive in
the redemption at a rate that is equal to or higher than the rate of return on
the capital securities.
WE GENERALLY WILL CONTROL PROVIDENT CAPITAL TRUST III BECAUSE YOUR VOTING RIGHTS
ARE VERY LIMITED; YOUR INTERESTS MAY NOT BE THE SAME AS OURS
You will only have limited voting rights. In particular, you may not elect
and remove any trustees, except when there is a default under the junior
subordinated debentures. If such a default occurs, a majority in liquidation
amount of the holders of the capital securities would be entitled to remove or
appoint the property trustee and the Delaware trustee.
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For more information, see below under the caption "Provident Capital Trust
III" in this prospectus supplement.
FEDERAL BANKING AUTHORITIES MAY RESTRICT THE ABILITY OF PROVIDENT CAPITAL TRUST
III TO MAKE DISTRIBUTIONS ON OR REDEEM THE CAPITAL SECURITIES
Federal banking authorities will have the right to examine Provident
Capital Trust III and its activities because Provident Capital Trust III is our
subsidiary. Under certain circumstances, including any determination that our
relationship to Provident Capital Trust III would result in an unsafe and
unsound banking practice, these banking authorities have the authority to issue
orders which could restrict the ability of Provident Capital Trust III to make
distributions on or to redeem the capital securities.
AN ACTIVE TRADING MARKET FOR THE CAPITAL SECURITIES MAY NOT DEVELOP
The capital securities have been approved for listing on the New York Stock
Exchange. However, the listing of the capital securities on an exchange does not
guarantee that an active market will be available for the capital securities or
that you will be able to sell your capital securities at the price you
originally paid for them.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the information
incorporated by reference in them contain or incorporate by reference certain
forward-looking statements that are subject to numerous assumptions, risks or
uncertainties. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. Some of the forward-looking
statements can be identified by the use of forward-looking words such as
"believes", "expects", "may", "will", "should", "seeks", "approximately",
"intends", "plans", "estimates", "anticipates" or the negative version of those
words or other comparable terminology. Actual results could differ materially
from those contained in or implied by such forward-looking statements for a
variety of factors including, without limitation:
- sharp and/or rapid changes in interest rates;
- significant changes in the anticipated economic scenario which could
materially change anticipated credit quality trends, the ability to
generate loans and leases, the ability to securitize loans and leases and
the spreads realized on securitizations;
- significant cost, delay in, or inability to execute strategic initiatives
designed to grow revenues and/or manage expenses;
- consummation of significant business combinations or divestitures; and
- significant changes in accounting, tax, or regulatory practices or
requirements and factors noted in connection with forward looking
statements.
In addition, borrowers could suffer unanticipated losses without regard to
general economic conditions. The result of these and other factors could cause a
difference from expectations of the level of defaults and a change in the risk
characteristics of the loan and lease portfolio and a change in the provision
for loan and lease losses. Forward-looking statements speak only as of the date
made. We undertake no obligations to update any forward-looking statements to
reflect events or circumstances arising after the date on which they are made.
For a discussion of factors that could cause actual results to differ, see the
information contained in our publicly available filings with the SEC. These
filings are described under the caption "Where You Can Find More Information" in
the accompanying prospectus.
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PROVIDENT FINANCIAL GROUP, INC.
OUR PLAN FOR EXPANSION
We currently conduct our banking operations through The Provident Bank (in
Ohio) and Provident Bank of Florida.
We have expanded our franchise in recent years through internal growth and
acquisitions. Recent examples of our expansion include the acquisitions of OHSL
Financial Corp. in December 1999 and Fidelity Financial of Ohio, Inc. in
February 2000 (financial institutions located in Cincinnati, Ohio); the
acquisition of Bank One Corporation's Housing and Health Care Capital Business
based in Columbus which operates as our Red Capital Group (business providing
investment and mortgage banking to principals in multifamily, affordable
housing, seniors housing, assisted living facilities and skilled nursing
facilities nationwide); the purchase of Capstone Realty Advisors, LLC based in
Cleveland (business specializing in the origination and servicing of commercial
real estate loans); the opening of corporate lending offices in Fort Worth,
Pittsburgh, Indianapolis, Chicago and Baltimore; and our expansion into Manatee
County, Florida through the addition of four new financial centers, with
construction to begin shortly on a fifth financial center.
CONTACT INFORMATION
Our executive offices are located at One East Fourth Street, Cincinnati,
Ohio 45202 and our Investors Relations telephone number is (513) 345-7102 or
(800) 851-9521.
PROVIDENT CAPITAL TRUST III
PURPOSE AND OWNERSHIP OF PROVIDENT CAPITAL TRUST III
Provident Capital Trust III is a business trust recently organized under
Delaware law by the trustees and us. Provident Capital Trust III was established
solely for the following purposes:
- to issue the capital securities, which represent undivided beneficial
ownership interests in Provident Capital Trust III's assets, in exchange
for our junior subordinated debentures;
- to issue the common securities to us in a total liquidation amount equal
to at least 3% of Provident Capital Trust III's total capital in exchange
for our junior subordinated debentures; and
- to engage in other activities that are directly related to the activities
described above, such as registering the transfer of the capital
securities.
Because Provident Capital Trust III was established only for the purposes
listed above, the junior subordinated debentures will be Provident Capital Trust
III's sole assets. Payments on the junior subordinated debentures will be
Provident Capital Trust III's sole source of income. Provident Capital Trust III
will issue only one series of capital securities.
As issuer of the junior subordinated debentures, we will pay:
- all fees, expenses and taxes related to Provident Capital Trust III and
the offering of the capital securities and common securities; and
- all ongoing costs, expenses and liabilities of Provident Capital Trust
III, except obligations to make distributions and other payments on the
common securities and the capital securities.
For so long as the capital securities remain outstanding, we will:
- own, directly or indirectly, all of the common securities;
- cause Provident Capital Trust III to remain a business trust and not to
voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the declaration of trust by which Provident Capital Trust
III was created;
- use our commercially reasonable efforts to ensure that Provident Capital
Trust III will not be an "investment company" for purposes of the
Investment Company Act of 1940; and
- take no action that would be reasonably likely to cause Provident Capital
Trust III to be classified as other than a grantor trust for United
States federal income tax purposes.
S-9
<PAGE> 10
THE TRUSTEES
The business and affairs of Provident Capital Trust III will be conducted
by its five trustees. The three regular trustees will be individuals who are our
employees. The fourth trustee, The Chase Manhattan Bank, as property trustee,
will hold title to the junior subordinated debentures for the benefit of the
holders of the capital securities and will have the power to exercise all the
rights and powers of a registered holder of the junior subordinated debentures.
The fifth trustee, Chase Manhattan Bank USA, National Association, as Delaware
trustee, maintains its principal place of business in Delaware and meets the
requirements of Delaware law for Delaware business trusts. In addition, The
Chase Manhattan Bank, as guarantee trustee, will hold the guarantee for the
benefit of the holders of the capital securities.
We have the sole right to appoint, remove and replace the trustees of
Provident Capital Trust III, unless an event of default occurs with respect to
the junior subordinated debentures. In that case, the holders of a majority in
liquidation amount of the capital securities will have the right to remove and
appoint the property trustee and the Delaware trustee.
ADDITIONAL INFORMATION
For additional information concerning Provident Capital Trust III, see "The
Trusts" in the accompanying prospectus. Provident Capital Trust III will not be
required to file any reports with the SEC after the issuance of the capital
securities. As discussed below under the caption "Accounting Treatment" in this
prospectus supplement, we will provide certain information concerning Provident
Capital Trust III and the capital securities in the financial statements
included in our own periodic reports to the SEC.
OFFICE OF PROVIDENT CAPITAL TRUST III
The executive office of Provident Capital Trust III is c/o Provident
Financial Group, Inc., One East Fourth Street, Cincinnati, Ohio 45202,
Attention: General Counsel, and its telephone number is (513) 579-2861.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges and consolidated
ratios of earnings to combined fixed charges and preferred stock dividend
requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- -------------------------------------
2000 1999 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS TO FIXED CHARGES:
Excluding interest on deposits........ 1.81x 2.78x 2.80x 2.40x 2.87x 2.32x 2.55x
Including interest on deposits........ 1.28x 1.59x 1.59x 1.49x 1.51x 1.40x 1.40x
EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS:
Excluding interest on deposits..... 1.79x 2.75x 2.78x 2.38x 2.84x 2.30x 2.42x
Including interest on deposits..... 1.28x 1.58x 1.58x 1.48x 1.50x 1.40x 1.38x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
excluding interest on deposits, represent interest 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.
S-10
<PAGE> 11
USE OF PROCEEDS
The Trust will issue the capital securities and common securities to us in
exchange for our junior subordinated debentures.
We will sell the capital securities to the public. We expect to use the
proceeds from the sale of the capital securities for general corporate purposes,
which may include the repayment of debt, investments in or extensions of credit
to its subsidiaries and the financing of possible acquisitions. We currently
have no agreements, arrangements or understandings regarding 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 the
proceeds will depend upon our funding requirements and the availability of other
funds.
ACCOUNTING TREATMENT
For financial reporting purposes, Provident Capital Trust III will be
treated as our subsidiary, and its accounts will be included in our consolidated
financial statements.
In our future financial reports, we will:
- present the junior subordinated debentures as part of a separate line
item on our consolidated balance sheets, as a component of long-term
debt;
- record distributions payable on the capital securities as an expense; and
- include a footnote in our consolidated financial statements stating,
among other things, that the sole assets of Provident Capital Trust III
are junior subordinated debentures issued by us and providing information
about the capital securities, the junior subordinated debentures and the
guarantee.
REGULATORY TREATMENT
We are required by the Federal Reserve Board to maintain certain levels of
capital for bank regulatory purposes. We expect that the capital securities will
be treated as Tier 1 capital for these purposes.
CAPITALIZATION
We provide in the table below our and our subsidiaries' unaudited
historical consolidated capitalization at September 30, 2000 and as adjusted to
give effect to the issuance of the capital securities including the $100 million
aggregate liquidation amount of capital securities of this series previously
sold.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 2000
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT.............................................. $1,464,672 $1,464,672
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN
PROVIDENT'S JUNIOR SUBORDINATED DEBENTURES (a): 220,214 332,714
SHAREHOLDERS' EQUITY:
Preferred Stock (b)....................................... 7,000 7,000
Common Stock (c).......................................... 14,452 14,452
Capital Surplus........................................... 313,588 313,588
Retained Earnings......................................... 683,295 683,295
Treasury Stock (d)........................................ 0 0
Accumulated Other Comprehensive Income (e)................ (37,684) (37,684)
---------- ----------
Total Shareholders' Equity........................... 980,651 980,651
---------- ----------
Total Capitalization.............................. $2,665,537 $2,778,037
========== ==========
</TABLE>
---------------
(a) Shown net of discount.
(b) Preferred Stock, 5,000,000 shares authorized, Series "D", 70,272 issued.
(c) Common Stock, no par value, 110,000,000 shares authorized, 48,758,291
issued.
(d) 0 shares.
(e) Consists entirely of unrealized loss on marketable securities (net of
deferred income taxes).
S-11
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
We provide in the table below our selected consolidated financial data. You
should read the data below with the more detailed information, consolidated
financial statements and the notes to the consolidated financial statements that
are incorporated by reference in the accompanying prospectus under the caption
"Where You Can Find More Information." The information presented below for the
years ended December 31, 1997, 1998 and 1999 give retroactive effect to our
acquisition of Fidelity Financial of Ohio, Inc. in February 2000 which we
accounted for as a pooling-of-interest.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------
2000 1999 1999 1998 1997
----------- ----------- ----------- ---------- ----------
(UNAUDITED) (AUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS:
Total Interest Income............................... $ 693,999 $ 533,855 $ 730,715 $ 693,951 $ 631,646
Total Interest Expense.............................. 411,227 284,921 394,083 382,902 344,510
Net Interest Income................................. 282,772 248,934 336,632 311,049 287,136
Provision for Loan and Lease Losses................. 61,950 37,610 48,417 31,597 45,119
Noninterest Income.................................. 191,673 200,618 272,664 225,492 174,899
Noninterest Expense................................. 296,078 242,470 326,990 317,316 241,152
Income Before Income Taxes.......................... 116,417 169,472 233,889 187,628 175,764
Applicable Income Taxes............................. 43,803 60,137 82,940 65,201 61,049
Net Income(a)....................................... 72,614 109,335 150,949 122,427 114,715
PER COMMON SHARE DATA:
Basic Earnings (a).................................. $ 1.48 $ 2.31 $ 3.18 $ 2.57 $ 2.51
Diluted Earnings (a)................................ 1.44 2.24 3.08 2.48 2.38
Dividends Paid...................................... 0.72 0.66 0.88 0.80 0.72
Book Value.......................................... 19.97 17.66 18.91 16.62 15.22
BALANCES AT PERIOD END:
Total Investment Securities......................... $ 3,137,961 $ 1,805,664 $ 2,111,037 $1,598,083 $1,468,438
Total Loans and Leases.............................. 8,360,164 6,574,935 7,010,913 6,302,508 5,748,188
Total Managed Loans and Leases...................... 14,282,271 11,887,589 12,948,933 9,522,895 7,280,874
Reserve for Loan and Lease Losses................... 120,277 87,723 4,045 78,867 74,615
Total Assets........................................ 13,122,117 9,797,331 10,537,926 8,949,651 7,946,580
Noninterest Bearing Deposits........................ 1,313,205 1,020,820 1,185,245 679,297 610,308
Interest Bearing Deposits........................... 6,874,550 5,905,960 6,044,743 5,277,182 4,746,764
Total Deposits...................................... 8,187,755 6,926,780 7,229,988 5,956,479 5,357,072
Long-Term Liabilities............................... 1,684,886 1,119,376 1,170,890 1,111,925 863,093
Total Shareholders' Equity.......................... 980,651 840,291 926,222 802,154 718,921
OTHER STATISTICAL INFORMATION:
Return on Average Assets (a)........................ 0.82% 1.50% 1.53% 1.40% 1.40%
Return on Average Equity (a)........................ 10.33% 17.97% 18.34% 15.57% 17.54%
Dividend Payout Ratio............................... 49.29% 28.48% 27.14% 30.93% 33.25%
CAPITAL RATIOS AT PERIOD END:
Total Equity to Total Assets........................ 7.47% 8.58% 8.79% 8.96% 9.05%
Tier 1 Leverage Ratio............................... 9.86% 10.52% 10.87% 9.13% 10.05%
Tier 1 Capital to Risk-Weighted Assets.............. 7.91% 10.03% 9.97% 9.03% 10.05%
Total Risk-Based Capital to Risk Weighted Assets.... 10.29% 12.05% 11.93% 11.53% 13.25%
LOAN QUALITY RATIOS AT PERIOD END:
Reserve for Loan and Lease Losses to Total Loans and
Leases............................................ 1.44% 1.33% 1.34% 1.25% 1.30%
Reserve for Loan and Lease Losses to Nonperforming
Loans............................................. 182.02% 139.55% 164.39% 175.18% 156.04%
Nonperforming Loans to Total Loans and Leases....... 0.79% 0.96% 0.82% 0.71% 0.83%
Net Charge-Offs to Average Total Loans and Leases... 0.71% 0.56% 0.49% 0.43% 0.69%
</TABLE>
---------------
(a) SELECTED FINANCIAL DATA ON OPERATING INCOME FOLLOWS (EXCLUDES MERGER AND
RESTRUCTURING CHARGES (9/30/00, 12/31/99 AND 9/30/99) AND SPECIAL CHARGES
AND EXIT COSTS (12/31/98)):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------
2000 1999 1999 1998 1997
------- -------- -------- -------- --------
(UNAUDITED) (AUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net Income................................. $99,614 $112,065 $153,679 $136,730 $114,715
Basic Earnings............................. 2.03 2.37 3.24 2.87 2.51
Diluted Earnings........................... 1.98 2.29 3.14 2.77 2.38
Return on Average Assets................... 1.13% 1.54% 1.56% 1.56% 1.49%
Return on Average Equity................... 14.16% 18.42% 18.68% 17.39% 17.54%
</TABLE>
S-12
<PAGE> 13
CERTAIN TERMS OF THE CAPITAL SECURITIES
We have summarized below certain terms of the capital securities. This
summary supplements the general description of the capital securities under the
caption "Description of the Trust Preferred Securities" and elsewhere in the
accompanying prospectus. To the extent that this summary is inconsistent with
the description in the accompanying prospectus, you should rely on the summary
below. This summary is not a complete description of all of the terms and
provisions of the capital securities. For more information, we refer you to the
declaration of trust, the form of the amended and restated declaration of trust
and the form of preferred securities (which will be substantially similar to the
form of the capital securities), which we filed as exhibits to the registration
statement of which the prospectus is a part.
We sold $100,000,000 aggregate liquidation amount of 10 1/4% trust
preferred securities issued by Provident Capital Trust III on November 13, 2000.
The 10 1/4%% trust preferred securities described in this prospectus supplement
are part of the same series of 10 1/4% trust preferred securities sold on
November 13, 2000. The capital securities represent undivided beneficial
ownership interests in the assets of Provident Capital Trust III. The only
assets of Provident Capital Trust III will be the junior subordinated
debentures. The capital securities will rank equally with the common securities
except as described below under the caption " -- Subordination of Common
Securities" in this section.
DISTRIBUTIONS
As an undivided beneficial owner in the junior subordinated debentures, you
will receive distributions on the capital securities that are cumulative and
will accumulate from November 13, 2000 at the annual rate of 10 1/4% of the
liquidation amount of $25 for each capital security. Interest on the junior
subordinated debentures will accrue and, as a result, distributions on the
capital securities will accumulate and will be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, beginning December
31, 2000. The amount of distributions payable for any period will be computed on
the basis of a 360 day year comprised of twelve 30 day months. The amount of
distributions payable for any period shorter than a full quarterly period will
be computed on the basis of a 30 day month and, for periods of less than a
month, the actual number of days elapsed per 30 day month.
Interest not paid when due will accrue additional interest at the annual
rate of 10 1/4% on the amount of unpaid interest, compounded quarterly. As a
result, distributions not paid when due will accumulate additional distributions
at the annual rate of 10 1/4% on the amount of unpaid distributions, compounded
quarterly. When we refer to any payment of distributions, the term
"distributions" includes any such additional accumulated distributions.
If distributions are payable on a date that is not a "business day",
payment will be made on the next business day and without any interest or other
payment as a result of such delay. However, if the next business day is in the
next calendar year, payment of distributions will be made on the preceding
business day. A "business day" means each day except Saturday, Sunday and any
day on which banking institutions in The City of New York are authorized or
required by law to close or on which the corporate trust office of the property
trustee or the indenture trustee is closed for business.
Interest not paid when due will accrue additional interest, and, as a
result, distributions on the capital securities will only be paid if Provident
Capital Trust III has sufficient funds available to make such payments.
Provident Capital Trust III's income available for the payment of distributions
will be limited to our payments made on the junior subordinated debentures. As a
result, if we do not make interest payments on the junior subordinated
debentures, then Provident Capital Trust III will not have funds to make
distributions on the capital securities.
DEFERRAL OF DISTRIBUTIONS
If the junior subordinated debentures are not in default, we can, on one or
more occasions, defer interest payments on the junior subordinated debentures
for up to twenty consecutive quarterly interest payment periods. A deferral of
interest payments cannot extend, however, beyond the maturity date of the junior
subordinated debentures. If we defer interest payments on the junior
subordinated debentures, Provident Capital Trust III also will defer
distributions on the capital securities. During a
S-13
<PAGE> 14
deferral period, interest on the junior subordinated debentures will accrue and
compound quarterly at the annual rate of 10 1/4%, to the extent permitted by
applicable law, and, as a result, distributions otherwise due to you would
continue to accumulate, to the extent permitted by applicable law, from the date
that these distributions were due.
Once we make all deferred interest payments on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures as discussed above. As a result, there could be multiple periods of
varying length during which you would not receive cash distributions from
Provident Capital Trust III.
We currently do not intend to defer interest payments on the junior
subordinated debentures. If we defer such interest payments, however, neither we
nor our subsidiaries generally will be permitted to pay dividends on or
repurchase shares of our capital stock or make payments on debt securities or
guarantees that rank equal or junior to the junior subordinated debentures and
the guarantee. These limitations are described in greater detail below under the
caption "Certain Terms of the Junior Subordinated Debentures -- Option to Defer
Interest Payments" in this prospectus supplement.
If we choose to defer payments of interest on the junior subordinated
debentures, then the junior subordinated debentures would at that time be
treated as being issued with original issue discount for United States federal
income tax purposes. This means you will be required to include your share of
the accrued but unpaid interest on the junior subordinated debentures in your
gross income for United States federal income tax purposes before you receive
cash distributions from Provident Capital Trust III. This treatment will apply
as long as you own capital securities. For more information, see below under the
caption "United States Federal Income Tax Consequences -- Interest Income and
Original Issue Discount" in this prospectus supplement.
PAYMENT OF DISTRIBUTIONS
Distributions on the capital securities will be payable to holders on the
relevant record date. As long as the capital securities are only in book-entry
form, the record date for the payment of distributions will be one business day
before the distribution date. If the capital securities are ever issued in
certificated form, the record date for the payment of distributions will be
determined by the regular trustees and will be at least one business day before
the relevant payment date. Distributions payable on any capital securities that
are not paid on the scheduled 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 distribution will instead be payable to the person in
whose name such capital securities are registered on a special record date set
for this purpose.
Payments on the capital securities while they are in book-entry form will
be made in immediately available funds to DTC, the depositary for the capital
securities.
REDEMPTION
We may redeem the junior subordinated debentures before their maturity:
- in whole or in part on one or more occasions any time on or after
December 31, 2005; and
- in whole at any time, if certain changes occur in tax or investment
company laws and regulations, or in the treatment of the capital
securities for bank regulatory capital purposes. These events, which we
refer to as "Special Events", are described in detail below under the
caption " -- Redemption Upon a Special Event".
We may not redeem the junior subordinated debentures unless we receive the
prior approval of the Federal Reserve Board to do so, if that approval is then
required under the Federal Reserve Board's capital rules. The redemption price
for the junior subordinated debentures is 100% of their principal amount plus
accrued and unpaid interest.
GENERAL
When we repay the junior subordinated debentures, either at maturity on
December 31, 2030 or upon early redemption (as discussed above), Provident
Capital Trust III will use the cash it receives from the repayment or redemption
of the junior subordinated debentures to redeem a corresponding amount of the
capital securities and common securities.
If less than all the capital securities and the common securities are
redeemed, the total amount of the capital securities and the common securities
S-14
<PAGE> 15
to be redeemed will be allocated proportionately among the capital securities
and common securities, unless an event of default under the junior subordinated
debentures or similar event has occurred, as described below under the caption
" -- Subordination of Common Securities" in this section.
REDEMPTION UPON A SPECIAL EVENT
If a Special Event has occurred and is continuing, and we cannot cure that
event by some reasonable action, then we may redeem the junior subordinated
debentures within 90 days following the occurrence of the Special Event. A
"Special Event" means, for these purposes, the occurrence of a "Tax Event", a
"Regulatory Capital Event" or an "Investment Company Event". We summarize each
of these events below.
A "Tax Event" means the receipt by Provident Capital Trust III of an
opinion of independent tax counsel experienced in such matters, to the effect
that as a result of:
- any amendment to, change in or announced proposed change in the laws or
regulations interpreting such laws of the United States or any political
subdivision or taxing authority; or
- any official administrative pronouncement, written action or judicial
decision interpreting or applying such laws or regulations;
which amendment or change becomes effective, or proposed change, pronouncement,
written action or decision is announced, on or after the date of this prospectus
supplement, there is more than an insubstantial risk currently or within the 90
days following such opinion that:
- Provident Capital Trust III will be subject to United States federal
income tax regarding income received or accrued on the junior
subordinated debentures;
- interest payable by us on the junior subordinated debentures will not be
deductible by us, in whole or in part, for United States federal income
tax purposes; or
- Provident Capital Trust III will be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that we shall have received an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of:
- any amendment to or change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
rules, guidelines or policies of the Federal Reserve System; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or 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 following the date of such
opinion, will not constitute Tier 1 capital or its equivalent at the time.
An "Investment Company Event" means the receipt by Provident Capital Trust
III of an opinion of a nationally recognized independent counsel to the effect
that, as a result of:
- a change in law or regulation; or
- a written change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority,
there is more than an insubstantial risk that Provident Capital Trust III will
be considered an "investment company" under the Investment Company Act of 1940
that is required to be registered under this law on or after the date of the
issuance of the capital securities.
If we do not elect to redeem the junior subordinated debentures following a
Special Event, then the capital securities will remain outstanding until the
repayment of the junior subordinated debentures, unless we liquidate Provident
Capital Trust III and distribute the junior subordinated debentures to you. For
more information, see "-- Optional Liquidation of Provident Capital Trust III
and Distribution of Junior Subordinated Debentures" in this section.
REDEMPTION PROCEDURES
Provident Capital Trust III will give you at least 30 days' but not more
than 60 days' notice before any redemption of capital securities. To the extent
funds are available for payment, Provident
S-15
<PAGE> 16
Capital Trust III will irrevocably deposit with DTC sufficient funds to pay the
redemption amount for the capital securities being redeemed. Provident Capital
Trust III also will give DTC irrevocable instructions and authority to pay the
redemption amount to its participants. Any distribution to be paid on or before
a redemption date for any capital securities called for redemption will be
payable to the registered holders on the record date for the distribution.
Once notice of redemption is given and Provident Capital Trust III
irrevocably deposits the redemption amount, additional distributions on the
capital securities will cease to accumulate from and after the redemption date.
In addition, all rights of the holders of the capital securities called for
redemption will cease, except for the right to receive distributions payable
prior to the redemption date and the redemption amount.
If any redemption date is not a business day, the redemption amount will be
payable on the next business day, without any interest or other payment in
respect of any such delay. However, if the next business day is in the next
calendar year, the redemption amount will be payable on the preceding business
day.
If payment of the redemption amount for any capital securities called for
redemption is not paid because the payment of the redemption price on the junior
subordinated debentures is not made, interest on the junior subordinated
debentures will continue to accrue, and, as a result, distributions on the
capital securities will continue to accumulate from the originally scheduled
redemption date to the actual date of payment. In this case, the actual payment
date will be the redemption date for purposes of calculating the redemption
amount.
In addition, we may and our affiliates may, at any time, purchase
outstanding capital securities by tender, in the open market or by private
agreement.
OPTIONAL LIQUIDATION OF PROVIDENT CAPITAL TRUST III AND DISTRIBUTION OF JUNIOR
SUBORDINATED DEBENTURES
We may dissolve Provident Capital Trust III at any time, and after
satisfying the creditors of Provident Capital Trust III, may cause the junior
subordinated debentures to be distributed to the holders of the capital
securities. We may not dissolve Provident Capital Trust III, however, unless we
first receive:
- the approval of the Federal Reserve System to do so, if that approval is
then required under the Federal Reserve System's capital rules; and
- an opinion of independent counsel to the effect that the distribution of
the junior subordinated debentures will not be taxable to you.
See below under the caption "Certain Terms of the Junior Subordinated
Debentures -- Distribution of Junior Subordinated Debentures" in this prospectus
supplement.
If we elect to dissolve Provident Capital Trust III, thus causing the
junior subordinated debentures to be distributed to the holders of the capital
securities, we will continue to have the right to redeem the junior subordinated
debentures in certain circumstances as described above.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions or any redemption or liquidation amounts by
Provident Capital Trust III regarding the capital securities and the common
securities will be made proportionately based on the total liquidation amounts
of the securities. However, if we are in default under the junior subordinated
debentures, Provident Capital Trust III will make no payments on the common
securities until all unpaid amounts on the capital securities have been provided
for or paid in full.
TRUST ENFORCEMENT EVENTS
An event of default under the indenture constitutes an event of default
under the declaration of trust. We refer to such an event as a "Trust
Enforcement Event". For more information on events of default under the
indenture, see "Description of Debt Securities -- Events of Default" and
"Description of Debt Securities -- Provisions Applicable to Junior Subordinated
Debt Securities -- Events of Default" in the accompanying prospectus. Upon the
occurrence and continuance of a Trust Enforcement Event, the property trustee,
as the sole holder of the junior subordinated debentures, will have the right
under the indenture to declare the principal amount of the junior subordinated
debentures due and payable.
S-16
<PAGE> 17
If the property trustee fails to enforce its rights under the junior
subordinated debentures, any holder of capital securities may, to the extent
permitted by applicable law, institute a legal proceeding against us to enforce
the property trustee's rights under the junior subordinated debentures and the
indenture without first instituting legal proceedings against the property
trustee or any other person. In addition, if a Trust Enforcement Event is due to
our failure to pay interest or principal on the junior subordinated debentures
when due, then the registered holder of capital securities may institute a
direct action on or after the due date directly against us for enforcement of
payment to that holder of the principal of or interest on the junior
subordinated debentures having a principal amount equal to the total liquidation
amount of that holder's capital securities. In connection with such a direct
action, we will have the right under the indenture to set off any payment made
to that holder by us. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the junior
subordinated debentures.
Pursuant to the declaration of trust, the holder of the common securities
will be deemed to have waived any Trust Enforcement Event regarding the common
securities until all Trust Enforcement Events regarding the capital securities
have been cured, waived or otherwise eliminated. Until all Trust Enforcement
Events regarding the capital securities have been so cured, waived or otherwise
eliminated, the property trustee will act solely on behalf of the holders of the
capital securities and only the holders of the capital securities will have the
right to direct the enforcement actions of the property trustee.
VOTING RIGHTS
Holders of capital securities will have only limited voting rights. In
particular, holders of capital securities may not elect or remove any trustee,
except when there is a default under the junior subordinated debentures. If such
a default occurs, a majority in liquidation amount of the holders of the capital
securities would be entitled to remove or appoint the property trustee and the
Delaware trustee.
REMEDIES
So long as any junior subordinated debentures are held by the property
trustee, the holders of a majority of all outstanding 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 power conferred upon the property trustee under the declaration of trust,
including the right to direct the property trustee, as holder of the junior
subordinated debentures, to:
- exercise the remedies available to it under the indenture as a holder of
the junior subordinated debentures, including the right to rescind or
annul a declaration that the principal of all the junior subordinated
indentures will be due and payable;
- consent to any amendment, modification or termination of the indenture or
the junior subordinated debentures; or
- waive any past default that is waivable under the indenture.
However, where a consent or action under the indenture would require the
consent or action of the holders of more than a majority of the total principal
amount of junior subordinated debentures affected by it, only the holders of
that greater percentage of the capital securities may direct the property
trustee to give the consent or to take such action. See "Description of Debt
Securities -- Modification" and "Description of Debt Securities -- Provisions
Applicable to Junior Subordinated Debt Securities -- Modification" in the
accompanying prospectus.
If an event of default under the indenture has occurred and is continuing,
the holders of 25% of the total liquidation amount of the capital securities may
direct the property trustee to declare the principal and interest on the junior
subordinated debentures due and payable.
MEETINGS
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 meeting at
which holders of capital securities are entitled to vote to be given
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to each holder of record of capital securities in the manner described in the
declaration of trust.
No vote or consent of the holders of capital securities will be required
for Provident Capital Trust III to redeem and cancel its capital securities in
accordance with the declaration of trust.
GLOBAL SECURITIES; BOOK-ENTRY ISSUE
We expect that the capital securities will be issued in the form of global
securities held by The Depository Trust Company as described under the captions
"Description of the Trust Preferred Securities -- Global Securities" in the
accompanying prospectus and "Book-Entry Issuance" in this prospectus supplement.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only the duties that are
specifically described in the declaration of trust and, after a Trust
Enforcement Event which has not been cured or waived, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his 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 of trust at the request of any holder of capital securities unless
it is offered reasonable security and indemnity against the costs, expenses and
liabilities that might be incurred in connection with taking that action.
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CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
We have summarized below certain terms of the junior subordinated
debentures. This summary supplements the general description of these securities
under the caption "Description of Debt Securities" and elsewhere in the
accompanying prospectus. To the extent that this summary is inconsistent with
the description in the accompanying prospectus, you should rely on the summary
below. This summary is not a complete description of all of the terms and
provisions of the junior subordinated debentures. For more information, we refer
you to the indenture and the form of the junior subordinated debentures, which
we filed as exhibits to the registration statement of which the accompanying
prospectus is a part.
The junior subordinated debentures will be issued pursuant to an indenture
to be entered into between us and The Chase Manhattan Bank, as indenture
trustee. The indenture provides for the issuance from time to time of junior
subordinated debentures in an unlimited dollar amount and an unlimited number of
series.
INTEREST RATE AND MATURITY
The junior subordinated debentures will bear interest at the annual rate of
10 1/4%, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, beginning December 31, 2000. Interest payments not
paid when due will themselves accrue additional interest at the annual rate of
10 1/4% on the amount of unpaid interest, to the extent permitted by law,
compounded quarterly. The amount of interest payable for any period will be
computed based on a 360 day year comprised of twelve 30 day months. The amount
of interest payable for any period shorter than a full quarterly period will be
computed on the basis of a 30 day month and, for periods of less than a month,
the actual number of days elapsed per 30 day month. The distribution provisions
of the capital securities correspond to the interest payment provisions for the
junior subordinated debentures because the capital securities represent
undivided beneficial ownership interests in the junior subordinated debentures.
The junior subordinated debentures do not have a sinking fund. This means
that we are not required to make any principal payments prior to maturity.
The junior subordinated debentures will mature on December 31, 2030.
RANKING
The junior subordinated debentures will be unsecured and will rank junior
and be subordinate in right of payment to all our senior debt.
As a holding company, our assets primarily consist of the equity securities
of our subsidiaries. As a result, the ability of holders of the junior
subordinated debentures to benefit from any distribution of assets of any
subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to the prior claims of present and future creditors of that
subsidiary.
The capital securities, the junior subordinated debentures and the
guarantee do not limit our or our subsidiaries' ability to incur additional
debt, including debt that ranks senior in priority of payment to the junior
subordinated debentures and the guarantee. At September 30, 2000, approximately
$248.3 million of our senior debt was outstanding. In addition, the junior
subordinated debentures will be effectively subordinated to all our
subsidiaries' existing and future obligations. At September 30, 2000, our
subsidiaries had outstanding debt and other liabilities, excluding deposits, of
approximately $3.2 billion.
REDEMPTION
We have the option to redeem some or all of the junior subordinated
debentures before their maturity. For more information, see above under the
caption "Certain Terms of the Capital Securities -- Redemption" in this
prospectus supplement.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
If the property trustee distributes the junior subordinated debentures to
the holders of the capital securities and the common securities upon the
liquidation of Provident Capital Trust III, we will cause the junior
subordinated debentures to be issued in denominations of $25 principal amount
and integral multiples thereof. We anticipate that the junior subordinated
debentures would be distributed in the form of one or more global securities and
that The Depository Trust Company, would act as depositary for the junior
subordinated debentures. The depositary arrangements for the junior
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subordinated debentures would be substantially the same as those in effect for
the capital securities.
For a description of The Depository Trust Company and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemption and other notices and other matters, see "Book-Entry Issuance" in
this prospectus supplement.
OPTION TO DEFER INTEREST PAYMENTS
We can defer interest payments on the junior subordinated debentures for up
to twenty consecutive quarterly interest payment periods if the junior
subordinated debentures are not in default. A deferral of interest payments
cannot extend, however, beyond the maturity date of the junior subordinated
debentures. During the deferral period, interest will continue to accrue on the
junior subordinated debentures, compounded quarterly, and deferred interest
payments will accrue additional interest at 10 1/4%. No interest will be due and
payable on the junior subordinated debentures until the end of the deferral
period except upon a redemption of the junior subordinated debentures during a
deferral period.
We may pay at any time all or any portion of the interest accrued to that
point during a deferral period. At the end of the deferral period or on any
redemption date, we will be obligated to pay all accrued and unpaid interest.
Once we pay all accrued and unpaid interest on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures as described above, provided that a deferral period cannot extend
beyond the maturity date of the junior subordinated debentures.
CERTAIN LIMITATIONS DURING A DEFERRAL PERIOD
During any deferral period, we will not and our subsidiaries will not be
permitted to:
- pay a dividend or make any other payment or distribution on our capital
stock;
- redeem, purchase or make a liquidation payment on any of our capital
stock;
- make an interest, principal or premium payment, or repay, repurchase or
redeem any of our debt securities that rank equal with or junior to the
junior subordinated debentures; or
- make any guarantee payment regarding any guarantee by us of debt
securities of any of our subsidiaries, if the guarantee ranks equal with
or junior to the junior subordinated debentures.
However, at any time, including during any deferral period, we will be
permitted to:
- pay dividends or distributions in additional shares of its capital stock;
- make payments under the guarantee in respect of the capital securities
and common securities;
- declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, issue stock under such a plan or redeem or
repurchase such rights; and
- purchase common stock for reissuance pursuant to an employee benefit,
dividend reinvestment or stock repurchase plan or for issuance in an
acquisition transaction that was entered into prior to the commencement
of that deferral period.
NOTICE
If the property trustee is the sole holder of the junior subordinated
debentures, then we will give Provident Capital Trust III, the regular trustees
and the property trustee notice if we decide to defer interest payments on the
junior subordinated debentures. We will give that notice one business day before
the earlier of:
- the next date distributions on the capital securities are payable; or
- the date Provident Capital Trust III is required to give notice to the
New York Stock Exchange (or any other applicable self-regulatory
organization) or to holders of the capital securities on the record date
or the date any distribution is payable, but in any event at least one
business day before the record date.
The regular trustees will give notice to the holders of capital securities
if we decide to defer interest payments on the junior subordinated debentures.
If the property trustee is not the sole holder of the junior subordinated
debentures, we will give the
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holders notice of any deferral period ten business days prior to the earlier of:
- the next interest payment date; or
- the date we are required to give notice to the New York Stock Exchange
(or any other applicable self-regulatory organization) or to holders of
the junior subordinated debentures on the record date or payment date of
any related interest payment, but in any event at least two business days
prior to the record date.
AGREEMENT BY PURCHASERS OF CERTAIN TAX TREATMENT
Each junior subordinated debenture will provide that, by acceptance of the
junior subordinated debentures, or a beneficial interest therein, the holder of
the junior subordinated debenture intends that such junior subordinated
debenture constitutes debt and agrees to treat it as debt for United States
federal, state and local tax purposes.
MISCELLANEOUS
The indenture requires us, as issuer of the junior subordinated securities,
to pay all fees and expenses related to:
- the issuance and exchange of the capital securities and the junior
subordinated debentures;
- the organization, maintenance and dissolution of Provident Capital Trust
III;
- the retention of the trustees; and
- the enforcement by the property trustee of the rights of the holders of
the capital securities.
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the capital securities
are irrevocably guaranteed by us, to the extent Provident Capital Trust III has
funds available for the payment of such distributions, as described under
"Description of the Guarantees" in the accompanying prospectus.
If we do not make payments under the junior subordinated debentures,
Provident Capital Trust III will not have sufficient funds to pay distributions
or other amounts due on the capital securities. The guarantee does not cover
payment of distributions when Provident Capital Trust III does not have
sufficient funds to pay such distributions. In that event, a holder of capital
securities may institute a legal proceeding directly against us to enforce
payment of the junior subordinated debentures to such holder in accordance with
their terms, including our right to defer interest payments.
Taken together, our obligations under the declaration of trust, the junior
subordinated debentures, the indenture and the guarantee provide a full and
unconditional guarantee of payments of distributions and other amounts due on
the capital securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest, principal and other payments are made when
due on the junior subordinated debentures, those payments will be sufficient to
cover distributions and other payments due on the capital securities because of
the following factors:
- the total principal amount of the junior subordinated debentures will be
equal to the sum of the total stated liquidation amount of the capital
securities and the common securities;
- the interest rate and payment dates on the junior subordinated debentures
will match the distribution rate and payment dates for the capital
securities;
- as borrower, we will pay, and Provident Capital Trust III will not be
obligated to pay, all costs, expenses and liabilities of Provident
Capital Trust III except Provident Capital Trust III's obligations under
the capital securities and common securities; and
- the declaration of trust further provides that Provident Capital Trust
III will engage only
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in activity that is consistent with the limited purposes of Provident
Capital Trust III.
We have the right to set-off any payment we are otherwise required to make
under the indenture with and to the extent we make a related payment under the
guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
If a Trust Enforcement Event occurs, the holders of capital securities
would rely on the enforcement by the property trustee of its rights as
registered holder of the junior subordinated debentures against us. In addition,
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 of
trust, including the right to direct the property trustee to exercise the
remedies available to it as the holder of the junior subordinated debentures.
The indenture provides that the indenture trustee will give holders of junior
subordinated debentures notice of all events of default within 30 days after
their occurrence.
If the property trustee fails to enforce its rights under the junior
subordinated debentures in respect of an event of default under the indenture
after a holder of capital securities has made a written request, such holder
may, to the extent permitted by applicable law, institute a legal proceeding
against us to enforce the property trustee's rights under the junior
subordinated debentures. In addition, if we fail to pay interest or principal on
the junior subordinated debentures, a holder of capital securities may institute
a proceeding directly against us for enforcement of payment to that holder of
the principal of or interest on junior subordinated debentures having a
principal amount equal to the total liquidation amount of that holder's capital
securities (which we refer to as a "direct action"). In connection with such a
direct action, we will have the right under the indenture to set off any payment
made to such holder by us. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the junior
subordinated debentures.
LIMITED PURPOSE OF TRUST
The capital securities evidence undivided beneficial ownership interests in
the assets of Provident Capital Trust III, and Provident Capital Trust III
exists for the sole purpose of issuing the common securities and capital
securities to us in exchange for the junior subordinated debentures. A principal
difference between the rights of a holder of capital securities and a holder of
junior subordinated debentures is that a holder of junior subordinated
debentures is entitled to receive from us the principal of and interest accrued
on junior subordinated debentures held, while a holder of capital securities is
entitled to receive distributions to the extent Provident Capital Trust III has
funds available for the payment of such distributions.
RIGHTS UPON TERMINATION
Upon any dissolution, winding-up or liquidation of Provident Capital Trust
III involving the liquidation of the junior subordinated debentures, the holders
of the capital securities will be entitled to receive, out of assets held by
Provident Capital Trust III, subject to the rights of any creditors of Provident
Capital Trust III, the liquidation distribution in cash. Upon our voluntary or
involuntary liquidation or bankruptcy, the property trustee, as holder of the
junior subordinated debentures, would be our subordinated creditor, subordinated
in right of payment to all senior debt as described in the indenture, but
entitled to receive payment in full of principal and interest before any of our
stockholders receive payments or distributions. Because we are the guarantor
under the guarantee and, under the indenture, as borrower, we have agreed to pay
for all costs, expenses and liabilities of Provident Capital Trust III (other
than Provident Capital Trust III'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 our
stockholders in the event of our liquidation or bankruptcy would be
substantially the same.
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BOOK-ENTRY ISSUANCE
We have summarized below certain terms relating to the book-entry
facilities of the depositary for the capital securities.
The capital securities will be represented by one or more global securities
that will be deposited with and registered in the name of DTC or its nominee.
This means that Provident Capital Trust III will not issue physical certificates
that represent ownership of the capital securities to the purchasers of these
securities. Rather, the capital securities will be represented by one or more
global securities. Each global security will be issued to DTC, or its nominee,
and held by or on behalf of DTC, or its nominee. DTC will keep a computerized
record of its participants (for example, a broker) whose clients have purchased
the capital securities. Each participant will then keep a record of its clients.
Unless it is exchanged in whole or in part for a certificated security, a global
security may not be transferred. However, DTC, its nominees and their successors
may transfer a global security as a whole to one another.
In the event that junior subordinated debentures are distributed to holders
of the capital securities and common securities, as described under "Certain
Terms of the Junior Subordinated Debentures -- Distribution of Junior
Subordinated Debentures" in this prospectus supplement, those junior
subordinated debentures would be represented by one or more global securities.
The book-entry and depositary arrangements for these securities would be
substantially similar to those described below for the capital securities.
RECORDS OF BENEFICIAL INTERESTS
Beneficial interests in a global security will be shown on, and transfers
of the global security will be made only through, records maintained by DTC and
its participants. DTC has provided Provident Capital Trust III and us with the
information that follows. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the United States Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the provisions of Section 17A of
the Securities Exchange Act of 1934. DTC holds securities that its participants
(which it terms its "direct participants") deposit with DTC. DTC also records
the settlements among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records for
direct participants' accounts. This eliminates the need to exchange certificates
in definitive form. Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on file
with the SEC.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
When you purchase capital securities through the DTC system, the purchases
must be made by or through a direct participant, who will receive credit for the
capital securities on DTC's records. When you purchase the capital securities,
you will be the beneficial owner. Your ownership interest will only be recorded
on the direct (or indirect) participants' records. DTC will have no knowledge of
your individual ownership of the capital securities. DTC's records only show the
identity of the direct participants and the amount of the capital securities
held by or through them. You will not receive a written confirmation of your
purchase or sale or any periodic account statement directly from DTC. Instead
you will receive these from your direct (or indirect) participant. As a result,
the direct (or indirect) participants are responsible for keeping accurate
account of the securities holdings of their customers like you.
WIRING OF PAYMENTS
The property trustee will wire payments on the capital securities to DTC's
nominee. We, Provident Capital Trust III and the property trustee will treat
DTC's nominee as the owner of each global security for all purposes. As a
result, we, Provident Capital Trust III, the property trustee and any paying
agent will have no direct responsibility or liability to pay amounts due on the
global security to you or any other beneficial owners in the global security.
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REDEMPTION
Any redemption notices will be sent by us and Provident Capital Trust III
directly to DTC, who will, in turn, inform the direct participants (or the
indirect participants), who will then contact you as a beneficial holder. If
less than all of the capital securities are being redeemed, DTC will
proportionally allot the amount of the interest of each direct participant to be
redeemed.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amount, to credit direct participants' accounts on the payment
date based on their holding of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to direct participants whose accounts are credited
with capital securities on a record date, by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global securities, and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests. However, payments will be the
responsibility of the participants and not of DTC, the property trustee, us or
Provident Capital Trust III.
EXCHANGES
Capital securities represented by a global security will be exchangeable
for certificated securities with the same terms in authorized denominations only
if:
- DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under applicable law and a successor
depositary is not appointed by the Trust within 90 days; or
- Provident Capital Trust III decides to discontinue use of the system of
book-entry transfer through DTC (or any successor depositary).
If the book-entry only system is discontinued, the property trustee will
keep the registration books for the capital securities of Provident Capital
Trust III at its corporate office.
EUROCLEAR AND CLEARSTREAM
Links have been established among DTC, Clearstream and Euroclear, to
facilitate the initial issuance of the capital securities and cross-market
transfers of the capital securities associated with secondary market trading.
Although DTC, Clearstream and Euroclear have agreed to the procedures
provided below in order to facilitate transfers of the capital securities among
their participants, they are under no obligation to perform or continue to
perform such procedures and such procedures may be modified or discontinued at
any time. Clearstream and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositaries (which we refer
to as the "U.S. depositaries"), which in turn will hold such interests in
customers' securities accounts in the depositaries' names on the books of DTC.
When capital securities are to be transferred from the account of a DTC
participant to the account of a Clearstream participant or a Euroclear
participant, the purchaser must send instructions to Clearstream or Euroclear
through a participant at least one business day prior to settlement. Clearstream
or Euroclear, as the case may be, will instruct the relevant U.S. depositary to
receive the capital securities against payment. Payment will then be made by
such U.S. depositary to the DTC participant's account against delivery of the
capital securities. After settlement has been completed, the capital securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Clearstream participant's or
Euroclear participant's account. Credit for the capital securities will appear
on the next day (in European time).
Because the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending capital securities to
the relevant U.S. depositary for the benefit of Clearstream participants or
Euroclear participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC participant, a cross-market transaction
will settle no differently than a trade between two DTC participants.
Due to time zone differences in their favor, Clearstream participants or
Euroclear participants may employ their customary procedures for transactions in
which capital securities are to be transferred by the respective clearing system
through the relevant U.S. depositary to another DTC participant.
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The seller must send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. In these cases,
Clearstream or Euroclear will instruct its U.S. depositary to credit the capital
securities to the DTC participant's account against payment. The payment will
then be reflected in the account of the Clearstream participant or Euroclear
participant the following day, and receipt of the cash proceeds in the
Clearstream participant's or Euroclear participant's account will be back-valued
to the value date (which would be the preceding day, when settlement occurs in
New York). If the Clearstream participant or Euroclear participant has a line of
credit with its respective clearing system and elects to draw on such line of
credit in anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft charges incurred
over the one-day period. If settlement is not completed on the intended value
date (i.e., the trade fails), receipt of the cash proceeds in the Clearstream
participant's or Euroclear participant's account would instead be valued as of
the actual settlement date.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a description of the material United States federal income
tax consequences of the purchase, ownership and disposition of the capital
securities as of the date of this prospectus supplement. Where noted, it
constitutes the opinion of Keating, Muething & Klekamp, P.L.L., counsel to
Provident Financial Group, Inc. and Provident Capital Trust III.
Except where we state otherwise, this summary deals only with capital
securities held as capital assets by a holder who:
- is a United States person (as defined below); and
- purchases the capital securities upon original issuance at their original
issue price.
A "United States person" is a holder who is one of the following:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision of the
United States;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust
- that is subject to the supervision of a court within the United
States and the control of one or more United States persons; or
- that has a valid election in effect under applicable United States
Treasury regulations to be treated as a United States person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all the tax consequences that may be relevant to
holders that are subject to special tax treatment, such as:
- dealers in securities or currencies;
- financial institutions;
- tax-exempt investors;
- traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
- persons liable for alternative minimum tax;
- insurance companies;
- persons holding capital securities as part of a hedging, conversion,
integrated or constructive sale transaction; or
- persons holding capital securities as part of a straddle.
In addition, this summary does not include any description of the tax laws
of any state, local or foreign government.
This summary is based on the Internal Revenue Code of 1986, as amended
(which we refer to as the "Code"), the Treasury regulations promulgated under
the Code and administrative and judicial interpretations. These income tax laws,
regulations and interpretations, however, may change at any time. Any change
could be retroactive to the issuance date of the capital securities.
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The authorities on which this summary is based are subject to various
interpretations and the opinions of Keating, Muething & Klekamp, P.L.L. are not
binding on the Internal Revenue Service (which we refer to as the "IRS") or the
courts. Either the IRS or the courts could disagree with the explanations or
conclusions contained in this summary. Nevertheless, Keating, Muething &
Klekamp, P.L.L. has advised us that they believe that the opinions expressed in
this summary, if challenged, would be sustained by a court with jurisdiction in
a properly presented case.
You should consult your own tax advisor regarding the tax consequences to
you of the purchase, ownership and disposition of the capital securities,
including the tax consequences under state, local, foreign and other tax laws.
For a discussion of the possible redemption of the capital securities upon the
occurrence of a tax event, see "Certain Terms of the Capital
Securities -- Special Event Redemption" in this prospectus supplement.
CLASSIFICATION OF PROVIDENT CAPITAL TRUST III
In connection with the issuance of the capital securities, Keating,
Muething & Klekamp, P.L.L. is of the opinion that under current law and assuming
full compliance with the terms of the declaration of trust, and based upon
certain facts and assumptions contained in such opinion, Provident Capital Trust
III will be classified as a grantor trust for United States federal income tax
purposes and not as an association taxable as a corporation. As a result, for
United States federal income tax purposes, you generally will be treated as
owning an undivided beneficial ownership interest in the junior subordinated
debentures. Thus, you will be required to include in your gross income your
proportionate share of the interest income or original issue discount that is
paid or accrued on the junior subordinated debentures. See below under the
caption "-- Interest Income and Original Issue Discount" in this section.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Provident Financial Group, Inc., Provident Capital Trust III and you (by
your acceptance of a beneficial ownership interest in a capital security) agree
to treat the junior subordinated debentures as indebtedness for all United
States tax purposes. In connection with the issuance of the junior subordinated
debentures, Keating, Muething & Klekamp, P.L.L. is of the opinion that, under
current law and based on certain representations, facts and assumptions set
forth in such opinion, the junior subordinated debentures will be classified as
indebtedness for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
We anticipate that the junior subordinated debentures will not be issued
with an issue price that is less than their stated redemption price at maturity.
In this case, subject to the discussion below, the junior subordinated
debentures will not be subject to the special original issue discount (which we
refer to as "OID") rules, at least upon initial issuance, so that you will
generally be taxed on the stated interest on the junior subordinated debentures
as ordinary income at the time it is paid or accrued in accordance with your
regular method of tax accounting.
If, however, we exercise our right to defer payments of interest on the
junior subordinated debentures, the junior subordinated debentures will become
OID instruments at such time. In such case, you will be subject to the special
OID rules described below. Once the junior subordinated debentures become OID
instruments, they will be taxed as OID instruments for as long as they remain
outstanding.
Under the OID economic accrual rules, the following occur:
- regardless of your method of accounting, you would accrue an amount of
interest income each year that approximates the stated interest payments
called for under the terms of the junior subordinated debentures using
the constant-yield-to-maturity method of accrual described in section
1272 of the Code;
- the actual cash payments of interest you receive on the junior
subordinated debentures would not be reported separately as taxable
income;
- any amount of OID included in your gross income (whether or not during a
deferral period) with respect to the capital securities would increase
your tax basis in such capital securities; and
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- the amount of distributions you receive in respect of such accrued OID
would reduce your tax basis in such capital securities.
The Treasury regulations dealing with OID and the deferral of interest
payments have not yet been addressed in any rulings or other interpretations by
the IRS. It is possible that the IRS could assert that the junior subordinated
debentures were issued initially with OID. If the IRS were successful,
regardless of whether we exercise our option to defer payments of interest on
such junior subordinated debentures, you would be subject to the special OID
rules described above.
Because the junior subordinated debentures are debt for tax purposes, you
will not be entitled to a dividends-received deduction with respect to any
income you recognize on the capital securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF
PROVIDENT CAPITAL TRUST III
As described under the caption "Certain Terms of the Capital
Securities -- Optional Liquidation of Provident Capital Trust III and
Distribution of Junior Subordinated Debentures" in this prospectus supplement,
the junior subordinated debentures held by Provident Capital Trust III may be
distributed to you in exchange for your capital securities if Provident Capital
Trust III is liquidated before the maturity of the junior subordinated
debentures, as long as it first receives:
- the approval of the Federal Reserve System to do so, if that approval is
then required under the Federal Reserve System's capital rules; and
- an opinion of an independent counsel to the effect that the distribution
of the junior subordinated debentures will not be taxable to you.
Under current law, except as described below, this type of distribution would
not be taxable.
Upon such a distribution, you will receive your proportionate share of the
junior subordinated debentures previously held indirectly through Provident
Capital Trust III. Your holding period and total tax basis in the junior
subordinated debentures will equal the holding period and total tax basis that
you had in your capital securities before the distribution.
If you receive junior subordinated debentures in exchange for your capital
securities, you would accrue interest in respect of the junior subordinated
debentures received from Provident Capital Trust III in the manner described
above under the caption " -- Interest Income and Original Issue Discount" in
this prospectus supplement.
In certain circumstances described above under the captions "Certain Terms
of the Capital Securities -- Special Event Redemption" and " -- Redemption" in
this prospectus supplement, we may redeem the junior subordinated debentures and
distribute cash in liquidation of Provident Capital Trust III. This distribution
of cash would be taxable as described below under " -- Sales of Capital
Securities or Redemption of Junior Subordinated Debentures" in this section.
SALES OF CAPITAL SECURITIES OR REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES
If you sell your capital securities or receive cash upon redemption of the
junior subordinated debentures, you will recognize gain or loss equal to the
difference between:
- the amount realized on the sale or redemption of the capital securities
or junior subordinated debentures (less an amount equal to any accrued
but unpaid qualified stated interest that you did not previously include
in income, which will be taxable as such); and
- your adjusted tax basis in your capital securities or junior subordinated
debentures sold or redeemed.
Your gain or loss will be a capital gain or loss, provided that you held
the capital securities as a capital asset. The gain or loss will generally be a
long-term capital gain or loss if you have held your capital securities for more
than one year. Long-term capital gains of individuals derived with respect to
capital assets held for more than one year are currently subject to a maximum
rate of 20%. The deductibility of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
The following discussion only applies to you if you are not a United States
person. As discussed above, the capital securities will be treated by the
parties as evidence of an undivided beneficial
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ownership interests in the junior subordinated debentures. See above under the
caption " -- Classification of Provident Capital Trust III" in this section.
U.S. FEDERAL WITHHOLDING TAX
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest (including OID) on the capital securities (or the junior
subordinated debentures) provided that:
- you do not actually (or constructively) own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and the Treasury Regulations;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on the capital securities
(or the junior subordinated debentures) is described in section
881(c)(3)(A) of the Code; and
- (a) you provide your name and address on an IRS Form W-8BEN (or successor
form), and certify, under penalty of perjury, that you are not a United
States person, or (b) if you hold your capital securities through certain
foreign intermediaries, you must satisfy the certification requirements
of applicable United States Treasury regulations.
For payments made before December 31, 2000, the certification requirements
described above differ slightly under current United States Treasury regulations
that expire at the end of this year.
If you cannot satisfy the requirements described above, payments of
premium, if any, and interest (including OID) made to you will be subject to the
30% U.S. federal withholding tax, unless you provide us with a properly executed
(1) IRS Form W-8BEN (or successor form) claiming an exemption from, or reduction
in the rate of, withholding under the benefit of a tax treaty or (2) IRS Form
W-8ECI (or successor form) stating that interest paid on the capital securities
(or the junior subordinated debentures) is not subject to withholding tax
because it is effectively connected with your conduct of a trade or business in
the United States.
The 30% U.S. federal withholding tax will not apply to any gain or income
that you realize on the sale, exchange, retirement or other disposition of the
capital securities or junior subordinated debentures.
U.S. FEDERAL INCOME TAX
If you are engaged in a trade or business in the United States and interest
on the capital securities (or the junior subordinated debentures) is effectively
connected with the conduct of that trade or business, you will be subject to
U.S. federal income tax on that interest on a net income basis (although exempt
from the 30% withholding tax) in the same manner as if you were a United States
person as defined under the Code. In addition, if you are a foreign corporation,
you may be subject to a branch profits tax equal to 30% (or lower applicable
treaty rate) of your earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with the conduct by you of a trade
or business in the United States. For this purpose, interest on the capital
securities (or the junior subordinated debentures) will be included in earnings
and profits.
Any gain or income realized on the disposition of a capital security (or a
junior subordinated debenture) generally will not be subject to U.S. federal
income tax unless (1) that gain or income is effectively connected with the
conduct of a trade or business by you in the United States, or (2) you are an
individual who is present in the United States for 183 days or more in the
taxable year of that disposition, and certain other conditions are met.
U.S. FEDERAL ESTATE TAX
Your estate will not be subject to U.S. federal estate tax on the capital
securities (or the junior subordinated debentures) beneficially owned by you at
the time of your death, provided that (1) you do not own 10% or more of the
total combined voting power of all classes of our voting stock (within the
meaning of the Code and the Treasury Regulations) and (2) interest on those
capital securities (or the junior subordinated debentures) would not have been,
if received at the time of your death, effectively connected with the conduct by
you of a trade or business in the United States.
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<PAGE> 29
INFORMATION REPORTING AND BACKUP WITHHOLDING
UNITED STATES HOLDERS
In general, information reporting requirements will apply to payments of
income on the capital securities and to the proceeds of the sale of capital
securities made to you (unless you are an exempt recipient such as a
corporation). A 31% backup withholding tax will apply to such payments if you
fail to provide a taxpayer identification number, a certification of exempt
status, or fail to report in full interest income.
NON-UNITED STATES HOLDERS
In general, no information reporting or backup withholding will be required
regarding payments of income on the capital securities that we make to you
provided that we do not have actual knowledge that you are a United States
person and we have received from you the statement described above under "United
States Federal Withholding Tax."
In addition, no information reporting or backup withholding will be
required regarding the proceeds of the sale of capital securities made within
the United States or conducted through certain United States financial
intermediaries if the payor receives the statement described above and does not
have actual knowledge that you are a United States person or you otherwise
establish an exemption.
Treasury Regulations were recently issued that generally modify the
information reporting and backup withholding rules applicable to certain
payments made after December 31, 2000. In general, the new Treasury Regulations
would not significantly alter the present rules discussed above, except in
certain special situations.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
ERISA CONSIDERATIONS
Each fiduciary of an employee benefit plan subject to Title I of ERISA, a
plan described in Section 4975 of the Code, including an individual retirement
arrangement or a Keogh plan, a plan subject to provisions under applicable
federal, state, local, non-U.S. or other laws or regulations that are similar to
the provisions of Title I of ERISA or Section 4975 of the Code ("Similar Laws"),
and any entity whose underlying assets include "plan assets" by reason of any
such employee benefit plan's or plan's investment in such entity (each of which
we refer to as a "Plan") should consider the fiduciary responsibility and
prohibited transaction provisions of ERISA, applicable Similar Laws and Section
4975 of the Code in the context of the Plan's particular circumstances before
authorizing an investment in the capital securities. Accordingly, such a
fiduciary should consider, among other factors, that each Plan investing in the
capital securities will be deemed to have represented that the Plan's purchase
of the capital securities is covered by one or more prohibited transaction
exemptions. Plan fiduciaries should also consider whether the Plan's investment
in the capital securities would satisfy the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing their Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") regarding such a Plan. A violation of these "prohibited
transaction" rules may result in an excise tax, penalty or other liabilities
under ERISA and/or Section 4975 of the Code for such persons or, in the case of
an individual retirement account, the occurrence of a prohibited transaction
involving the individual who established the individual retirement account, or
his or her beneficiaries, would cause the individual retirement account to lose
its tax-exempt status, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA or Section 4975(g)(2) of the Code) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation (which we refer to as the "Plan Assets Regulation")
issued by the United States Department of Labor (the "DOL"), the assets of
Provident Capital Trust III would be
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deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if assets of a Plan were used to acquire an equity interest in
Provident Capital Trust III and no exception were applicable under the Plan
Assets Regulation. An "equity interest" is defined under the Plan Assets
Regulation as any interest in an entity other than an instrument which is
treated as debt under applicable local law and which has no substantial equity
features. Under one such exception contained in the Plan Assets Regulation, the
assets of Provident Capital Trust III would not be deemed to be "plan assets" of
investing Plans if, immediately after the most recent acquisition of any equity
interest in Provident Capital Trust III, less than 25% of the value of each
class of equity interests in Provident Capital Trust III were held by Plans,
other employee benefit plans not subject to ERISA or Section 4975 of the Code
(such as governmental, church or foreign plans), and entities holding assets
deemed to be "plan assets" of any Plan (which we refer to collectively, as
"Benefit Plan Investors"). No assurance can be given that the value of the
capital securities held by Benefit Plan Investors will be less than 25% of the
total value of such capital securities at the completion of the initial offering
of the capital securities or thereafter, and no monitoring or other measures
will be taken regarding the satisfaction of the conditions to this exception.
All of the common securities will be purchased and held by Provident.
It is possible that the capital securities may qualify as "publicly-offered
securities" under the Plan Assets Regulation. "Publicly-offered securities"
within the meaning of the Plan Assets Regulation are:
- widely held (i.e., owned by more than 100 investors independent of
Provident Financial Group, Inc. and of each other);
- freely transferable; and
- sold as part of an offering pursuant to an effective registration
statement under the Securities Act of 1933 and then timely registered
under Section 12(b) or 12(g) of the Securities Exchange Act of 1934.
If the capital securities are "publicly offered securities", the underlying
assets of Provident Capital Trust III would not be deemed to be "plan assets" of
investing Plans. The underwriters expect:
- that the capital securities will be held by at least 100 independent
investors at the conclusion of the offering of the capital securities;
- that there will be no restrictions imposed on the transfer of the capital
securities; and
- that the capital securities will be sold as part of an offering pursuant
to an effective registration statement under the Securities Act of 1933
and then will be timely registered under the Securities Exchange Act of
1934.
There can be no assurance that this or any of the other exceptions set
forth in the Plan Assets Regulation will apply to the capital securities, and,
as a result, under the terms of the Plan Assets Regulation, an investing Plan's
assets could be considered to include an undivided interest in the assets held
by Provident Capital Trust III (including the junior subordinated debentures),
and transactions by Provident Capital Trust III could be subject to the
fiduciary responsibility provision of Title I of ERISA.
Regardless of whether the assets of Provident Capital Trust III are deemed
to be "plan assets" of Plans investing in Provident Capital Trust III, as
discussed above, the acquisition and holding of the capital securities with
"plan assets" of a Plan could itself result in a prohibited transaction. The DOL
has issued five prohibited transaction class exemptions ("PTCEs") that may
provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase and/or holding of the capital securities by a Plan.
These class exemptions are:
- PTCE 96-23 (for certain transactions determined by "in-house asset
managers");
- PTCE 95-60 (for certain transactions involving insurance company general
accounts);
- PTCE 91-38 (for certain transactions involving bank collective investment
funds);
- PTCE 90-1 (for certain transactions involving insurance company pooled
separate accounts); and
- PTCE 84-14 (for certain transactions determined by independent "qualified
professional asset managers").
Such class exemptions may not, however, apply to all of the transactions
that could be
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<PAGE> 31
deemed prohibited transactions in connection with a Plan's investment in the
capital securities.
Any purchaser of the capital securities that is an insurance company using
assets of its general account should note that, based on the reasoning of the
United States Supreme Court set forth in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of Plans investing in
such general account (e.g., through the purchase of an annuity contract).
Any insurance company considering the use of its general account assets to
purchase capital securities should consult with its counsel concerning matters
affecting its purchase decision.
Because of ERISA's prohibitions and those of Section 4975 of the Code,
discussed above, the capital securities, or any interest therein, should not be
purchased or held by any Plan or any person investing "plan assets" of any Plan,
unless such purchase and holding is covered by the exemptive relief available
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or
individual exemption). Accordingly, each purchaser or holder of the capital
securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that either:
- it is not a Plan and no part of the assets to be used by it to purchase
and/or hold such capital securities or any interest therein constitutes
"plan assets" of any Plan; or
- it is itself a Plan, or is purchasing or holding the capital securities
or an interest therein on behalf of or with "plan assets" of one or more
Plans, and each such purchase and holding of such securities is
permissible under all applicable Similar Laws, and either (i) satisfies
the requirements of, and is entitled to full exemptive relief under, PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or
individual exemption) or (ii) will not result in a prohibited transaction
under ERISA or the Code.
Although, as noted above, governmental plans are not subject to ERISA,
including the prohibited transaction provisions thereof, or of Section 4975 of
the Code, Similar Laws governing the investment and management of the assets of
such plans may contain fiduciary and prohibited transaction provisions similar
to those under ERISA and Section 4975 of the Code discussed above. Similarly,
fiduciaries of other plans not subject to ERISA may be subject to other legal
restrictions under applicable Similar Laws. Accordingly, fiduciaries of
governmental plans or other plans not subject to ERISA, in consultation with
their advisors, should consider the impact of their respective Similar Laws on
their investment in capital securities, and the considerations discussed above,
to the extent applicable.
Due to the complexity of the fiduciary responsibility and prohibited
transaction rules described above and the penalties that may be imposed upon
persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the capital
securities on behalf of or with "plan assets" of any Plan consult with their
counsel, prior to any such purchase, regarding the potential applicability of
ERISA, Section 4975 of the Code and any Similar Laws to such investment and
whether any exemption would be applicable and determine on their own whether all
conditions of such exemption or exemptions have been satisfied such that the
acquisition and holding of capital securities by the purchaser Plan are entitled
to full exemption relief thereunder.
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<PAGE> 32
UNDERWRITING
Based on the terms and conditions of an underwriting agreement, we have
agreed to sell to each of the underwriters named below and each of the
underwriters has severally agreed to purchase from us the liquidation amount of
capital securities set forth opposite its name below:
<TABLE>
<CAPTION>
LIQUIDATION
AMOUNT OF
CAPITAL
NAME SECURITIES
---- -----------
<S> <C>
Lehman Brothers Inc. ....................................... $ 2,578,125
A.G. Edward & Sons, Inc. ................................... 2,546,875
Prudential Securities Incorporated.......................... 2,546,875
McDonald Investments Inc. .................................. 859,375
J.P. Morgan Securities Inc. ................................ 859,375
Stephens Inc. .............................................. 859,375
ABN AMRO Incorporated....................................... 156,250
Bear, Stearns & Co. Inc. ................................... 156,250
Dain Rauscher Incorporated ................................. 156,250
Deutsche Bank Securities Inc. .............................. 156,250
First Union Securities, Inc. ............................... 156,250
Legg Mason Wood Walker, Inc. ............................... 156,250
U.S. Bancorp Piper Jaffray Inc. ............................ 156,250
Wachovia Securities, Inc. .................................. 156,250
Advest, Inc. ............................................... 62,500
Robert W. Baird & Co. Incorporated.......................... 62,500
BB&T Capital Markets, a Division of Scott & Stringfellow.... 62,500
Davenport & Co. LLC......................................... 62,500
Fahnestock & Co. Inc. ...................................... 62,500
Gibraltar Securities ....................................... 62,500
Gruntal & Co., L.L.C. ...................................... 62,500
J.J.B. Hilliard, W.L. Lyons, Inc. .......................... 62,500
Janney Montgomery Scott LLC................................. 62,500
JW Charles Securities, Inc. ................................ 62,500
Mesirow Financial, Inc. .................................... 62,500
Morgan Keegan & Company, Inc. .............................. 62,500
Parker/Hunter Incorporated.................................. 62,500
The Robinson-Humphrey Company, LLC.......................... 62,500
TD Securities (USA) Inc. ................................... 62,500
Tucker Anthony Incorporated................................. 62,500
-----------
Total............................................. $12,500,000
===========
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters to purchase the capital securities are subject to the satisfaction
of certain conditions, including the approval of certain legal matters by their
counsel. The underwriters are obligated to purchase all of the capital
securities if they purchase any of them.
We and Provident Capital Trust III have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute regarding payments which the
underwriters may be required to make.
COMMISSIONS AND DISCOUNTS
The underwriters will offer the capital securities directly to the public
at $25 per capital security plus accrued and unpaid distributions from November
13, 2000. The underwriters may also offer the capital securities to certain
selected securities dealers at the above mentioned offering price less a
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concession of $0.50 per capital security. The underwriters may allow, and such
dealers may reallow, a discount not in excess of $0.35 per capital security to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
We have agreed to pay to the underwriters an underwriting commission of
$0.7875 per capital security.
We will pay certain other fees and expenses, which we expect to be
approximately $100,000, in connection with the offer and sale of the capital
securities.
NEW YORK STOCK EXCHANGE LISTING
Before this offering, there has been no established public trading market
for the capital securities. The capital securities have been approved for
listing on the New York Stock Exchange. In order to meet all of the requirements
for listing the capital securities on the New York Stock Exchange, the
underwriters have agreed to sell the capital securities, including the capital
securities of this series previously sold, to a minimum of 400 beneficial
holders. The underwriters have advised us that they intend to make a market in
the capital securities prior to the commencement of trading on the New York
Stock Exchange. The underwriters are not, however, obligated to do so and may
discontinue market making at any time without notice. We cannot assure you that
an active trading market will be available for the capital securities, whether
or not they are listed on the New York Stock Exchange, or that you will be able
to sell capital securities at the price you originally paid for them.
NO SALES OF SIMILAR SECURITIES
We and Provident Capital Trust III have agreed that for 30 business days
after the date of this prospectus supplement not directly or indirectly to
offer, sell, offer to sell, or grant any option for the sale of any capital
securities or junior subordinated debentures or any securities convertible or
exchangeable into, or exercisable for, capital securities or junior subordinated
debentures, or any debt securities substantially similar to junior subordinated
debentures or any equity securities substantially similar to the capital
securities, except for the capital securities and junior subordinated debentures
described in this prospectus supplement, without the prior written consent of
the underwriters.
CONFIRMATION TO DISCRETIONARY ACCOUNTS NOT PERMITTED
The underwriters may not confirm sales to any accounts over which they
exercise discretionary authority without the prior approval of the customer.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the sale of the capital securities, SEC rules permit the
underwriters to engage in transactions that stabilize the price of the capital
securities. These transactions may include purchases for the purpose of fixing
or maintaining the price of the capital securities. The underwriters may create
a short position in the capital securities in connection with the offering. That
means they may sell a larger number of the capital securities than is shown on
the cover page of this prospectus supplement. If they create a short position,
the underwriters may purchase capital securities in the open market to reduce
the short position. If the underwriters purchase the capital securities to
stabilize the price or to reduce their short position, the price of the capital
securities could be higher than it might be if they had not made such purchases.
The underwriters make no representation or prediction about any effect that
these purchases may have on the price of the capital securities. The
underwriters may suspend any of these activities at any time.
The underwriters may also impose a penalty bid on certain dealers and
selling group members. This means that if the representatives of the
underwriters purchase capital securities in the open market to reduce the
underwriters' short position or to stabilize the price of the capital
securities, they may reclaim the amount of the selling concession from the
underwriters or selling group members who sold those securities as part of this
offering.
AFFILIATIONS
The underwriters and their affiliates have in the past and expect that they
may in the future engage in transactions with and perform services for us and
our subsidiaries in the ordinary course of their businesses, for which they
received, and in the future expect that they will receive, customary fees.
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LEGAL OPINIONS
Certain matters of Delaware law relating to Provident Capital Trust III
will be passed upon for Provident Capital Trust III and Provident Financial
Group, Inc. by Richards, Layton & Finger, P.A., Wilmington, Delaware. The due
authorization, execution and delivery of the junior subordinated debentures and
the validity of the junior subordinated debentures and the guarantees will be
passed upon for Provident Financial Group, Inc. and Provident Capital Trust III
by Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio. The validity of the
junior subordinated debentures and the guarantees will be passed upon for the
underwriters by Simpson Thacher & Bartlett, New York, New York. Simpson Thacher
& Bartlett will rely as to matters of Ohio law on the opinion of Keating,
Muething & Klekamp, P.L.L., and Keating, Muething & Klekamp, P.L.L. will rely as
to matters of New York law on the opinion of Simpson Thacher & Bartlett. Certain
United States federal income taxation matters also will be passed upon for
Provident Financial Group, Inc. and Provident Capital Trust III by Keating,
Muething & Klekamp, P.L.L. At September 30, 2000, attorneys at Keating, Muething
& Klekamp, P.L.L. participating in this engagement owned 130,091 shares of
Provident Financial Group, Inc.'s common stock.
EXPERTS
Our consolidated financial statements as of December 31, 1999 and 1998, and
for each of the three years in the period ended December 31, 1999 incorporated
in this prospectus by reference from our Annual Report on Form 10-K for the year
ended December 31, 1999 have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports, which are incorporated in reliance upon
the reports of such firm as experts in accounting and auditing.
Our supplemental consolidated financial statements as of December 31, 1999
and 1998, and for each of the years in the three-year period ended December 31,
1999, included in our Current Report on Form 8-K dated October 30, 2000, have
been audited by Ernst & Young LLP, independent public accountants, as set forth
in their report thereon, included therein and incorporated herein by reference
in reliance upon such reports given upon the authority of Ernst & Young LLP as
experts in accounting and auditing.
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<PAGE> 35
PROSPECTUS
$500,000,000
PROVIDENT FINANCIAL GROUP, INC.
MAY OFFER --
------------------------
COMMON STOCK
COMMON STOCK WARRANTS
PREFERRED STOCK
PREFERRED STOCK WARRANTS
DEPOSITARY SHARES
DEBT SECURITIES
DEBT WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
WARRANT UNITS
THE TRUSTS
MAY OFFER --
TRUST PREFERRED SECURITIES
WARRANT UNITS
------------------------
We and, in the case of an offering of trust preferred securities, the
applicable Trust, will provide the specific terms of these securities in
supplements to this prospectus. We and the Trusts may also offer units
consisting of combinations of these securities. You should read this prospectus
and the accompanying prospectus supplement carefully before you invest.
We or the Trusts may use this prospectus to offer up to $500,000,000 of
securities. Our common stock is traded on the NASDAQ National Market under the
symbol "PFGI."
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
February 4, 2000
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Provident Financial Group, Inc.............................. 3
The Securities We May Offer................................. 3
The Trusts.................................................. 4
The Securities the Trusts May Offer......................... 4
Where You Can Find More Information......................... 5
Forward-Looking Statements.................................. 6
Use of Proceeds............................................. 6
Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... 7
Description of Common Stock................................. 7
Description of Preferred Stock.............................. 7
Description of Depositary Shares............................ 9
Description of Debt Securities.............................. 12
Description of Warrants..................................... 19
Warrant Units............................................... 21
Stock Purchase Contracts and Stock Purchase Units........... 21
Description of the Trust Preferred Securities............... 22
Description of the Guarantees............................... 28
Description of Capital Securities........................... 31
Certain Tax Considerations.................................. 32
Plan of Distribution........................................ 32
ERISA Considerations........................................ 34
Legal Matters............................................... 34
Experts..................................................... 34
</TABLE>
2
<PAGE> 37
PROSPECTUS SUMMARY
This is a brief overview of key aspects about us and the Trusts and all
material terms of the offered securities that are known as of the date of this
prospectus. For more complete information on us and the Trusts and a more
complete understanding of the terms of the offered securities, before making
your investment decision, you should carefully read:
- this prospectus, which explains the general terms of the securities that
we and the Trusts may offer;
- the accompanying prospectus supplement, which (1) explains the specific
terms of the securities being offered and (2) updates and changes
information in this prospectus; and
- the documents referred to in the section of this prospectus entitled,
"Where You Can Find More Information" on page 5 for information about
Provident Financial Group, including our financial statements.
PROVIDENT FINANCIAL GROUP, INC.
We are a Cincinnati-based commercial banking and financial services company
with full service banking operations in Ohio, northern Kentucky and southwestern
Florida. At September 30, 1999, we had total assets of $8.991 billion, loans and
leases of $5.894 billion, deposits of $6.330 billion and shareholders' equity of
$741.8 million. We also service an additional $5.287 billion of loans and
leases.
We have expanded our franchise in recent years through internal growth and
acquisitions. Business units that have been expanded to operate at a national
level include Provident Capital Corp (a middle-market structured finance
products division), Provident Commercial Group and Information Leasing
Corporation (commercial leasing divisions) and Provident Consumer Financial
Services (a mortgage loan division). We have also expanded by acquisitions of
Florida Gulfcoast Bancorp, Inc. located in Sarasota, Florida and South
Hillsborough Community Bank located in Hillsborough County, Florida.
Effective December 3, 1999, we completed our acquisition of OHSL Financial
Corp. and its subsidiary Oak Hills Savings & Loan Company, F.A. We expect to
complete the acquisition of Fidelity Financial of Ohio, Inc. during the first
quarter of 2000.
We conduct our banking operations through The Provident Bank and Provident
Bank of Florida.
At September 30, 1999, we and our subsidiaries employed approximately 2,600
full-time-equivalent employees.
Our principal executive offices are located at One East Fourth Street,
Cincinnati, Ohio 45202. Our Investors Relations telephone number is (513)
345-7102 or (800) 851-9521.
THE SECURITIES WE MAY OFFER
We may use this prospectus to offer up to $500,000,000 of:
- common stock;
- common stock warrants;
- preferred stock;
- preferred stock warrants;
- depositary shares;
- debt securities;
- debt warrants;
- stock purchase contracts;
3
<PAGE> 38
- stock purchase units; and
- units consisting of combinations of these securities, which may include
trust preferred securities, that may be offered by the Trusts.
A prospectus supplement will describe the specific types, amounts, prices,
and detailed terms of any of these offered securities.
THE TRUSTS
Each Trust is a statutory business trust formed under Delaware law pursuant
to a separate Declaration of Trust (a "Declaration") executed by us, as sponsor
for such Trust, and the trustees of such Trust and the filing of a Certificate
of Trust with the Delaware Secretary of State.
Unless an accompanying prospectus supplement provides otherwise, each Trust
exists for the sole purposes of:
- issuing the trust preferred securities and trust common securities in
exchange for a specific series of our subordinated debt securities; and
- engaging in only those other activities necessary or incidental thereto.
We will own all of the common securities of the Trusts. The trust common
securities will rank on a parity, and payments will be made thereon pro rata,
with the trust preferred securities. However, if an event of default under the
applicable Declaration occurs, the rights of the holders of the applicable trust
common securities to payment of distributions upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the applicable
trust preferred securities.
We will acquire trust common securities having an aggregate liquidation
amount equal to a minimum of 3% of the total capital of each Trust. Each Trust
will have a term of at least 20 but not more than 50 years, but may dissolve
earlier. Each Trust will be operated by the trustees. The holder of the trust
common securities will be entitled to appoint or replace any of, or increase or
reduce the number of, the Trustees of each Trust. The duties and obligations of
the Trustees shall be governed by the Declaration of such Trust. At least one of
the trustees of each Trust will be a person who is an employee or officer of
ours or who is affiliated with us (a "Regular Trustee"). One trustee of each
Trust will be a financial institution that is not affiliated with us and which
shall act as property trustee and as indenture trustee for the purposes of the
Trust Indenture Act of 1939 pursuant to the terms set forth in a prospectus
supplement. In addition, unless the property trustee maintains a principal place
of business in Delaware and otherwise meets the requirements of applicable law,
one trustee of each Trust will be a legal entity having a principal place of
business in, or an individual resident of, Delaware.
As borrower under the indenture, we will pay all fees and expenses related
to each Trust and the offering of the trust preferred securities. Unless
otherwise set forth in the prospectus supplement, the property trustee will be
The Chase Manhattan Bank, and the Delaware trustee will be Chase Manhattan Bank
Delaware. The executive officer of each Trust is c/o Provident Financial Group,
Inc., One East Fourth Street, Cincinnati, Ohio 45202, Attention: General
Counsel, and its telephone number is (513) 579-2861.
THE SECURITIES THE TRUSTS MAY OFFER
Each Trust may use this prospectus to offer up to $500,000,000 of trust
preferred securities. Each Trust may also offer units consisting of trust
preferred securities and securities that we will issue.
A prospectus supplement will describe the specific types, amounts, prices
and detailed terms of any of the trust preferred securities and units consisting
of trust preferred securities and securities that we issue.
4
<PAGE> 39
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. You can also request copies of the documents, upon payment of
a duplicating fee, by writing the Public Reference Section of the SEC. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. These SEC filings are also available to the public from the SEC's web
site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. Information that we file later with the
SEC will automatically update and supersede, as relevant, information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus or the prospectus supplement.
We incorporate by reference the documents listed below and any future filings
made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 before the later of (1) the completion of the offering of
the securities described in this prospectus and (2) the date we stop offering
securities pursuant to this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
- Current Reports on Form 8-K dated January 28, 1999, June 23, 1999 and
November 24, 1999; and
- The description of our common stock contained in SEC Registration
Statement No. 333-32423.
You may request a copy of these filings, in most cases without exhibits, at
no cost, by writing or telephoning us at the following address:
Provident Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Mark E. Magee, Esq.
(513) 579-2000
------------------------
This prospectus does not contain or incorporate by reference any separate
financial statements of the Trusts. We do not consider such financial statements
material to holders of trust preferred securities because:
- all of the voting securities of each Trust will be owned, directly or
indirectly, by us, a reporting company under the Exchange Act;
- no Trust has independent operations but rather each exists only to issue
securities representing undivided beneficial interests in the assets of
such Trust and investing the proceeds thereof in debt securities; and
- the obligations of the Trusts under the trust preferred securities are
fully and unconditionally guaranteed by us to the extent set forth in
this prospectus.
You should rely only on the information provided in this prospectus and the
prospectus supplement, as well as the information incorporated by reference. We
have not authorized anyone to provide you with different information. We are not
making an offer of these securities in any jurisdiction where the offer is not
permitted. You should not assume that the information in this prospectus, the
prospectus supplement or any documents incorporated by reference is accurate as
of any date other than the date of the applicable document.
5
<PAGE> 40
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
from civil litigation for certain forward-looking statements. Forward-looking
statements include those preceded by, followed by or that otherwise include the
statements "should", "believe", "expect", "anticipate", "intend", "may", "will",
"continue", "estimate" and other expressions that indicate future events and
trends. Although we believe that in making such statements their expectations
are based on reasonable assumptions, such statements may be influenced by risks
and uncertainties which could cause actual results and trends to be materially
different from historical results or those anticipated depending on a variety of
factors. These factors include, without limitation:
- competitive pressures among depository and other financial services
companies may increase significantly;
- costs or difficulties related to the integration of the businesses that
we acquire may be greater than expected;
- changes in the interest rate environment may reduce our interest margins,
cause an increase in the prepayment rate on mortgages we hold and
securitized and other loans or reduce the demand for new loans;
- general economic or business conditions, either internationally or
nationally or in the states in which we do business, may be less
favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit;
- legislation or regulatory requirements or changes may adversely affect
the businesses in which we are engaged;
- technology-related changes may be harder to make or more expensive than
expected; and
- changes in the securities markets.
You should understand that these factors, in addition to those discussed
elsewhere in this document and in documents which have been incorporated by
reference, could affect our future results and could cause those results to be
materially different from those expressed in their forward-looking statements.
We do not undertake any obligation to update any forward looking statements to
reflect events or circumstances arising after the date of this document.
USE OF PROCEEDS
Each Trust will issue the preferred securities and common securities in
exchange for our junior subordinated debentures.
Except as otherwise described in any prospectus supplement, we will use the
net proceeds from the sale of securities for general corporate purposes, which
may include working capital, capital expenditures, repayment of existing
indebtedness, financing possible future acquisitions and providing advances to
or investments in our subsidiary banks. The amounts and timing of our
application of the proceeds will depend upon many factors, including the funding
requirements of, the availability of other funds, and the existence of
acquisition opportunities. Pending these uses, we expect to invest the net
proceeds in short-term, interest-bearing securities.
6
<PAGE> 41
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Our consolidated ratios of earnings to fixed charges and consolidated
ratios of earnings to combined fixed charges and preferred stock dividend
requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------- -----------------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest on
deposits................... 2.80x 2.55x 2.37x 2.82x 2.33x 2.55x 3.13x
Including interest on
deposits................... 1.62x 1.56x 1.50x 1.53x 1.42x 1.41x 1.53x
Earnings to Combined Fixed Charges
and Preferred Stock Dividend
Requirements:
Excluding interest on
deposits................... 2.77x 2.52x 2.35x 2.78x 2.31x 2.42x 2.82x
Including interest on
deposits................... 1.62x 1.56x 1.50x 1.52x 1.42x 1.39x 1.49x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
excluding interest on deposits, represent interest 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.
DESCRIPTION OF COMMON STOCK
We may issue, either separately or in units together with other securities,
shares of common stock. We are authorized to issue up to 110,000,000 shares of
common stock. A prospectus supplement relating to an offering of common stock,
or other securities convertible or exchangeable for, or exercisable into, common
stock, will describe the relevant terms, including the number of shares offered,
any initial offering price and market price and dividend information, as well
as, if applicable, information on other related securities. See the section of
this prospectus entitled, "Description of Capital Securities" on page 31.
DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of our preferred stock,
other than pricing and related terms disclosed in a prospectus supplement. You
should read the particular terms of any series of preferred stock that we offer
which we will describe in more detail in any prospectus supplement relating to
such series. You should also read the more detailed provisions of our articles
of incorporation and the statement with respect to shares relating to each
particular series of preferred stock for provisions that may be important to
you. The statement with respect to shares relating to each particular series of
preferred stock offered by the accompanying prospectus supplement and this
prospectus will be filed as an exhibit to a document incorporated by reference
in the registration statement. The prospectus supplement will also state whether
any of the terms summarized below do not apply to the series of preferred stock
being offered.
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<PAGE> 42
GENERAL
Our board of directors is authorized to issue up to 5,000,000 shares of
preferred stock in one or more series and to specify the following terms for
each series:
- the number of shares;
- the designation, powers, preferences and rights of the shares; and
- the qualifications, limitations or restrictions, except as otherwise
stated in the articles of incorporation.
Before issuing any series of preferred stock, our board of directors will
adopt resolutions creating and designating the series as a series of preferred
stock, and the resolutions will be filed in a statement with respect to shares
as an amendment to the articles of incorporation.
The rights of holders of the preferred stock offered may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. Our board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
Examples include issuances to obtain additional financing in connection with
acquisitions or otherwise, and issuances to our officers, directors and
employees and our subsidiaries pursuant to benefit plans or otherwise. Shares of
preferred stock that we issue may have the effect of rendering more difficult or
discouraging an acquisition of us deemed undesirable by our board of directors.
Unless the particular prospectus supplement states otherwise, holders of
each series of preferred stock will not have any preemptive or subscription
rights to acquire more of our stock.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, the shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
DIVIDENDS
Unless the particular prospectus supplement states otherwise, holders of
each series of preferred stock will be entitled to receive cash dividends, when,
as and if declared by our board of directors out of funds legally available for
dividends. The rates and dates of payment of dividends will be set forth in the
prospectus supplement relating to each series of preferred stock. Dividends will
be payable to holders of record of preferred stock as they appear on our books
or, if applicable, the records of the depositary referred to in the section of
this prospectus entitled, "Description of Depositary Shares" on page 9, on the
record dates fixed by the board of directors. Dividends on any series of
preferred stock may be cumulative or noncumulative.
We may not declare, pay or set apart for payment dividends on the preferred
stock unless full dividends on any other series of preferred stock that ranks on
an equal or senior basis have been paid or sufficient funds have been set apart
for payment for:
- all prior dividend periods of the other series of preferred stock that
pay dividends on a cumulative basis; or
- the immediately preceding dividend period of the other series of
preferred stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and any other
series of preferred stock ranking on an equal basis as to dividends will be
declared pro rata. A pro rata declaration means that the ratio of dividends
declared per share to accrued dividends per share will be the same for all such
series of preferred stock.
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<PAGE> 43
Similarly, we may not declare, pay or set apart for payment non-stock
dividends or make other payments on the common stock or any other stock of ours
ranking junior to the preferred stock unless full dividends on all series of
preferred stock have been paid or set apart for payment for:
- all prior dividend periods if the preferred stock pays dividends on a
cumulative basis; or
- the immediately preceding dividend period if the preferred stock pays
dividends on a noncumulative basis.
CONVERSION AND EXCHANGE
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of our common stock.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at our
option or at the option of the holders, or may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in a way that our
board of directors decides is equitable.
Unless we default in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of such shares will terminate except
for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon our voluntary or involuntary liquidation, dissolution or winding up,
holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount set forth in the prospectus
supplement relating to such series of preferred stock, plus an amount equal to
any accrued and unpaid dividends. Such distributions will be made before any
distribution is made on any securities ranking junior to the preferred stock
with respect to liquidation, including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of such series and such
other securities will share in any such distribution of our available assets on
a ratable basis in proportion to the full liquidation preferences. Holders of
such series of preferred stock will not be entitled to any other amounts from us
after they have received their full liquidation preference.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights,
except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the resolutions establishing such series; or
- as required by applicable law.
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed in a prospectus supplement. This summary is
qualified in its entirety by reference to, all provisions of the deposit
agreement, depositary shares and depositary receipts. You should read the
particular terms of any depositary shares and any depositary receipts that we
offer and any deposit agreement relating to a particular series of preferred
stock which will be described in more detail in a prospectus supplement. The
prospectus supplement will also state whether any of the generalized provisions
summarized below do not apply to the depositary shares or depositary
9
<PAGE> 44
receipts being offered. A copy of the form of deposit agreement, including the
form of depositary receipt, will be filed as an exhibit to a document
incorporated by reference in the registration statement. You should read the
more detailed provisions of the deposit agreement and the form of depositary
receipt for provisions that may be important to you.
GENERAL
We may, at our option, offer fractional rather than full shares of
preferred stock. In such event, we will issue receipts for depositary shares,
which will represent a fraction of a share of a particular series of preferred
stock.
The shares of any series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company that we select that has its principal office in the United States
and having a combined capital and surplus of at least $50,000,000, as preferred
stock depositary. Each owner of a depositary share will be entitled to all the
rights and preferences of the underlying preferred stock, including any
dividend, voting, redemption, conversion and liquidation rights described in the
particular prospectus supplement, in proportion to the applicable fraction of a
share of preferred stock represented by such depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to such preferred stock in
proportion to the number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled thereto. If
the preferred stock depositary determines that it is not feasible to make such
distribution, it may, with our approval, sell such property and distribute the
net proceeds from such sale to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the preferred stock depositary resulting from the redemption, in whole or in
part, of such series of preferred stock. The depositary shares will be redeemed
by the preferred stock depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed.
Whenever we redeem shares of preferred stock held by the preferred stock
depositary, the preferred stock depositary will redeem as of the same date the
number of depositary shares representing shares of preferred stock so redeemed.
If fewer than all the depositary shares are to be redeemed, the depositary
shares to be redeemed will be selected by the preferred stock depositary by lot
or ratably or by any other equitable method as the preferred stock depositary
may decide.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the preferred stock depositary
will mail the information contained in such notice of meeting to the record
holders of the depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date will be entitled
to instruct the preferred stock depositary to vote the amount of the preferred
stock represented by such holder's depositary shares. The preferred stock
depositary will try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such instructions.
10
<PAGE> 45
We will agree to take all actions that the preferred stock depositary
determines are necessary to enable the preferred stock depositary to vote as
instructed. The preferred stock depositary will not vote shares of any series of
preferred stock held by it for which it does not receive specific instructions
from the holders of depositary shares representing such preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the preferred stock depositary. However, any amendment that
materially and adversely alters any existing right of the holders of depositary
shares will not be effective unless such amendment has been approved by the
holders of at least a majority of the depositary shares then outstanding. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such depositary
receipt, to consent and agree to such amendment and to be bound by the deposit
agreement, which has been amended thereby. The deposit agreement may be
terminated only if:
- all outstanding depositary shares have been redeemed; or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with our liquidation,
dissolution or winding up.
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We also will pay
charges of the depositary in connection with the initial deposit of preferred
stock and any redemption of preferred stock. Holders of depositary receipts will
pay other transfer and other taxes and governmental charges and such other
charges, including a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided in the deposit
agreement to be for their accounts.
Prospective purchasers of depositary shares should be aware that special
tax, accounting and other issues may be applicable to instruments such as
depositary shares.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to us
notice of its intent to do so. We may at any time remove the preferred stock
depositary effective upon the appointment of a successor depositary and its
acceptance of such appointment. Any successor must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward all reports and communications
from us which are delivered to it and which we are required to furnish to the
holders of the deposited preferred stock.
Neither we nor the preferred stock depositary will be liable if the
depositary is prevented or delayed by law or any circumstances beyond its
control in performing its obligations under the deposit agreement. Our
obligations and the obligations of the preferred stock depositary under the
deposit agreement will be limited to performance in good faith of enumerated
duties. Neither us nor the preferred stock depositary will be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares,
depositary receipts or shares of preferred stock unless satisfactory indemnity
is furnished. We and the preferred stock depositary may rely upon written advice
of counsel or accountants, or upon information provided by holders of depositary
receipts or other persons believed to be competent and on documents believed to
be genuine.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
As required by Federal law for all bonds and notes of companies that are
publicly offered, the debt securities are governed by documents called
"indentures." The indenture is a contract between us and the trustee named in
the applicable prospectus supplement which acts as trustee for the debt
securities. There may be more than one trustee under each indenture for
different series of debt securities. The trustee has two main roles. First, the
trustee can enforce your rights against us if we default. There are some
limitations on the extent to which the trustee acts on your behalf, described
later on page 13 under "Remedies If An Event of Default Occurs". Second, the
trustee may perform administrative duties for us, such as sending you interest
payments, transferring your debt securities to a new buyer if you sell, and
sending you notices.
The debt securities will be secured or unsecured obligations of ours and
may include:
- senior debt securities, to be issued under the senior indenture;
- subordinated debt securities, to be issued under the subordinated
indenture; and
- junior subordinated debt securities, to be issued under the junior
subordinated indenture.
If issued, the junior subordinated debt securities will be issued to a Trust in
exchange for trust preferred securities and common securities. When we refer to
the indenture, we mean the senior indenture, the subordinated indenture and the
junior subordinated indenture collectively, unless we indicate otherwise. When
we refer to the trustee we mean the senior trustee, the subordinated trustee and
the junior subordinated trustee collectively, unless we indicate otherwise.
This section summarizes the general terms of the debt securities we may
offer. The prospectus supplement relating to any particular debt securities
offered will indicate whether the debt securities are secured or unsecured, are
senior debt securities, subordinated debt securities or junior subordinated debt
securities. The supplement also will describe the interest and other terms of
the debt securities, which may be in addition to or different from the general
terms summarized in this section. The summary in this section and in any
prospectus supplement does not describe every aspect of the senior, subordinated
or junior subordinated indenture or the debt securities, and is qualified in its
entirety by reference to all the provisions of the applicable indenture and the
debt securities. The forms of the senior indenture, subordinated indenture and
junior subordinated indenture and the forms of the debt securities are or will
be filed as exhibits to or incorporated by reference in the registration
statement. See the section of this prospectus entitled "Where You Can Find More
Information" on page 5 for information on how to obtain a copy.
The prospectus supplement relating to your debt securities will describe
the following specific financial, legal and other terms particular to your debt
securities:
- the title of your debt securities;
- any limit on the aggregate principal amount of your debt securities;
- the date or dates on which your debt securities will mature;
- the annual rate or rates (which may be fixed or variable) at which your
debt securities will bear interest, if any, and the date or dates from
which the interest will accrue;
- the dates on which interest on your debt securities will be payable and
the regular record dates for those interest payment dates;
- any mandatory or optional sinking funds or analogous provisions or
provisions for redemption at your option;
- the date, if any, after which and the price or prices at which your debt
securities may, in accordance with any optional or mandatory redemption
provisions, be redeemed and the other detailed terms and provisions of
any such optional or mandatory redemption provision;
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- if other than denominations of $1,000 and any integral multiple thereof,
the denomination in which your debt securities will be issuable;
- if other than the principal amount thereof, the portion of the principal
amount of your debt securities which will be payable upon the declaration
of acceleration of the maturity of those debt securities;
- any index or formula used to determine the amount of payment of principal
of, premium, if any, and interest on your debt securities;
- whether the debt securities are secured or unsecured or are senior,
subordinated or junior subordinated debt securities;
- provisions, if any, under which the debt securities may be converted into
our common stock or preferred stock;
- the subordination provisions applicable to the subordinated debt
securities or junior subordinated debt securities; and
- any other material terms of your debt securities.
The prospectus supplement relating to your debt securities will be attached
to the front of this prospectus.
The indenture and its associated documents contain the full legal text of
the matters described in this section. The indenture and the debt securities are
governed by New York law.
EVENTS OF DEFAULT
General
You will have special rights if an "event of default" occurs and is not
cured, as described later in this subsection. Under the indentures, the term
"event of default" means any of the following:
- We do not pay the principal or any premium on a debt security on its due
date;
- We do not pay interest on a debt security within 30 days of its due date
subject to rights of deferral of interest on junior subordinated
debentures as provided in the junior subordinated indenture;
- We remain in breach of any restrictive covenant or warranty in any
material respect described in the indenture for 60 days, in the case of
senior debt securities and subordinated debt securities, or 90 days, in
the case of junior subordinated debt securities, after receiving a notice
stating it is in breach. The notice must be sent by either the trustee or
direct holders of at least 25% of the principal amount of outstanding
debt securities of the affected series; or
- Certain events of bankruptcy, insolvency or reorganization of us.
Remedies if an Event of Default Occurs
If an event of default (with the exception of an event of default involving
our bankruptcy, insolvency or reorganization) has occurred and has not been
cured, the trustee or the direct holders of 25% in principal amount of the
outstanding debt securities of the affected series may declare the entire
principal amount of all the debt securities of that series to be due and
immediately payable. This is called a "declaration of acceleration of maturity."
Except in cases of default, where a trustee has some special duties, a
trustee is not required to take any action under the indenture at the request of
any direct holders unless the direct holders offer the trustee reasonable
protection from expenses and liability (called an "indemnity"). If reasonable
indemnity is provided, the direct holders of a majority in principal amount of
the outstanding debt securities of the relevant series may direct the time,
method and place of conducting any lawsuit or other formal legal action seeking
any remedy available to the trustee. These majority direct holders may also
direct the trustee in performing any other action under the indenture.
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In general, before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your rights or protect
your interests relating to the debt securities, the following must occur:
- You must give the trustee written notice that an event of default has
occurred and remains uncured;
- The direct holders of 25% in principal amount of all outstanding debt
securities of the relevant series must make a written request that the
trustee take action because of the default and must offer reasonable
indemnity to the trustee against the cost and other liabilities of taking
that action;
- The trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity; and
- The trustee must not have received from direct holders of a majority in
principal amount of the outstanding debt securities of that series a
direction inconsistent with the written notice during the 60 day period
after receipt of the above notice.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
MODIFICATION
There are three types of changes we can make to the indentures and the debt
securities.
Changes Requiring Your Approval
The following are changes that cannot be made to your debt securities
without your specific approval:
- except with respect to deferrals of interest of junior subordinated
debentures as provided in the junior subordinated indenture, change the
payment due date of the principal or interest on a debt security;
- reduce any amounts due on a debt security;
- reduce the amount of principal payable upon acceleration of the maturity
of a debt security following a default;
- change the place of payment on a debt security;
- impair your right to sue for payment;
- reduce the percentage of direct holders of debt securities whose consent
is needed to modify or amend the indenture;
- reduce the percentage of direct holders of debt securities whose consent
is needed to waive compliance with certain provisions of the indenture or
to waive certain defaults;
- change or modification to the subordination or conversion provisions (if
any) of the debt securities in any manner adverse to the holders; and
- modify any other aspect of the provisions dealing with modification and
waiver of the indenture.
Changes Requiring a Majority Vote
Some changes to the indentures and the debt securities require a vote in
favor by holders owning a majority of the principal amount of the particular
series affected. The same majority vote would be required for us to obtain a
waiver of a past default. However, we cannot obtain a waiver of a payment
default or any other aspect of the indenture or the debt securities listed in
the first category described previously under "Changes Requiring Your Approval"
unless we obtain your individual consent to the waiver.
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Changes Not Requiring Approval
The third type of change does not require any vote by direct holders of
debt securities. This type is limited to clarifications and similar changes that
would not adversely affect holders of the debt securities and additions to
covenants and events of default for the benefit of the holders of the debt
securities.
SUBORDINATION
Our obligations under the subordinated debentures or junior subordinated
debentures, as applicable, will be subordinate, to the extent set forth in the
applicable indenture, to all our existing and future senior debt. In addition,
the subordinated debentures and junior subordinated debentures will be
effectively subordinated to all existing and future obligations of our
subsidiaries. In addition, our obligations under the guarantees are subordinated
to the same extent as the junior subordinated securities. This means we cannot
make any payments on the junior subordinated debentures or the guarantees if we
are in default on any of our senior debt.
Also, in the event of our bankruptcy, liquidation or dissolution, our
assets must be used to pay off our senior obligations in full before any
payments may be made on the subordinated debentures and junior subordinated
debentures or the guarantees. The indentures, the guarantees and the
declarations of trust do not limit our ability to incur additional senior debt.
For more information, see below under the caption "Description of the
Guarantees -- Ranking" on page 30 of this prospectus.
As a holding company, our assets primarily consist of the equity securities
of our subsidiaries. As a result, our cash flow and consequent ability to
service our debt, including the subordinated debentures and junior subordinated
debentures, are dependent upon the earnings of our subsidiaries and the
distribution of those earnings to us, or upon loans or other payments of funds
by those subsidiaries to us. Our subsidiaries are separate and distinct legal
entities and will have no obligation, contingent or otherwise, to pay any
interest or principal on the subordinated debentures and junior subordinated
debentures or to make any funds available therefor, whether by dividends, loans
or other payments. The payment of dividends by our subsidiaries is contingent
upon their earnings and is subject to various business considerations in
addition to the requirements of federal and state bank and other regulators and
contractual restrictions.
In addition, since the subordinated debentures and junior subordinated
debentures will be obligations of a holding company, the ability of holders of
the subordinated debentures and junior subordinated debentures to benefit from
any distribution of assets of any subsidiary upon the liquidation or
reorganization of such subsidiary is subordinate to the prior claims of present
and future creditors of that subsidiary.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We are generally permitted to consolidate or merge with another entity. We
are also permitted to sell or lease substantially all of our assets to another
company, or to buy or lease substantially all of the assets of another entity.
However, we may not take any of these actions unless the following conditions,
among others, are met:
- where we consolidate or merge out of existence or sell or lease
substantially all our assets, the resulting entity must be a corporation,
partnership or trust organized under the laws of a State or the District
of Columbia or under federal law, and it must agree to be legally
responsible for the debt securities; and
- there would be no event of default under the indenture immediately after
giving effect to the transactions; and
- in the case of junior subordinated debt securities of a series held by a
Trust, the consolidation, merger, conveyance, transfer or lease is
permitted under the relevant declaration of trust and the guarantee and
does not give rise to and any breach or violation of these documents.
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FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt securities will be issuable in definitive, registered form or in
temporary or permanent global form.
You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange".
You may exchange or transfer debt securities at the office of the trustee.
The trustee acts as our agent for registering debt securities in the names of
holders and transferring debt securities. We may appoint another entity or
perform this role ourselves. The entity performing the role of maintaining the
list of registered direct holders is called the "security registrar". It will
also perform transfers. You will not be required to pay a service charge to
transfer or exchange debt securities, but you may be required to pay for any tax
or other governmental charge associated with the exchange or transfer. The
transfer or exchange will only be made if the security registrar is satisfied
with your proof of ownership.
If the debt securities are redeemable and we redeem less than all of the
debt securities of a particular series, we may block the transfer or exchange of
those debt securities during the period beginning 15 days before the day we mail
the notice of redemption and ending on the day of that mailing, in order to
freeze the list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of debt securities selected for redemption,
except that we will continue to permit transfers and exchanges of the unredeemed
portion of any debt security being partially redeemed.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable prospectus supplement, all or any portion
of the debt securities of a series which are issuable as bearer securities will
initially be represented by one or more temporary global securities, without
interest coupons, to be deposited with a common depositary credit to designated
accounts. On and after the date determined as provided in any such temporary
global security and described in the applicable prospectus supplement, but
within a reasonable time, each such temporary global security will be
exchangeable for definitive bearer securities, definitive registered securities
or all or a portion of a permanent global bearer security, or any combination
thereof, as specified in the prospectus supplement. No definitive bearer
security or permanent global bearer security delivered in exchange for a portion
of a temporary global security shall be mailed or otherwise delivered to any
location in the United States in connection with such exchange.
Additional information regarding restrictions on and special United States
federal income tax consequences relating to temporary global securities will be
set forth in the applicable prospectus supplement.
PERMANENT GLOBAL SECURITIES
If any debt securities of a series are issuable in permanent global form,
the applicable prospectus supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such permanent global security
may exchange their interests for debt securities of such series and of like
tenor and principal amount of any authorized form and denomination. Principal of
and any premium and interest on a permanent global security will be payable in
the manner described in the applicable prospectus supplement.
PAYMENT AND PAYING AGENTS
We will pay interest to you if you are a direct holder listed in the
trustee's records at the close of business on a particular day in advance of
each due date for interest, even if you no longer own the debt security on the
interest due date. That particular day, usually about two weeks in advance of
the interest due date, is called the "regular record date" and will be stated in
the prospectus supplement. Holders buying and selling debt securities must work
out between them how to compensate for the fact that we will pay all the
interest for an interest period to the one who is the registered holder on the
regular record date. The most common manner is to adjust the sales price of the
debt securities to prorate interest fairly between buyer and seller. This
prorated interest amount is called "accrued interest."
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In the past, we have chosen to pay interest by mailing checks. We may also
choose to pay interest, principal and any other money due on the debt securities
at the corporate trust office of the trustee or by wire transfer. You must make
arrangements to have your payments picked up at or wired from the trust office.
We may also arrange for additional payment offices, and may cancel or
change these offices, including its use of the trustee's corporate trust office.
These offices are called "paying agents." We may also choose to act as our own
paying agent. We must notify you of changes in the paying agents for any
particular series of debt securities.
INFORMATION CONCERNING THE TRUSTEES
The trustee serves as trustee under indentures for other debt of ours. The
trustee may, from time to time, make loans to us and perform other services for
us in the normal course of business. Under the provisions of the Trust Indenture
Act of 1939, upon the occurrence of a default under an indenture, if a trustee
has a conflicting interest (as defined in the Trust Indenture Act) the trustee
must, within 90 days, either eliminate such conflicting interest or resign.
Under the provisions of the Trust Indenture Act, an indenture trustee shall be
deemed to have a conflicting interest if the trustee is a creditor of the
obligor. If the trustee fails either to eliminate the conflicting interest or to
resign within 10 days after the expiration of such 90-day period, the trustee is
required to notify debt holders to this effect and any debt holder who has been
a bona fide holder for at least six months may petition a court to remove the
trustee and to appoint a successor trustee.
NOTICES
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they appear in the security register.
PROVISIONS APPLICABLE TO JUNIOR SUBORDINATED DEBT SECURITIES
The following provisions apply only to the junior subordinated debt
securities:
Events of Default
If upon, an event of default of the junior subordinated debentures, the
indenture trustee or holders of at least 25% of the total principal amount of
the outstanding junior subordinated debt securities fail to declare the payment
of all amounts on these securities to be due and payable immediately, then the
holders of at least 25% in total liquidation amount of the preferred securities
then outstanding will have the right to declare these amounts due and payable
immediately.
Rescission of Acceleration
At any time after a declaration of acceleration, as described in the
preceding paragraph and in "-- Events of Default -- Remedies if an Event of
Default Occurs", has been made and before a judgment or decree for payment of
the money due has been obtained by the indenture trustee, then the holder of a
majority in total principal amount of the outstanding junior subordinated debt
securities may rescind the declaration of acceleration if both of the following
events have occurred:
- we have paid or deposited with the indenture trustee amounts sufficient
to pay the sum of:
(1) all overdue interest;
(2) the principal that has become due, other than by acceleration, and
interest on it at the rate borne by the junior subordinated debt
securities;
(3) interest on overdue interest at the rate borne by the junior
subordinated debt securities to, the extent that the rate of
interest is lawful; and
(4) all amounts paid or advanced by the indenture trustee and its and
its counsel's reasonable fees and expenses; and
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- all events of default regarding that series of junior subordinated debt
securities have been cured or waived as described below under the caption
"-- Waivers".
If the holders of the junior subordinated debt securities fail to rescind
the declaration of acceleration, then the holders of a majority in total
liquidation amount of the preferred securities will have that right.
Waivers
In certain cases, the holders of a majority in principal amount of the
outstanding series of junior subordinated debt securities may, on behalf of the
holders of all junior subordinated debt securities of that series, and the
holders of a majority in total liquidation amount of the preferred securities
issued by a Trust may, on behalf of all holders of the preferred securities
issued by such Trust, waive any past default or event of default regarding that
series or compliance within certain provisions of the indenture. The following
defaults may not, however, be waived:
- default in the payment of the principal of and premium or interest on any
of that series which has not been cured until that time; or
- a default regarding a covenant or provision of the indenture which cannot
be modified or amended,
without the consent of the holder of each outstanding junior subordinated debt
security of the series affected.
Notwithstanding the rights of the holders of the junior subordinated debt
securities to waive certain events of default, covenants and other provisions as
described above, the holders of at least a majority of the total liquidation
amount of the outstanding preferred securities will be required to waive any
event of default or compliance with any covenant under the indenture.
Any such waiver will cure such default or event of default. If, under the
amended declaration of the Trust, an event of default has occurred and is
attributable to our failure to pay principal, premium, if any, or interest on,
such junior subordinated debt securities, then each holder of the trust
preferred securities of the Trust may sue us or seek other remedies, to force
payment to such holder of the principal of, premium, if any, or interest on,
such junior subordinated debt securities having a principal amount equal to the
aggregate liquidation amount of the trust preferred securities held by such
holder.
Modification of Junior Subordinated Indenture
Under the junior subordinated indenture, we and the indenture trustee may
change some rights of holders of a series of junior subordinated debt securities
with the written consent of the holders of a majority in principal amount of the
series of junior subordinated debt securities that are affected; provided that
no such modifications may be made that adversely affect the holders of the
preferred securities of a Trust in any material respect without the prior
consent of the holders of at least a majority of the aggregate liquidation
amount of such preferred securities then outstanding. Any such change will be
subject to the limitations described above under "Modification" on page 14
applicable to the other debt securities. If the property trustee of the Trust,
as a holder of junior subordinated debt securities, is required to consent to
any amendment, modification or termination of the junior subordinated indenture,
the property trustee will request directions from the holders of the trust
securities of the Trust.
Amendments Without Consent of Holders of Preferred Securities
Without the consent of each of the holders preferred securities, no
amendment may be made to the indenture that adversely affects the rights of
these holders to directly institute a proceeding against us for the enforcement
of the payment of interest of or principal on the junior subordinated debt
securities in the amount of such holders' total liquidation amount of preferred
securities.
Agreement by Purchasers of Certain Tax Treatment
Each junior subordinated debt security will provide that we and, by
acceptance of the junior subordinated debt security, or a beneficial interest
therein, the other holders of that junior subordinated debt
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security intend that the security constitutes debt and agrees to treat it as
debt for United States federal, local and state tax purposes.
Satisfaction and Discharge
At our request, the indenture will terminate as to the junior subordinated
debt securities of any series (except as to any surviving rights of registration
of transfer or exchange of junior subordinated debt securities) when either:
- all the junior subordinated debt securities of that series have been
delivered to the indenture trustee for cancellation; or
- all the junior subordinated debt securities of that series have become
due and payable, will become due and payable at their maturity within one
year or are to be called for redemption within one year and we have
deposited with the indenture trustee funds sufficient to make all
remaining interest and principal payments on the junior subordinated debt
securities of that series.
Information Regarding the Indenture Trustee
The indenture trustee, other than during the occurrence and continuance of
a default by us under the indenture, undertakes to perform only such duties as
are specifically set forth in the indenture. After a default under the
indenture, which has not been cured or waived, that is actually known to a
responsible officer of the indenture trustee, the indenture trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs. Subject to this
provision, the indenture trustee is under no obligation to exercise any of the
powers vested in it by an indenture at the request of any holder of junior
subordinated debt securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred by such action.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of common stock, preferred stock and
debt securities. Warrants may be issued separately or together with common
stock, preferred stock, debt securities or trust preferred securities offered by
any prospectus supplement and may be attached to or separate from those
securities. Each series of warrants will be issued under a separate agreement to
be entered into between us and a bank or trust corporation, as warrant agent as
set forth in the prospectus supplement relating to the particular issue of
offered warrants. The warrant agent will act solely as our agent in connection
with the warrants and will not assume any obligation or relationship of agency
or trust for or with any holders of warrants or beneficial owners of warrants.
Copies of the forms of warrant agreements, including the forms of warrant
certificates representing the warrants, are or will be filed as exhibits to or
incorporated by reference in the registration statement. The following summaries
of certain provisions of the forms of warrant agreements and warrant
certificates do not purport to be complete and are qualified in their entirety
by reference to, all the provisions of the warrant agreements and the warrant
certificates.
GENERAL
If warrants are offered, the applicable prospectus supplement will describe
the terms of such warrants, including, in the case of warrants for the purchase
of debt securities, the following where applicable:
- the offering price;
- the currencies in which the price for such warrants may be payable;
- the designation, aggregate principal amount, currencies, denominations
and terms of the series of debt securities purchasable upon exercise of
such warrants;
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- the designation and terms of any series of debt securities, preferred
stock or trust preferred securities with which the warrants are being
offered and the number of warrants being offered with each such share of
common stock or preferred stock, debt security or trust preferred
securities;
- if applicable, the date on and after which such warrants and the related
common stock, series of debt securities, preferred stock or trust
preferred securities will be transferable separately;
- the principal amount and series of debt securities purchasable upon
exercise of each such warrant and the price at which and currencies in
which such principal amount of debt securities of such series may be
purchased upon such exercise;
- the dates on which the right to exercise such warrants shall commence and
expire;
- whether the warrants will be issued in registered or bearer form;
- if applicable, a discussion of certain United States federal income tax,
accounting and other special considerations, procedures and limitations;
and
- any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
In the case of warrants for the purchase of common stock or preferred
stock, the applicable prospectus supplement will describe the terms of such
warrants, including the following where applicable:
- the offering price;
- the number of shares purchasable upon exercise of such warrants and, in
the case of warrants for preferred stock, the designation, number and
terms of the series of preferred stock purchasable upon exercise of such
warrants;
- if applicable, the designation and terms of the series of common stock,
debt securities, preferred stock or trust preferred securities with which
such warrants are being offered and the number of such warrants being
offered with each share of common stock or preferred stock, debt security
or trust preferred securities;
- if applicable, the date on and after which such warrants and the related
common stock or preferred stock series of debt securities or trust
preferred securities will be transferable separately;
- the number of shares of common stock or preferred stock purchasable upon
exercise of each such warrant and the price at which such number of
shares of common stock or preferred stock may be purchased upon such
exercise;
- the dates on which the right to exercise such warrants shall commence and
expire;
- any applicable anti-dilution provisions;
- any applicable redemption or call provisions;
- any United States federal income tax consequences; and
- any other terms of such warrants.
Warrants for the purchase of preferred stock or common stock will be
offered and exercisable for U.S. dollars only and will be in registered form
only.
Warrant certificates may be exchanged for new warrant certificates of
different denominations, may be presented for registration of transfer, and may
be exercised at the corporate trust office of the warrant agent or any other
office indicated in the applicable prospectus supplement. Prior to the exercise
of any warrant to purchase debt securities, holders of such warrants will not
have any of the rights of holders of the debt securities purchasable upon such
exercise, including the right to receive payments of principal of, premium, if
any, or interest, if any, on the debt securities purchasable upon such exercise
or to enforce covenants in the applicable indenture. Before the exercise of any
warrants to purchase preferred stock or common stock,
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holders of such warrants will not have any rights of holders of the preferred
stock or common stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the preferred stock or common stock
purchasable upon such exercise or to exercise any applicable right to vote.
EXERCISE OF WARRANTS
Each warrant will entitle the holder thereof to purchase such principal
amount of debt securities, shares of common stock or preferred stock or trust
preferred securities, as the case may be, at such exercise price as shall in
each case be set forth in, or calculable from the prospectus supplement relating
to the offered warrants. After the close of business on the expiration date of
the warrants, or such later date to which such expiration date may be extended
by us, unexercised warrants will become void.
Warrants may be exercised by delivering to the warrant agent payment as
provided in the applicable prospectus supplement of the amount required to
purchase the debt securities, preferred stock or common stock, as the case may
be, purchasable upon such exercise together with certain information set forth
on the reverse side of the warrant certificate. Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt, within five business days, of the warrant certificate evidencing such
warrants. Upon receipt of such payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus supplement, we will,
as soon as practicable, issue and deliver the debt securities, preferred stock
or common stock, as the case may be, purchasable upon such exercise. If fewer
than all of the warrants represented by the warrant certificate are exercised, a
new warrant certificate will be issued for the remaining amount of warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENTS
The warrant agreements may be amended or supplemented without the consent
of the holders of the warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the warrants and that do not adversely
affect the interests of the holders of the warrants.
WARRANT UNITS
We may issue warrants as a part of a warrant unit consisting of warrants
and another security described in this prospectus, including a trust preferred
security. The terms of a series of warrant units may be described in a unit
agreement between us (and the Trust if the warrant unit includes trust preferred
securities) and a bank or trust corporation, as unit agent. The applicable
prospectus supplement will describe the specific terms of any warrant units.
STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and us to sell to the holders, a specified number
of shares of common stock at a future date or dates. The consideration per share
of common stock may be fixed at the time the stock purchase contracts are issued
or may be determined by reference to a specific formula described in the stock
purchase contracts. We may issue the stock purchase contracts separately or as a
part of stock purchase units consisting of a stock purchase contract and one or
more shares of our common stock, preferred stock or fractions thereof or a debt
security or a debt obligation of ours or a third party, including a U.S.
Treasury security. Our common stock, preferred stock or debt securities or the
debt obligation of a third party may serve as collateral to secure the holders'
obligations to purchase the shares of common stock under the stock purchase
contracts. The stock purchase contracts may require us to make periodic payments
to the holders of stock purchase contracts. These payments may be unsecured or
prefunded on some basis. The stock purchase contracts may require holders to
secure their obligations in a specified manner. The applicable prospectus
supplement will describe the specific terms of any stock purchase contracts or
stock purchase units.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following description of the terms and provisions of trust preferred
securities summarizes certain general terms that will apply to each series of
trust preferred securities. This description is not complete, and we refer you
to the certificate of trust and the declaration of trust for each Trust and the
form of the amended and restated declaration of trust, copies of which we filed
as exhibits to the registration statement of which this prospectus is a part.
DECLARATION OF TRUSTS
When a Trust issues a series of preferred securities, the declaration of
trust relating to that Trust will contain, and the prospectus supplement
relating to that series will summarize, the terms and other provisions relating
to that series of preferred securities. Each Trust will issue only one series of
preferred securities.
The declaration of trust of each Trust will be qualified as an indenture
under the Trust Indenture Act of 1939. Unless the applicable prospectus
supplement states otherwise, The Chase Manhattan Bank will act as property
trustee under each relevant declaration of trust.
Each series of preferred securities will represent undivided beneficial
ownership interests in the assets of the applicable Trust. The holders of the
preferred securities will be entitled to a preference in certain circumstances
regarding distributions from the applicable Trust and amounts payable on
redemption or liquidation over the corresponding series of common securities.
SPECIFIC TERMS OF EACH SERIES
Each time that a Trust issues a series of preferred securities, the
prospectus supplement relating to that new series will summarize the particular
amount, price and other terms and provisions of these preferred securities.
These terms may include the following:
- the distinctive designation of the preferred securities;
- the number of preferred securities issued by the applicable Trust and the
liquidation value of each such preferred security;
- the annual distribution rate (or method of determining such rate) for
preferred securities issued by the applicable Trust and the date or dates
upon which such distributions will be payable;
- whether distributions on preferred securities issued by the applicable
Trust may be deferred and, if so, what the maximum number of
distributions that may be deferred and the terms and conditions of such
deferrals will be;
- the amount or amounts which will be paid out of the assets of the
applicable Trust to the holders of preferred securities of the Trust upon
voluntary or involuntary dissolution, winding up or termination of the
applicable Trust;
- any obligation of the applicable Trust to purchase or redeem preferred
securities issued by the applicable Trust and the price or prices at
which, the period or periods within which and the terms and conditions
upon which preferred securities issued by the applicable Trust will be
purchased or redeemed, in whole or in part, pursuant to such obligation;
- any voting rights of preferred securities issued by the applicable Trust
in addition to those required by law, including the number of votes per
preferred security and any requirement for the approval by the holders of
preferred securities as a condition to specified action or amendments to
the relevant declaration of trust; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of preferred securities issued by the applicable Trust,
consistent with the declaration of the trust and with applicable law.
All preferred securities that a Trust offers will be guaranteed by us to
the extent set forth in the section of this prospectus entitled "Description of
the Guarantees" on page 28. The applicable prospectus supplement
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will also describe the United States federal income tax considerations
applicable to each offering of preferred securities.
ISSUANCE OF COMMON SECURITIES
In connection with the issuance of preferred securities, each Trust will
issue common securities to us. Except as described below under the caption
" -- Subordination" in this prospectus, the terms of the common securities
issued by the applicable Trust will be substantially identical to the terms of
the preferred securities. These terms will be defined in the relevant
declaration of trust and will be summarized in the applicable prospectus
supplement. These terms will specify the following:
- the annual distribution rate (or method of determining that rate) and the
date or dates upon which the distributions will be payable;
- the rights of the applicable Trust to redeem the common securities and
related provisions;
- the voting rights of holders of the common securities;
- any liquidation rights or similar restrictions;
- and other specific terms of the common securities (not inconsistent with
the relevant declaration of trust).
Subordination
The common securities will rank on a par with, and payments will be made on
them on a proportionate basis with, the preferred securities issued by the
applicable Trust, except that upon a "trust enforcement event", the rights of
the holders of the common securities to payments of distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the preferred securities.
Holder of Common Securities
Except in some limited circumstances, the holder of the common securities
of the applicable Trust will have sole power to appoint, remove or replace any
of the trustees of the applicable Trust. We will, directly or indirectly, own
all of the common securities of the applicable Trust.
TRUST ENFORCEMENT EVENTS
An event of default under the indenture that has occurred and is continuing
constitutes a trust enforcement event under the relevant declaration of trust.
Remedies of Holders of Preferred Securities and The Property Trustee
If a trust enforcement event occurs, holders of preferred securities of the
applicable Trust would rely on the enforcement by the property trustee of its
rights as a holder of the junior subordinated debentures against us. In
addition, the holders of a majority in liquidation amount of the preferred
securities of the applicable Trust 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 relevant declaration of trust, including the
right to direct the property trustee to exercise the remedies available to it as
a holder of the junior subordinated debentures.
Upon the occurrence of a trust enforcement event, the property trustee, as
the holder of the junior subordinated debentures, will have the right under the
indenture to declare the principal of and premium, if any, and interest on the
junior subordinated debentures held by the applicable Trust to be immediately
due and payable.
If the property trustee fails to enforce its rights regarding the junior
subordinated debentures held by the applicable Trust, any holder of preferred
securities may, to the extent permitted by applicable law, institute a
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legal proceeding directly against us to enforce the property trustee's rights
under these junior subordinated debentures without first instituting any legal
proceeding against the property trustee or any other person or entity. In
addition, if a trust enforcement event occurs and such event is attributable to
our failure to make any required payments on the junior subordinated debentures
when due, then a holder of preferred securities may, on or after the date that
such payment was due, institute a proceeding directly against us for enforcement
of payment on the junior subordinated debentures having a principal amount equal
to the total liquidation amount of the preferred securities held by that holder.
We refer to such proceeding as a "direct action". In connection with a direct
action, we will have the right under the indenture to set off any payment made
to that holder by us. The holders of preferred securities will not be able to
exercise directly any other remedy available to the holders of junior
subordinated debentures.
Remedies of Holders of Common Securities
The holder of the common securities will be deemed to have waived any trust
enforcement event regarding the common securities until all trust enforcement
events regarding the preferred securities have been cured, waived or otherwise
eliminated. Until such a trust enforcement event has been cured, waived or
otherwise eliminated, the property trustee will be deemed to be acting solely on
behalf of the holders of the preferred securities and only the holders of the
preferred securities will have the right to direct the property trustee
regarding remedies under the relevant declaration of trust, and, therefore, the
indenture.
LIMITATION ON CONSOLIDATIONS, MERGERS AND SALE OF ASSETS
None of the Trusts may consolidate, merge with or into, or sell or lease
substantially all of its properties and assets to any corporation or other
entity, unless:
- a majority of the regular trustees consent to such a transaction;
- the successor assumes all of the obligations of the Trust regarding the
preferred securities, or substitutes other securities for the preferred
securities with substantially the same terms and other provisions as the
preferred securities (which we refer to as "Successor Securities"), and
regarding the Trustees;
- if Successor Securities are issued, these securities are listed on the
same national securities exchange on which the preferred securities were
listed;
- the transaction does not cause the preferred securities or the Successor
Securities to be downgraded by a national ratings organization;
- such transaction does not adversely affect the rights of the holders of
the preferred securities in any material respect;
- following the transaction, the Trust would not have to register as an
"investment company" under the Investment Company Act of 1940;
- we, or a successor which will own all of the common securities of the
Trust or its successor, will guarantee the preferred securities, or the
Successor Securities, to the same extent as the preferred securities are
guaranteed by the guarantee;
- the Trust would continue to be classified as a grantor trust for United
States federal income tax purposes, unless each holder of preferred
securities consents to such a change; and
- the holders of the preferred securities would continue to be treated as
owning an undivided beneficial interest in the assets of the Trust,
unless each holder of the preferred securities consents to such a change.
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PAYING AGENT
Unless the applicable prospectus supplement states otherwise, if any
preferred securities are not in the form of global securities each Trust will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the preferred securities may be presented for payment by a paying agent.
Each Trust may appoint a paying agent and may appoint one or more
additional paying agents in such other locations as it may determine and change
any paying agent without prior notice to the holders of preferred securities.
Each Trust, or any of its affiliates, may act as paying agent regarding any
series of preferred securities. Unless the applicable prospectus supplement
states otherwise, the property trustee will act as paying agent for each series
of preferred securities. If the property trustee will no longer act as the
paying agent, the regular trustees may appoint a successor, which will be a bank
or trust company acceptable to us, to act as paying agent.
TRANSFER OF PREFERRED SECURITIES
For each issue of preferred securities, the property trustee will keep a
security register to provide for the transfer and registration of transfer of
preferred securities. The following provisions apply to the transfer of
preferred securities which are not issued in book-entry form:
- Holders of any issue of preferred securities may exchange their
securities for an equal principal amount of other preferred securities of
different authorized denominations of the same issue and with the same
terms.
- No service charge will be made for any registration of transfer or
exchange of securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
securities.
- If the preferred securities are to be redeemed in part, the Trust will
not be required:
- to issue, register the transfer of or exchange any securities during
a period beginning at the opening of business 15 days before the day
of the mailing of a notice of redemption of any such securities
selected for redemption and ending at the close of business on the
day of such mailing; or
- to register the transfer or exchange of any preferred security so
selected for redemption in whole or in part, except the unredeemed
portion of any security being redeemed in part.
GLOBAL SECURITIES
The preferred securities of any issue may be issued in the form of one or
more global securities. Preferred securities of any issue will no longer be
eligible to be represented in the form of a global security and will be
registered in definitive form if one of the following events occurs:
- if at any time the depositary notifies the applicable Trust that it is
unwilling or unable under the Securities Exchange Act of 1934 and other
applicable law to continue as depositary or if at any time it will no
longer be eligible, in each case if a successor depositary is not
appointed within 90 days after the applicable Trust receives notice or
becomes aware of this ineligibility; or
- the applicable Trust, in its sole discretion, may determine that the
preferred securities issued in the form of one or more global securities
will no longer be represented by a global security.
For more information regarding the issuance of global securities and the
depositary arrangements for them, see the applicable prospectus supplement.
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Registration of Global Securities
If the preferred securities are to be issued in the form of one or more
global securities, then a regular trustee on behalf of the applicable Trust will
execute and the property trustee will cause the global securities to be
registered in the name of the depositary for these global securities or its
nominee.
Registration of Preferred Securities in Definitive Form
Preferred securities not represented by a global security which are issued
in exchange for all or a part of a global security will be registered in such
names and in such authorized denominations as the depositary, pursuant to
instructions from its direct or indirect participants or otherwise, will
instruct the property trustee. Upon execution and authentication, the property
trustee will deliver the preferred securities not represented by a global
security to the persons in whose names such definitive preferred securities are
so registered. The preferred securities that are not initially represented by a
global security may be exchanged or transferred for part of a global security
pursuant to the instructions and procedures of the depositary.
Reliance on The Depositary by the Trusts and Property Trustee
In connection with each issue of preferred securities, the applicable Trust
and property trustee may for all purposes, including the making of payments due
on these preferred securities, deal with the depositary as the authorized
representative of the holders of these preferred securities for the purpose of
exercising the rights of these holders. The rights of the owner of any
beneficial interest in a global security will be limited to those established by
law and agreements between such owners and depository participants or Euroclear
and Cedel; provided that no such agreement will give any rights to any person
against the applicable Trust or property trustee without the written consent of
these parties.
Transfer of Beneficial Interests in Global Securities
Global securities may not be transferred as a whole except under the
following circumstances:
- by the depositary to a nominee of the depositary;
- by a nominee of the depositary to the depositary or another nominee of
the depositary; or
- by the depositary or any such nominee to a successor depositary or a
nominee of such successor depositary.
Interests of beneficial owners in a global security may be transferred or
exchanged for preferred securities not represented by a global security and
preferred securities not represented by a global security may be transferred or
exchanged for global securities in accordance with rules of the depositary.
AMENDMENTS
Amendments Without Consent of Holders of Preferred Securities
Each declaration of trust may be amended without the consent of the holders
of the preferred securities:
- to cure any ambiguity;
- to correct or supplement any provisions in the declaration of trust that
may be defective or inconsistent with any other provision in the relevant
declaration of trust;
- to add to our covenants, restrictions or obligations, as sponsor of the
Trusts;
- to conform to any change in Rule 3a-5 under the Investment Company Act of
1940 or written change in interpretation or application of Rule 3a-5
under the Investment Company Act of 1940 by any legislative body, court,
government agency or regulatory authority; or
- to modify, eliminate or add to any provisions as necessary to the
relevant declaration of trust to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all
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times that any preferred securities or common securities are outstanding
or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act of 1940;
provided that any action described in this sentence may be taken only if it does
not adversely affect in any material respect the rights of the holders of
preferred securities or common securities
Amendment With Consent of Holders of Preferred Securities and Common
Securities
Without the consent of each holder of the preferred securities and the
common securities, the relevant declaration of trust may not be amended to:
- change the amount or timing of any distribution of the preferred
securities and the common securities or otherwise adversely affect the
amount of any distribution required to be made on the preferred
securities and the common securities;
- restrict the right of a holder of preferred securities to institute suit
for the enforcement of any payment owed on these securities; or
- change the voting requirements and other provisions relating to
amendments.
Without the consent of 66 2/3% of the holders of outstanding preferred
securities and common securities voting as a single class, the relevant
declaration of trust may not be amended to:
(1) adversely affect the powers, preferences or special rights of the
preferred securities and the common securities; or
(2) result in the dissolution, winding-up or termination of the applicable
Trust other than pursuant to the terms of the relevant declaration of
trust;
provided that, if any amendment or proposal referred to in clause (1) above
would adversely affect only the preferred securities or the common securities,
then only the affected class will be entitled to vote on such amendment or
proposal.
Amendments With Consent of Holders of Common Securities
Without the consent of the holders of a majority in liquidation amount of
the common securities, the relevant declaration of trust may not be amended to
change the rights of the holders of the common securities to increase or
decrease the number of, and appoint and remove trustees.
PROVISIONS THAT MAY NOT BE AMENDED
Under no circumstances may the following provisions of the relevant
declaration of trust be amended:
- to cause the applicable Trust to be classified other than as a grantor
trust for United States federal income tax purposes;
- to reduce or otherwise adversely affect the powers of the property
trustee in contravention of the Trust Indenture Act of 1939; and
- to cause the applicable Trust to be deemed to be an "investment company"
required to be registered under the Investment Company Act of 1940.
MEETINGS OF THE HOLDERS OF SECURITIES
Meetings
The regular trustees of a Trust may call a meeting of the holders of the
securities on any matter on which these securities are entitled to act under the
relevant declaration of trust. In addition, the holders of at least 10% in
liquidation amount of issue of preferred securities may direct the regular
trustees to call such a meeting. The regular trustees are required to give
notice of any such meeting at least 7 days but not more
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than 60 days before the date of that meeting. The regular trustees, in their
sole discretion, will establish all other provisions relating to meetings of
holders of preferred securities not stated below.
Action by Written Consent
Whenever a vote, consent or approval of the holders of preferred securities
is permitted or required, that vote, consent or approval may be given at the
meeting. Any action that may be taken at a meeting of these holders may be taken
without a meeting and without prior notice if a consent in writing setting forth
the action so taken is signed by the holders owning not less than the minimum
amount of preferred securities in liquidation amount that would be necessary to
authorize or take such action at the meeting itself.
Proxies
Each holder of a preferred security may authorize any person to act for it
by proxy on all matters but proxies will not be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy
will be revocable at the pleasure of the holder of preferred securities
executing the proxy. Except as otherwise provided herein, all matters relating
to the giving, voting or validity of proxies will be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the applicable Trust were a Delaware
corporation and the holders of the preferred securities were stockholders of a
Delaware corporation.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee serves as a trustee under indentures for other debt of
ours.
The trustee may, from time to time make loans to us and perform other
services for us in the normal course of business. Under the provisions of the
Trust Indenture Act of 1939, upon the occurrence of a default under an
indenture, if a trustee has a conflicting interest (as defined in the Trust
Indenture Act) the trustee must, within 90 days, either eliminate such
conflicting interest or resign. Under the provisions of the Trust Indenture Act,
an indenture trustee shall be deemed to have a conflicting interest if the
trustee is a creditor of the obligor. If the trustee fails either to eliminate
the conflicting interest or to resign within 10 days after the expiration of
such 90-day period, the trustee is required to notify debt holders to this
effect and any debt holder who has been a bona fide holder for at least six
months may petition a court to remove the trustee and to appoint a successor
trustee.
GOVERNING LAW
Each declaration of trust and the related preferred securities will be
governed by and construed in accordance with the laws of the State of Delaware.
DESCRIPTION OF THE GUARANTEES
The following description of the terms and provisions of the guarantees
summarizes certain general terms that will apply to each guarantee that we
deliver in connection with a series of preferred securities. This description is
not complete, and we refer you to the form of the guarantee agreement, a copy of
which we filed as an exhibit to the registration statement of which this
prospectus is a part.
When a Trust issues a series of its preferred securities, we will execute
and deliver a guarantee of that series of preferred securities under a guarantee
agreement for the benefit of the holders of these preferred securities. Only one
guarantee will be issued by us in connection with the issuance of preferred
securities by the applicable Trust. Each guarantee agreement will be qualified
as an indenture under the Trust Indenture Act of 1939. Unless the applicable
prospectus supplement states otherwise, The Chase Manhattan Bank will act as
indenture trustee under each guarantee agreement. The guarantee trustee will
hold each guarantee for the benefit of the holders of the preferred securities
of the applicable Trust.
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SPECIFIC TERMS OF THE GUARANTEES
Except as stated in the applicable prospectus supplement, we will
irrevocably and unconditionally agree to pay in full the following payments or
distributions on each corresponding series of preferred securities, to the
extent that they are not paid by, or on behalf of, the applicable Trust:
- any accumulated and unpaid distributions required to be paid on the
preferred securities, to the extent that the applicable Trust has
sufficient funds available for those payments at the time;
- the redemption price regarding any preferred securities called for
redemption, to the extent that the applicable Trust has sufficient funds
available for those redemption payments at such time; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the applicable Trust, unless the corresponding series of junior
subordinated debentures are distributed to holders of the preferred
securities, the lesser of:
- the total liquidation amount of the preferred securities and all
accumulated and unpaid distributions on them to the date of payment;
and
- the amount of assets of the applicable Trust remaining available for
distribution to holders of the preferred securities.
Our obligation to make the payments described above under the guarantee may
be satisfied by direct payment of the required amounts by us to the holders of
the applicable preferred securities or by causing the applicable Trust to pay
such amounts to these holders. In addition, our obligation to make the payments
described above will exist regardless of any defense, right of setoff or
counterclaim that the applicable Trust may have or assert.
Each guarantee will apply only to the extent that the applicable Trust has
sufficient funds available to make the required payments. If we do not make
interest payments on the junior subordinated debentures held by the applicable
Trust, then the Trust will not be able to pay distributions on the preferred
securities issued by the Trust and will not have funds legally available for
these payments.
NATURE OF THE GUARANTEE
We will, through the relevant declaration of trust, the guarantee, the
junior subordinated debentures and the indenture, taken together, fully and
unconditionally guarantee the applicable Trust's obligations under the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes this guarantee. It is only the
combined operation of these documents that has the effect of providing a full
and unconditional guarantee of the applicable Trust's obligations under the
preferred securities.
Each guarantee will constitute a guarantee of payment and not of
collection. This means that the guaranteed party may institute a legal
proceeding directly against us to enforce its rights under a guarantee without
first instituting a legal proceeding against any other person or entity. In
addition, each guarantee will not be discharged except by payment of the amounts
due under it in full to the extent they have not been paid by the applicable
Trust or upon distribution of junior subordinated debentures to the holders of
the preferred securities in exchange for all of these preferred securities.
SUBORDINATION OF COMMON SECURITIES
We also will irrevocably and unconditionally guarantee the obligations of
the applicable Trust regarding that Trust's common securities to the same extent
as our guarantee of the applicable preferred securities, except that upon the
occurrence and the continuation of a trust enforcement event regarding the
applicable Trust, holders of these preferred securities will have priority over
holders of the common securities regarding distributions and payments on
liquidation, redemption or otherwise.
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RANKING
Each guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our other liabilities to
the same extent as the junior subordinated debentures.
The guarantees will not place a limitation on the amount of additional
senior debt that may be incurred by us.
CERTAIN COVENANTS OF PROVIDENT FINANCIAL GROUP
In general, we will covenant in each guarantee that, so long as any
preferred securities issued by a Trust remain outstanding, if
- there shall have occurred any event of default under the indenture
regarding the applicable series of junior subordinated debentures;
- we shall be in default regarding our payment of any obligations under the
related guarantee; or
- we shall have given notice of our election to defer interest payments on
the junior subordinated debentures, if applicable, as described in the
prospectus supplement relating to the applicable series of preferred
securities and we shall not have rescinded that notice or begun making
such payments,
then we will not, and will not permit any subsidiary to, do the following:
- to declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment regarding, any of our capital
stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities that rank on a par with
or junior to the junior subordinated debentures or make any payments
regarding any guarantee by us of the debt securities of any of our
subsidiaries if such guarantee ranks on a par with or junior to these
junior subordinated debentures.
At any time, however, we may do the following:
- pay dividends or make distributions in our common stock;
- make payments under the applicable guarantee made by us regarding
preferred securities of the applicable Trust;
- declare a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under any such plan in the
future, or redeem or repurchase any rights issued pursuant to such a
plan; and
- purchase common stock related to the issuance of common stock or rights
under any of our benefit plans.
AMENDMENTS
Unless otherwise specified in the applicable prospectus supplement, each
guarantee may be amended under the following circumstances:
- no consent of holders will be required regarding changes to the guarantee
that do not materially adversely affect the rights of holders of the
applicable preferred securities; and
- no other amendments to the guarantee may be made without the prior
approval of the holders of not less than a majority of the total
liquidation amount of the outstanding preferred securities to which the
guarantee relates.
The manner of obtaining the necessary approvals to amend a guarantee are
the same as for holders of the preferred securities, which are described under
"Description of the Trust Preferred Securities -- Meetings of the Holders of
Securities" on page 27 of this prospectus.
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ASSIGNMENT
All guarantees and agreements contained in a guarantee will bind our
successors, assigns, receivers, trustees and representatives and will inure to
the benefit of the holders of the related preferred securities then outstanding.
EVENTS OF DEFAULT AND REMEDIES
An event of default under a guarantee will occur upon our failure to make
any of our payments or perform any of our other obligations under it.
The holders of not less than a majority in total liquidation amount of the
preferred securities to which a guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the guarantee trustee regarding the guarantee or to direct the exercise of any
trust or power conferred upon the guarantee trustee under such guarantee.
If the guarantee trustee fails to enforce a guarantee, then any holder of
the corresponding series of preferred securities may institute a legal
proceeding directly against us to enforce the guarantee trustee's rights under
that guarantee, without first instituting a legal proceeding against the
applicable Trust that issued the preferred securities, the guarantee trustee or
any other person or entity.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
a default by us in performance of a guarantee, undertakes to perform only such
duties as are specifically set forth in the guarantee. After a default under the
guarantee, which has not been cured or waived, that is actually known to a
responsible officer of the guarantee trustee, the guarantee trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs. Subject to this
provision, the guarantee trustee is under no obligation to exercise any of the
powers vested in it by a guarantee at the request of any holder of preferred
securities to which the guarantee relates unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred by
such action.
TERMINATION OF THE GUARANTEES
Each guarantee will terminate upon any of the following events:
- full payment of the redemption price of all preferred securities of the
applicable Trust;
- full payment of the amounts payable upon liquidation of the applicable
Trust; or
- distribution of the junior subordinated debentures held by the applicable
Trust to the holders of the preferred securities of the Trust in exchange
for all of the preferred securities of the Trust.
Each guarantee will continue to be effective or will be reinstated, if at any
time any holder of related preferred securities issued by the applicable Trust
is required to restore payment of any sums paid under the applicable preferred
securities or the guarantee.
GOVERNING LAW
The guarantees will be governed by the laws of the State of New York,
including any matters of interpretation under them.
DESCRIPTION OF CAPITAL SECURITIES
The following is a summary of the provisions of Ohio General Corporation
Law and Provident Financial's Articles of Incorporation and Code of Regulations
which govern the terms of Provident Financial's common stock.
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COMMON STOCK
Our Articles of Incorporation authorize the issuance of 110,000,000 shares
of common stock. At September 30, 1999 approximately 4,000 record holders owned
the 42,680,758 outstanding shares, all of which are fully paid, validly issued
and non-assessable.
Holders of our common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Shareholders may
cumulate their votes when electing directors.
Holders of our common stock are entitled to share in the dividends that the
board of directors validly declares from legally available funds. If we
liquidate, holders of our common stock also are entitled to participate ratably
in the assets remaining after we pay our liabilities and preferred stock
liquidation preferences.
Holders of our common stock do not have preemptive rights or other rights
to subscribe for purchase additional shares of any class of stock or any other
securities of ours. Our common stock has no redemption or sinking fund
provisions. Approving amendments to the Articles of Incorporation, mergers,
reorganizations and similar transactions requires the vote of the holders of
two-thirds of all outstanding shares of our common stock. The Provident Bank
serves as Registrar and Transfer Agent for our common stock.
PREFERRED STOCK
Our Articles of Incorporation authorize 5,000,000 shares of preferred stock
which may be issued from time to time in series that have been designated
preferences, rights, qualifications and limitations that the board of directors,
in its sole discretion, may determine. The board of directors can give preferred
stock both voting and conversion rights which would affect the voting power and
equity of holders of our common stock. Preferred stock could also have
preference to our common stock with respect to dividend and liquidation rights.
The preferred stock could have the effect of acting as an anti-takeover device
to prevent a change of control of us. We have 70,272 shares of preferred stock,
designated as our Series D Preferred Stock, outstanding. Each share has a stated
and liquidation value of $100, is convertible into 14.0625 shares of our common
stock, and pays an annual dividend equal to the dividend payable on 14.0625
shares of our common stock.
CERTAIN TAX CONSIDERATIONS
The applicable prospectus supplement with respect to each type of security
issued under this registration statement may contain a discussion of certain tax
consequences of an investment in the securities offered thereby.
PLAN OF DISTRIBUTION
We or the Trusts may offer the offered securities in one or more of the
following ways from time to time:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of sale.
The prospectus supplement relating to an offering of offered securities
will set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price of the offered securities and the proceeds to us or
the Trusts from such sale;
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- any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation;
- the initial public offering price;
- any discounts or concessions to be allowed or reallowed or paid to
dealers; and
- any securities exchanges on which such offered securities may be listed.
Any initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in an offering of offered securities, such offered
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be either offered to the public through
underwriting syndicates represented by one or more managing underwriters or by
one or more underwriters without a syndicate. Unless otherwise set forth in the
prospectus supplement, the underwriters will not be obligated to purchase
offered securities unless specified conditions are satisfied, and if the
underwriters do purchase any offered securities, they will purchase all offered
securities.
In connection with underwritten offerings of the offered securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the offered securities at levels above those that might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
- A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when offered securities originally sold by the
syndicate member are purchased in syndicate covering transactions.
These transactions may be effected through the Nasdaq National Market
system, or otherwise. Underwriters are not required to engage in any of these
activities, or to continue such activities if commenced.
If dealers are utilized in the sale of offered securities, we or the Trusts
will sell such offered securities to the dealers as principals. The dealers may
then resell such offered securities to the public at varying prices to be
determined by such dealers at the time of resale. The names of the dealers and
the terms of the transaction will be set forth in the prospectus supplement
relating to that transaction.
Offered securities may be sold directly by us or the Trusts to one or more
institutional purchasers, or through agents designated by us or the Trusts from
time to time, at a fixed price or prices, which may be changed, or at varying
prices determined at the time of sale. Any agent involved in the offer or sale
of the offered securities in respect of which this prospectus is delivered will
be named, and any commissions payable by us to such agent will be set forth, in
the prospectus supplement relating to that offering. Unless otherwise indicated
in such prospectus supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
If so indicated in the applicable prospectus supplement, we or the Trusts
will authorize agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase offered securities from us or the Trusts at
the public offering price set forth in such prospectus supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be
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subject only to those conditions set forth in the prospectus supplement and the
prospectus supplement will set forth the commission payable for solicitation of
such contracts.
Underwriters, dealers and agents may be entitled, under agreements with us,
to indemnification by us relating to material misstatements and omissions.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for, us and our affiliates in the ordinary course of
business.
Each series of offered securities other than common stock will be a new
issue of securities and will have no established trading market. Any
underwriters to whom offered securities are sold for public offering and sale
may make a market in such offered securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. The offered securities may or may not be listed on a national securities
exchange. No assurance can be given that there will be a market for the offered
securities.
ERISA CONSIDERATIONS
Our subsidiaries provide services to several employee benefit plans.
Although the majority of these plans are employee-directed 401(k) plans, we and
any direct or indirect subsidiary of ours may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, and a "disqualified person" under corresponding provisions of the Internal
Revenue Code of 1986, relating to some of these employee benefit plans.
"Prohibited transactions" within the meaning of ERISA and the Code may result if
any offered securities are acquired by an employee benefit plan to which we or
any direct or indirect subsidiary of ours is a party in interest, unless such
offered securities are acquired pursuant to an applicable exemption issued by
the U.S. Department of Labor. Any employee benefit plan or other entity to which
such provisions of ERISA or the Code apply proposing to acquire the offered
securities should consult with its legal counsel.
LEGAL MATTERS
Keating, Muething & Klekamp, P.L.L., Cincinnati, Ohio, will act as legal
counsel to us and will pass upon the validity of any securities offered by this
prospectus and any applicable prospectus supplement. Certain matters of Delaware
law relating to each Trust will be passed upon for the Trusts and us by
Richards, Layton & Finger, P.A., Wilmington, Delaware. Unless otherwise stated
in a prospectus supplement, United States federal income taxation matters will
also be passed upon for us and the Trusts by Keating, Muething & Klekamp, P.L.L.
Members of Keating, Muething & Klekamp, P.L.L. participating in this engagement
own approximately 115,000 shares of our common stock. Counsel identified in the
applicable prospectus supplement will act as legal counsel to the underwriters.
EXPERTS
The consolidated financial statements of Provident Financial Group, Inc.
appearing in Provident Financial's Annual Report (Form 10-K) for the year ended
December 31, 1998 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon and incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
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$12,500,000
PROVIDENT CAPITAL TRUST III
10 1/4% TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
PROVIDENT FINANCIAL GROUP, INC.
----------------------------
PROSPECTUS SUPPLEMENT
NOVEMBER 20, 2000
----------------------------
(LEAD MANAGER AND SOLE BOOK-RUNNING MANAGER)
LEHMAN BROTHERS
(CO-MANAGERS)
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES
(JUNIOR CO-MANAGERS)
MCDONALD INVESTMENTS INC.
J.P. MORGAN & CO.
STEPHENS INC.
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