<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
under Registration No. 333-22905
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 13, 1997
$200,000,000
FIFTH THIRD CAPITAL TRUST I
8.136% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
FIFTH THIRD BANCORP
---------------------
The 8.136% Capital Securities, Series A (the "Series A Capital
Securities"), offered hereby represent preferred beneficial interests in Fifth
Third Capital Trust I, a statutory business trust formed under the laws of the
State of Delaware (the "Series A Issuer"). Fifth Third Bancorp, an Ohio
corporation (the "Corporation"), will be the owner of all of the beneficial
interests represented by common securities of the Series A Issuer ("Series A
Common Securities" and, collectively with the Series A Capital Securities, the
"Series A Securities"). Wilmington Trust Company is the Property Trustee of the
Series A Issuer. The Series A Issuer exists for the sole purpose of issuing the
Series A Securities and investing the proceeds thereof in $206,186,000 initial
principal amount of 8.136% Junior Subordinated Deferrable Interest
(Continued on next page)
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A CAPITAL SECURITIES.
---------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING THE SERIES A
OFFERING PRICE(1) COMMISSION(2) ISSUER(1)(3)(4)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Series A Capital Security................ $1,000 (3) $1,000
Total........................................ $200,000,000 (3) $200,000,000
</TABLE>
- ---------------
(1) Plus accrued Distributions, if any, from the date of original issuance.
(2) The Series A Issuer and the Corporation have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series A Capital
Securities will be invested in the Series A Subordinated Debentures, the
Corporation has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein of
such proceeds $10 per Series A Capital Security (or $2,000,000 in the
aggregate) and to reimburse the Underwriters for $60,000 of expenses. See
"Underwriting."
(4) Expenses of the offering which are payable by the Corporation are estimated
to be $310,000.
---------------------
The Series A Capital Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Series A Capital Securities will be ready for delivery in book-entry
form only through the facilities of The Depository Trust Company in New York,
New York, on or about March 20, 1997, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE MERRILL LYNCH & CO.
SECURITIES CORPORATION
SALOMON BROTHERS INC UBS SECURITIES
---------------------
The date of this Prospectus Supplement is March 13, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES A CAPITAL
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND
AFTER THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
(cover page continued)
Debentures, Series A (the "Series A Subordinated Debentures"), to be issued by
the Corporation. The Series A Subordinated Debentures will mature on March 15,
2027 (the "Stated Maturity"). The Series A Capital Securities will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Series A Common
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities" in the accompanying Prospectus.
Holders of the Series A Capital Securities will be entitled to receive
preferential cumulative cash distributions accruing from the date of original
issuance and payable semi-annually in arrears on March 15 and September 15 of
each year, commencing September 15, 1997, at the annual rate of 8.136% of the
Liquidation Amount of $1,000 per Series A Capital Security ("Distributions").
Subject to certain exceptions, as described herein, the Corporation has the
right to defer payment of interest on the Series A Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Series A Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the rate of 8.136% per annum, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period subject to the requirements set forth
herein. If interest payments on the Series A Subordinated Debentures are so
deferred, Distributions on the Series A Capital Securities will also be deferred
and the Corporation will not be permitted, subject to certain exceptions
described herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities that rank pari passu with or
junior to the Series A Subordinated Debentures. During an Extension Period,
interest on the Series A Subordinated Debentures will continue to accrue (and
the amount of Distributions to which holders of the Series A Capital Securities
are entitled will accumulate) at the rate of 8.136% per annum, compounded
semi-annually from the relevant payment date for such interest, and holders of
Series A Capital Securities will be required to accrue interest income for
United States federal income tax purposes. See "Certain Terms of Series A
Subordinated Debentures -- Option to Defer Interest Payments" and "Certain
Federal Income Tax Consequences -- Interest Income and Original Issue Discount."
The Series A Subordinated Debentures are unsecured and subordinated to all
Senior Debt (as defined in the accompanying Prospectus). Substantially all of
the Corporation's existing indebtedness constitutes Senior Debt. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary including its subsidiary banks upon
any such subsidiary's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary except to the extent that the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Series A Subordinated Debentures (and therefore the Series A
Capital Securities) will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders thereof should look
only to the assets of the Corporation for payments on the Series A Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Subordination"
in the accompanying Prospectus.
The Corporation has, through the Series A Guarantee, the Trust Agreement,
the Series A Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein),
S-2
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(cover page continued)
taken together, fully, irrevocably and unconditionally guaranteed all of the
Series A Issuer's obligations under the Series A Capital Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures, the Expense Agreement and the Guarantees -- Full and
Unconditional Guarantee" in the accompanying Prospectus. The Series A Guarantee
of the Corporation guarantees the payment of Distributions and payments on
liquidation or redemption of the Series A Capital Securities, but only in each
case to the extent of funds held by the Series A Issuer, as described herein
(the "Series A Guarantee"). See "Description of Guarantees" in the accompanying
Prospectus. If the Corporation does not make interest payments on the Series A
Subordinated Debentures held by the Series A Issuer, the Series A Issuer will
have insufficient funds to pay Distributions on the Series A Capital Securities.
The Series A Guarantee does not cover payment of Distributions when the Series A
Issuer has insufficient funds to pay such Distributions. In such event, a holder
of Series A Capital Securities may institute a legal proceeding directly against
the Corporation pursuant to the terms of the Indenture to enforce payment of
amounts equal to such Distributions to such holder. See "Description of Junior
Subordinated Debentures -- Enforcement of Certain Rights By Holders of Preferred
Securities" in the accompanying Prospectus. The obligations of the Corporation
under the Series A Guarantee and the Series A Subordinated Debentures are
subordinate and junior in right of payment to all Senior Debt of the
Corporation.
The Series A Capital Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the Series A Subordinated Debentures at
maturity or their earlier redemption. The Series A Subordinated Debentures are
redeemable prior to maturity at the option of the Corporation (i) on or after
March 15, 2007, in whole at any time or in part from time to time, or (ii) in
whole but not in part at any time in certain circumstances as described under
"Certain Terms of Series A Subordinated Debentures -- Conditional Right to
Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event", upon
the occurrence of a Tax Event or Capital Treatment Event (each as defined
herein). For a description of the redemption prices for Series A Capital
Securities pursuant to clause (i) or (ii) above, see "Certain Terms of Series A
Capital Securities -- Redemption" and "Certain Terms of Series A Subordinated
Debentures -- Redemption". The Corporation has committed to the Federal Reserve
that the Corporation will not exercise its right to redeem the Series A
Subordinated Debentures prior to the Stated Maturity without having received the
prior approval of the Federal Reserve to do so, if such approval is then
required under applicable Federal Reserve capital guidelines or policies.
The Corporation will have the right at any time to terminate the Series A
Issuer and cause the Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in liquidation of the Series A
Issuer. The Corporation has committed to the Federal Reserve that, so long as
the Corporation (or any affiliate) is a holder of Common Securities, the
Corporation will not so terminate the Series A Issuer without having received
the prior approval of the Federal Reserve to do so, if such approval is then
required under applicable Federal Reserve capital guidelines or policies. In the
event of the termination of the Series A Issuer, after satisfaction of
liabilities to creditors of the Series A Issuer as required by applicable law,
the holders of the Series A Capital Securities will be entitled to receive a
Liquidation Amount of $1,000 per Series A Capital Security plus accumulated and
unpaid Distributions thereon to the date of payment, which may be in the form of
a distribution of such amount in Series A Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
If the Series A Subordinated Debentures are distributed to the holders of
Series A Capital Securities upon the liquidation of the Series A Issuer, the
Corporation will use its best efforts to include the Series A Subordinated
Debentures on such stock exchanges or other automated quotation systems, if any,
on which the Series A Capital Securities are then listed or traded.
S-3
<PAGE> 4
(cover page continued)
The Series A Capital Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Series A Capital Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described in the accompanying Prospectus, Series
A Capital Securities in certificated form will not be issued in exchange for the
global certificates. See "Book-Entry Issuance" in the accompanying Prospectus.
S-4
<PAGE> 5
The information in this Prospectus Supplement supplements and should be
read in conjunction with the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, as amended and supplemented from time to time, between the
Corporation and Wilmington Trust Company, as trustee (the "Debenture Trustee"),
and (ii) the "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the Series A Issuer among the Corporation, as Depositor, Wilmington
Trust Company, as Property Trustee (the "Property Trustee") and as Delaware
Trustee (the "Delaware Trustee"), and the Administrative Trustees named therein
(collectively, with the Property Trustee and Delaware Trustee, the "Issuer
Trustees"). Each of the other capitalized terms used in this Prospectus
Supplement and not otherwise defined in this Prospectus Supplement has the
meaning set forth in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Capital Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters. In addition, because holders of Series A Capital Securities may receive
Series A Subordinated Debentures in exchange therefor upon liquidation of the
Series A Issuer, prospective purchasers of Series A Capital Securities are also
making an investment decision with regard to the Series A Subordinated
Debentures and should carefully review all the information regarding the Series
A Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A SUBORDINATED DEBENTURES
The obligations of the Corporation under the Series A Guarantee issued by
the Corporation for the benefit of the holders of Series A Capital Securities
and under the Series A Subordinated Debentures are unsecured and rank
subordinate and junior in right of payment to all Senior Debt of the
Corporation. Substantially all of the Corporation's existing indebtedness
constitutes Senior Debt. Because the Corporation is a holding company, the right
of the Corporation to participate in any distribution of assets of any
subsidiary, including its subsidiary banks, upon any such subsidiary's
liquidation or reorganization or otherwise (and thus the ability of holders of
the Series A Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Series A Guarantee and the Series A Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Series A
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Series A Subordinated Debentures. See "The Corporation." None of
the Indenture, the Series A Guarantee, the Trust Agreement or the Expense
Agreement places any limitation on the amount of secured or unsecured debt,
including Senior Debt, that may be incurred by the Corporation. See "Description
of Guarantees -- Status of the Guarantees" and "Description of Junior
Subordinated Debentures -- Subordination" in the accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Capital Securities is solely dependent upon the Corporation making payments on
the Series A Subordinated Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES
So long as no event of default under the Indenture has occurred or is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each Extension Period, provided that no Extension Period may extend beyond
the Stated Maturity of the Series A Subordinated Debentures. As a consequence of
any such deferral,
S-5
<PAGE> 6
semi-annual Distributions on the Series A Capital Securities by the Series A
Issuer will also be deferred (and the amount of Distributions to which holders
of the Series A Capital Securities are entitled will accumulate additional
Distributions thereon at the rate of 8.136% per annum, compounded semi-annually
from the relevant payment date for such Distributions) during any such Extension
Period. During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the Series A
Subordinated Debentures subject to certain exceptions described herein. See
"Certain Terms of Series A Subordinated Debentures -- Option to Defer Interest
Payments." Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the Series A Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all interest then accrued
and unpaid (together with interest thereon at the rate of 8.136% per annum,
compounded semi-annually from the interest payment date for such interest, to
the extent permitted by applicable law), the Corporation may elect to begin a
new Extension Period subject to the above requirements. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Certain Terms of Series A Capital Securities -- Distributions."
Should an Extension Period occur, a holder of Series A Capital Securities
will be required to recognize income (in the form of original issue discount) in
respect of its pro rata share of the Series A Subordinated Debentures held by
the Series A Issuer for United States federal income tax purposes. As a result,
a holder of Series A Capital Securities will be required to include such income
in gross income for United States federal income tax purposes in advance of the
receipt of cash attributable to such income, and will not receive the cash
related to such income from the Series A Issuer if the holder disposes of the
Series A Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "-- Sale or Redemption of Series A Capital
Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest on the Series A Subordinated Debentures. However, should
the Corporation elect to exercise such right in the future, the market price of
the Series A Capital Securities is likely to be affected. A holder that disposes
of its Series A Capital Securities during an Extension Period, therefore, might
not receive the same return on its investment as a holder that continues to hold
its Series A Capital Securities.
TAX EVENT OR CAPITAL TREATMENT EVENT -- EXCHANGE OF SERIES A CAPITAL SECURITIES
FOR SERIES A SUBORDINATED DEBENTURES, SHORTENING OF MATURITY OF SERIES A
SUBORDINATED DEBENTURES OR REDEMPTION
Upon the occurrence and continuation of a Tax Event or a Capital Treatment
Event (whether occuring before or after March 15, 2007), the Corporation has the
right, if certain conditions are met, (i) to terminate the Series A Issuer and
cause the Series A Subordinated Debentures to be distributed to the holders of
the Series A Capital Securities in exchange therefor upon liquidation of the
Series A Issuer, (ii) to shorten the maturity of the Series A Subordinated
Debentures to a date not earlier than March 15, 2012, or (iii) to redeem the
Series A Subordinated Debentures in whole (but not in part) within 90 days
following the occurrence and continuation of such Tax Event or Capital Treatment
Event and thereby cause a mandatory redemption of the Series A Capital
Securities. The Corporation has committed to the Federal Reserve that it will
not exercise such right unless it has received prior approval of the Federal
Reserve to do so, if such approval is then required under applicable guidelines
or policies of the Federal Reserve.
A "Tax Event" means, with respect to Series A Subordinated Debentures held
by the Series A Issuer or another Issuer (as defined in the Prospectus), the
receipt by the Series A Issuer of an
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<PAGE> 7
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement or decision is announced on or after the
date or issuance of the Series A Capital Securities under the Trust Agreement,
there is more than an insubstantial risk that (i) the Series A Issuer is, or
will be within 90 days of the date of such opinion, subject to United States
Federal income tax with respect to income received or accrued on the Series A
Subordinated Debentures, (ii) interest payable by the Corporation on the Series
A Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Corporation, in whole or in part, for United
States federal income tax purposes or (iii) the Series A Issuer is, or will be
within 90 days of the date of the opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges. With respect to
Series A Subordinated Debentures which are no longer held by the Series A Issuer
or another Issuer, "Tax Event" means the receipt by the Corporation of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Series A Subordinated Debentures under the Indenture,
there is more than an insubstantial risk that interest payable by the
Corporation on the Series A Subordinated Debentures is not, or within 90 days of
the date of such opinion will not be, deductible by the Corporation, in whole or
in part, for United States federal income tax purposes (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
A "Capital Treatment Event" means the reasonable determination by the
Corporation 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 political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws, rules or regulations, which
amendment or change is effective or which pronouncement, action or decision is
announced on or after the date of issuance of the Series A Capital Securities
under the Trust Agreement, there is more than an insubstantial risk that the
Corporation will not be entitled to treat an amount equal to the aggregate
Liquidation Amount of the Series A Capital Securities as "Tier 1 Capital" (or
the then equivalent thereof) for purposes of the capital adequacy guidelines of
the Federal Reserve, as then in effect and applicable to the Corporation.
See "-- Possible Tax Law Changes Affecting the Series A Capital Securities"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to cause a redemption of
the Series A Capital Securities prior to March 15, 2007.
EXCHANGE OF SERIES A CAPITAL SECURITIES FOR SERIES A SUBORDINATED DEBENTURES
The Corporation will have the right at any time to terminate the Series A
Issuer and, after satisfaction of liabilities to creditors of the Series A
Issuer as required by applicable law, cause the Series A Subordinated Debentures
to be distributed to the holders of the Series A Capital Securities in exchange
therefor upon liquidation of the Series A Issuer. The Corporation has committed
to the Federal Reserve that the Corporation will not exercise such right without
having received the prior approval of the Federal Reserve to do so, if such
approval is then required under applicable Federal Reserve capital guidelines or
policies. See "Certain Terms of Series A Capital Securities -- Liquidation of
Series A Issuer and Distribution of Series A Subordinated Debentures to
Holders."
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<PAGE> 8
Under current United States Federal income tax law and interpretations, a
distribution of the Series A Subordinated Debentures upon liquidation of the
Series A Issuer should not be a taxable event to holders of the Series A Capital
Securities. However, if a Tax Event were to occur which would cause the Series A
Issuer to be subject to United States Federal income tax with respect to income
received or accrued on the Series A Subordinated Debentures, a distribution of
the Series A Subordinated Debentures by the Series A Issuer could be a taxable
event to the Series A Issuer and the holders of the Series A Capital Securities.
See "Certain Federal Income Tax Consequences -- Distribution of the Series A
Subordinated Debentures to Holders of Series A Capital Securities."
MARKET PRICES
There can be no assurance as to the market prices for Series A Capital
Securities or Series A Subordinated Debentures that may be distributed in
exchange for Series A Capital Securities upon liquidation of the Series A
Issuer. Accordingly, the Series A Capital Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Series A Subordinated Debentures that a holder of Series A Capital
Securities may receive on liquidation of the Series A Issuer, may trade at a
discount to the price that the investor paid to purchase the Series A Capital
Securities offered hereby. As a result of the existence of the Corporation's
right to defer interest payments, the market price of the Series A Capital
Securities (which represent preferred beneficial interests in the Series A
Issuer) may be more volatile than the market prices of other securities on which
original issue discount accrues that are not subject to such deferrals. See
"Certain Terms of the Series A Subordinated Debentures" and "Description of
Junior Subordinated Debentures -- Corresponding Junior Subordinated Debentures"
in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE; DIRECT ACTION
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on the
Series A Capital Securities, to the extent that the Series A Issuer has funds on
hand available therefor at such time, (ii) the redemption price with respect to
any Series A Securities called for redemption, to the extent that the Series A
Issuer has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Series A
Issuer (unless the Series A Subordinated Debentures are distributed to holders
of the Series A Capital Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Series A Issuer has funds on hand available
therefor at such time, and (b) the amount of assets of the Series A Issuer
remaining available for distribution to holders of the Series A Capital
Securities. The Series A Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Wilmington
Trust Company will act as the indenture trustee under the Series A Guarantee
(the "Guarantee Trustee") for the purposes of compliance with the Trust
Indenture Act and will hold the Series A Guarantee for the benefit of the
holders of the Series A Capital Securities. Wilmington Trust Company will also
act as Debenture Trustee for the Series A Subordinated Debentures and as
Property Trustee and Delaware Trustee under the Trust Agreement.
The holders of not less than a majority in aggregate liquidation amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the Corporation
were to default on its obligation to pay amounts payable under the Series A
Subordinated Debentures, the Series A Issuer would lack funds for the payment of
Distributions or amounts
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payable on redemption of the Series A Capital Securities or otherwise, and, in
such event, holders of the Series A Capital Securities would not be able to rely
upon the Series A Guarantee for payment of such amounts. Instead, in the event a
Debenture Event of Default shall have occurred and be continuing and such event
is attributable to the failure of the Corporation to pay interest on or
principal of the Series A Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Series A Capital Securities
may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of or interest on such
Series A Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Series A Capital Securities of such holder
(a "Direct Action"). In connection with such Direct Action, the Corporation will
have a right of set-off under the Indenture to the extent of any payment made by
the Corporation to such holder of Series A Securities in the Direct Action.
Except as described herein, holders of Series A Securities will not be able to
exercise directly any other remedy available to the holders of the Series A
Subordinated Debentures or assert directly any other rights in respect of the
Series A Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities"
and "-- Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Trust Agreement provides that each holder of Series
A Capital Securities by acceptance thereof agrees to the provisions of the
Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Capital Securities generally will have limited voting
rights relating only to the modification of the Series A Capital Securities and
the exercise of the Series A Issuer's rights as holder of Series A Subordinated
Debentures and the Series A Guarantee. Holders of Series A Capital Securities
will not be entitled to vote to appoint, remove or replace the Property Trustee,
the Delaware Trustee or any Administrative Trustee, and such voting rights are
vested exclusively in the holder of the Series A Common Securities except, with
respect to the Property Trustee and the Delaware Trustee, upon the occurrence of
certain events described in the accompanying Prospectus. The Property Trustee,
the Administrative Trustees and the Corporation may amend the Trust Agreement
without the consent of holders of Series A Capital Securities to ensure that the
Series A Issuer will not be taxable as a corporation or classified for United
States federal income tax purposes as other than a grantor trust, unless such
action materially adversely affects the interests of such holders. See
"Description of Preferred Securities -- Voting Rights; Amendment of Each Trust
Agreement" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities have not been listed on a national
securities exchange or the NASDAQ Stock Market. The absence of such a listing
for the Series A Capital Securities could adversely affect the liquidity of the
Series A Capital Securities.
The Series A Capital Securities may trade at prices that do not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Series A Subordinated Debentures. A holder of Series A Capital Securities that
disposes of its Series A Capital Securities between record dates for payments of
Distributions (and consequently does not receive a Distribution from the Series
A Issuer for the period prior to such disposition) will nevertheless be required
to include accrued but unpaid interest on the Series A Subordinated Debentures
through the date of disposition in income as ordinary income and to add such
amount to its adjusted tax basis in the Series A Capital Securities disposed of.
Such holder will recognize a capital loss to the extent the selling price (which
may not fully reflect the value of accrued but unpaid interest) is less than its
adjusted tax basis (which will include accrued but unpaid interest). Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences -- Sale or Redemption of Series A Capital Securities."
S-9
<PAGE> 10
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES A CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal") was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued by
a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above described
provision of the Budget Proposal is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action.
If a similar provision were to apply to the Series A Subordinated Debentures,
the Corporation would be unable to deduct interest on the Series A Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Series A Subordinated Debentures. Such a
change could give rise to a Tax Event, which in certain circumstances would
permit the Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A Capital
Securities in exchange therefor upon liquidation of the Series A Issuer, to
shorten the maturity of the Series A Subordinated Debentures to a date not
earlier than March 15, 2012 or to cause a redemption of the Series A Capital
Securities. See "Certain Terms of Series A Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem Upon a Tax Event
or Capital Treatment Event" and "-- Redemption" in this Prospectus Supplement
and "Description of Preferred Securities -- Redemption or Exchange" in the
accompanying Prospectus. See also "Certain Federal Income Tax Consequences --
Possible Tax Law Changes."
FIFTH THIRD CAPITAL TRUST I
Fifth Third Capital Trust I is a statutory business trust created under
Delaware law pursuant to (i) the Trust Agreement executed by the Corporation, as
Depositor, Wilmington Trust Company, as Property Trustee and as Delaware
Trustee, and the Administrative Trustees named therein, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on March 5, 1997. The
Series A Issuer's business and affairs are conducted by the Issuer Trustees:
Wilmington Trust Company, as Property Trustee and as Delaware Trustee, and two
individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Series A Issuer exists for the exclusive
purposes of (i) issuing and selling the Series A Securities, (ii) using the
proceeds from the sale of Series A Securities to acquire Series A Subordinated
Debentures issued by the Corporation and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Series A Capital Securities). Accordingly, the Series A Subordinated
Debentures will be the sole assets of the Series A Issuer, and payments under
the Series A Subordinated Debentures will be the sole revenue of the Series A
Issuer. All of the Series A Common Securities will be owned by the Corporation.
The Series A Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Series A Capital Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from an Event of Default under the Indenture, the rights of the
Corporation, as holder of the Series A Common Securities, to payment in respect
of Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Series A Capital Securities.
See "Description of Preferred Securities -- Subordination of Common Securities"
in the accompanying Prospectus. The Corporation will acquire Series A Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Series A Issuer. The Series A Issuer has a term of 55 years, but may
terminate earlier as provided in the Trust Agreement. The principal executive
office of the Series A Issuer is 38 Fountain Square Plaza, Cincinnati, Ohio
45263, Attention: Paul L. Reynolds, and its telephone number is (513) 579-5300.
See "The Issuers" in the accompanying Prospectus.
It is anticipated that the Series A Issuer will not be subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
S-10
<PAGE> 11
THE CORPORATION
The Corporation is a multi-bank holding company subject to the Bank Holding
Company Act of 1956, as amended, and is headquartered in Cincinnati, Ohio. The
Corporation was organized in Ohio on October 7, 1974, and on April 15, 1975
became the owner of all of the outstanding capital stock of its principal bank
subsidiary, The Fifth Third Bank (the "Bank"), an Ohio banking corporation
located in Cincinnati, Ohio.
At December 31, 1996, the Corporation also owned five other banks and one
savings bank in Ohio, two banks and two savings banks in Kentucky, one bank in
Indiana, and one bank in Florida, as well as various other non-bank
subsidiaries. At December 31, 1996, the Bank represented more than 45% of the
Corporation's assets, revenues and net income, although the Corporation expects
that the operations of the other subsidiaries will become increasingly
significant. The Bank will in the foreseeable future continue to be the major
source of the Corporation's assets, revenues and net income.
During January 1997, The Fifth Third Savings Bank of Western Kentucky, FSB
was merged into and with Fifth Third Bank of Kentucky, Inc., Fifth Third Savings
Bank of Northern Ohio, FSB was merged into and with Fifth Third Bank of
Northeastern Ohio and Fifth Third Savings Bank of Northern Kentucky, FSB was
merged into and with Fifth Third Bank of Northern Kentucky, Inc. At the same
time, the Corporation was deregistered as a savings-and-loan holding company.
At December 31, 1996, the Corporation had total consolidated assets of
approximately $21 billion and stockholders' equity of $2 billion. At December
31, 1996, the Corporation was the fifth largest bank holding company
headquartered in Ohio and the 36th largest in the United States, based upon
consolidated total assets. For the year ended December 31, 1996, the Corporation
earned $335 million in net income.
The Corporation's principal business strategy is to aggressively market its
four business lines in the three state region of Ohio, Indiana and Kentucky.
These four business lines include commercial banking, retail banking, trust and
investment management and data processing services. As part of its business
strategy, the Corporation pursues a strong sales ethic, aggressive expense
control and diverse fee income-based revenue.
The Corporation offers a full line of commercial and retail banking
products and services. These products and services are offered through the
Corporation's banking subsidiaries and their offices.
The Corporation also provides, through its banking subsidiaries, full
service trust and investment services. As of December 31, 1996, approximately
$92 billion of assets were under care; approximately $10 billion of these assets
are managed directly. The Corporation's banking subsidiaries focus on trust and
investment services for individuals, corporations and not-for-profit
organizations. Personal trust services include private banking, tax and real
estate services, trust services and services to private foundations. Services to
corporations and not-for-profit organizations include employee benefits,
corporate trust, stock transfers, securities custody, mutual funds and
foundations and endowments.
The Corporation is also in the data processing business through a
wholly-owned subsidiary of the Bank, Midwest Payment Systems, Inc. ("MPS"),
which provides merchant processing services and electronic funds transfer
("EFT") services for the Corporation and its bank subsidiaries as well as other
retail and financial institutions. MPS is a significant participant in the EFT
business and is a source of substantial fee income to the Corporation.
The principal executive office of the Corporation is located at 38 Fountain
Square Plaza, Cincinnati, Ohio 45263, and its telephone number is (513)
579-5300.
S-11
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA OF FIFTH THIRD BANCORP
The following table presents summary consolidated financial data which has
been derived from, and should be read in conjunction with, the consolidated
financial statements, notes thereto and other information of the Corporation
included in the documents incorporated herein by reference. This summary is
qualified in its entirety by the detailed information included in such
documents. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. The comparability of the data presented is affected by
certain acquisitions that the Corporation has completed in the time periods
presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
($000'S EXCEPT RATIO AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FOR THE PERIOD
Interest income........................................... $ 1,385,113 $ 1,173,165 $ 922,301 $ 812,914 $ 787,240
Interest expense.......................................... 695,869 609,733 405,548 339,399 359,370
----------- ----------- ----------- ----------- -----------
Net interest income....................................... 689,244 563,432 516,753 473,515 427,870
Provision for credit losses............................... 64,014 42,962 35,780 48,037 66,100
Other operating income.................................... 368,415 305,715 255,908 231,150 206,308
Operating expenses (1).................................... 493,330 395,617 371,545 352,720 316,315
----------- ----------- ----------- ----------- -----------
Income before income taxes................................ 500,315 430,568 365,336 303,908 251,763
Applicable income taxes................................... 165,256 142,883 120,877 97,673 79,742
----------- ----------- ----------- ----------- -----------
Net income................................................ $ 335,059 $ 287,685 $ 244,459 $ 206,235 $ 172,021
=========== =========== =========== =========== ===========
PER SHARE
Net income................................................ $ 3.22 2.91 2.53 2.19 1.84
Cash dividends declared................................... $ 1.10 .96 .80 .68 .60
Book value at end of period............................... $ 20.25 17.17 14.41 13.29 11.48
Weighted average common shares (000's).................... 103,994 98,879 96,580 93,973 93,494
AT PERIOD END
Loans and leases.......................................... $12,514,792 11,690,643 10,286,457 9,566,898 8,115,590
Earning assets............................................ $18,960,056 16,035,734 13,947,257 12,245,969 10,538,565
Assets.................................................... $20,548,998 17,052,883 14,957,009 13,128,544 11,390,289
Deposits.................................................. $14,374,656 12,485,780 10,630,878 9,477,306 8,447,812
Long-term debt and convertible subordinated notes......... $ 277,661 425,396 178,713 407,864 309,730
Stockholders' equity...................................... $ 2,144,125 1,724,575 1,398,774 1,277,660 1,076,854
PERFORMANCE RATIOS
Return on average assets(1)............................... 1.72% 1.78 1.77 1.71 1.63
Return on average equity(1)............................... 17.2% 18.1 18.6 17.8 16.9
Net interest margin....................................... 3.99% 3.90 4.16 4.39 4.54
Overhead ratio(1) (2)..................................... 45.0% 43.9 46.6 48.6 48.6
CAPITAL RATIOS AT PERIOD END
Equity to assets.......................................... 10.43% 10.11 9.35 9.73 9.45
Tangible equity to tangible assets........................ 9.16% 9.58 8.98 9.36 9.00
Tier 1 risk-adjusted capital(3)........................... 11.37% 11.03 11.26 11.50 11.24
Total risk-adjusted capital(4)............................ 14.06% 14.33 13.21 13.85 14.07
Tier 1 leverage(5)........................................ 9.22% 9.47 9.62 9.59 9.15
ASSET QUALITY DATA
Nonperforming loans and leases............................ $ 30,167 37,555 21,168 21,339 36,465
Nonperforming assets...................................... $ 35,237 40,680 27,330 39,835 78,087
Reserve for credit losses................................. $ 187,278 177,388 155,918 144,537 121,452
Net charge-offs........................................... $ 59,962 29,861 17,474 27,074 45,765
Nonperforming loans and leases to period-end loans and
leases.................................................. .24% .32 .21 .22 .45
Nonperforming assets to period-end loans and leases plus
other real estate owned................................. .28% .35 .27 .42 .96
Reserve for credit losses to nonperforming loans and
leases.................................................. 620.80% 472.34 736.57 677.34 333.06
Reserve for credit losses to period end loans and
leases.................................................. 1.50% 1.52 1.52 1.51 1.50
Net loan charge-offs to average loans and leases
outstanding............................................. .49% .27 .18 .31 .64
RATIO OF EARNINGS TO FIXED CHARGES(6)
Including deposit interest................................ 1.71x 1.70 1.89 1.89 1.69
Excluding deposit interest................................ 3.93x 3.49 4.75 5.77 5.47
</TABLE>
S-12
<PAGE> 13
(1) Operating expenses for 1996 include the impact of the special SAIF
assessment of $16.6 million pretax ($10.8 million after tax or $.10 per
share). For comparability, excluding the impact of this assessment, return
on average assets, return on average equity and the overhead ratio would
have been 1.78%, 17.8% and 43.5%, respectively.
(2) Operating expense divided by the sum of taxable equivalent net interest
income and other operating income.
(3) The Corporation's Tier 1 capital consists of stockholders' equity (excluding
net unrealized gains or losses on securities available for sale), less
certain intangibles.
(4) The Corporation's total capital consists of Tier 1 capital, qualifying
subordinated debt and the reserve for credit losses, subject to limitation.
At least half of a bank holding company's total capital is to be comprised
of Tier 1 capital.
(5) The Tier 1 leverage ratio is defined as the ratio of Tier 1 capital to
average quarterly assets, less certain intangible assets. Federal Reserve
guidelines require a minimum leverage ratio of 3% for bank holding companies
that meet certain specified criteria, including that they have the highest
regulatory rating. All other bank holding companies will be required to
maintain a Tier 1 leverage ratio of 3% plus an additional cushion of at
least 100 to 200 basis points.
(6) Earnings represent income before income taxes plus fixed charges. Fixed
charges include interest expense and the proportion deemed representative of
the interest factor of rental expense, net of income from subleases.
USE OF PROCEEDS
All of the proceeds from the sale of Series A Capital Securities will be
invested by the Series A Issuer in Series A Subordinated Debentures. The
Corporation intends that the proceeds from the sale of such Series A
Subordinated Debentures will be added to its general corporate funds and will be
used for general corporate purposes.
The Corporation is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the Federal
Reserve announced that cumulative preferred securities having the
characteristics of the Series A Capital Securities which qualify as a minority
interest could be included as Tier 1 capital for bank holding companies. Such
Tier 1 capital treatment, together with the Corporation's ability to deduct, for
income tax purposes, interest payable on the Series A Subordinated Debentures,
will provide the Corporation with a more cost-effective means of obtaining
capital for regulatory purposes than other Tier 1 capital alternatives currently
available to it.
S-13
<PAGE> 14
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of December 31, 1996 and as adjusted to give
effect to the consummation of the offering of the Series A Capital Securities.
The following data should be read in conjunction with the consolidated financial
statements and notes thereto of the Corporation and its subsidiaries
incorporated herein by reference.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------
ACTUAL ADJUSTED
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Total long-term debt(a)............................................. $ 277,661 $ 477,661
---------- ----------
Stockholders' equity:
Common stock...................................................... $ 235,090 235,090
Capital surplus................................................... 525,038 525,038
Retained earnings................................................. 1,367,653 1,367,653
Unrealized gains on securities available for sale................. 16,598 16,598
Treasury stock.................................................... (254) (254)
---------- ----------
Total stockholder's equity.......................................... 2,144,125 2,144,125
---------- ----------
Total capitalization................................................ $2,421,786 $2,621,786
========== ==========
</TABLE>
- ---------------
(a) Long-term debt, as adjusted, includes the Series A Subordinated Debentures
issued by the Corporation to the Series A Issuer. The Series A Subordinated
Debentures will mature on March 15, 2027. The Corporation owns all of the
Series A Common Securities of the Series A Issuer.
S-14
<PAGE> 15
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Corporation. The Series A Capital Securities will be presented as a component of
long-term debt in the consolidated balance sheets of the Corporation, and
appropriate disclosures about the Series A Capital Securities, the Series A
Guarantee and the Series A Subordinated Debentures will be included in the notes
to the consolidated financial statements. For financial reporting purposes, the
Corporation will record Distributions payable on the Series A Capital Securities
as interest expense in the consolidated statements of income.
CERTAIN TERMS OF SERIES A CAPITAL SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Capital Securities supplements the description of the terms and provisions of
the Capital Securities set forth in the accompanying Prospectus under the
heading "Description of Preferred Securities," to which description reference is
hereby made. This summary of certain terms and provisions of the Series A
Capital Securities, which describes the material provisions thereof, does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement to which reference is hereby made. The form of
the Trust Agreement has been filed as an exhibit to the Registration Statement
of which this Prospectus Supplement and accompanying Prospectus form a part.
DISTRIBUTIONS
The Series A Capital Securities represent beneficial interests in the
Series A Issuer. Each Series A Capital Security will be entitled to preferential
Distributions at the annual rate of 8.136% of the stated Liquidation Amount of
$1,000, payable semi-annually in arrears on March 15 and September 15 of each
year (each a "Distribution Date"), to the holders of the Series A Capital
Securities at the close of business on the fifteenth day (whether or not a
Business Day (as defined below)) next preceding the relevant Distribution Date.
Distributions will accumulate from the date of original issuance. The first
Distribution payment date for the Series A Capital Securities will be September
15, 1997. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which Distributions are payable on the Series A Capital Securities is not a
Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date such payment was originally
payable. The Paying Agent for the Capital Securities shall be The Fifth Third
Bank. See "Description of Preferred Securities -- Distributions" in the
accompanying Prospectus.
DEFERRAL OF DISTRIBUTIONS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture to defer payment
of interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each Extension Period, provided that no Extension Period may extend beyond
the Stated Maturity of the Series A Subordinated Debentures. As a consequence of
any such deferral of interest payments by the Corporation, semi-annual
Distributions on the Series A Capital Securities will also be deferred by the
Series A Issuer during any such Extension Period. Distributions to which holders
of the Series A Capital Securities are entitled will accumulate
S-15
<PAGE> 16
additional Distributions thereon at the rate per annum of 8.136% thereof,
compounded semi-annually from the relevant payment date for such Distributions.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Corporation may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Corporation's capital
stock or (ii) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu in all respects with or junior in interest to the Series A
Subordinated Debentures subject to certain exceptions described herein. See
"Certain Terms of Series A Subordinated Debentures -- Option to Defer Interest
Payments". Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest on the Series A
Subordinated Debentures, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the rate of 8.136% per annum, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may elect to begin a
new Extension Period. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "Certain Federal Income
Tax Consequences -- Interest Income and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from such repayment or redemption
shall be applied by the Property Trustee to redeem a Like Amount (as defined in
the accompanying Prospectus) of the Series A Securities, upon not less than 30
nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price, with respect to the Series A Capital
Securities (the "Redemption Price"), equal to the aggregate Liquidation Amount
of such Series A Capital Securities plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date"), and the related
amount of the premium, if any, paid by the Corporation upon the concurred
redemption of such Series A Subordinated Debentures. See "Certain Terms of
Series A Subordinated Debentures -- Redemption." If less than all of the Series
A Subordinated Debentures are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption, including any premium paid
by the Corporation, shall be allocated to the redemption pro rata of the Series
A Capital Securities and the Series A Common Securities. The Corporation has
committed to the Federal Reserve that the Corporation will not exercise its
right to redeem the Series A Subordinated Debentures prior to the Stated
Maturity without having received the prior approval of the Federal Reserve to do
so, if such approval is then required under applicable Federal Reserve capital
guidelines or policies.
The Corporation has the right to redeem the Series A Subordinated
Debentures (i) on or after March 15, 2007, in whole at any time or in part from
time to time or (ii) in whole but not in part at any time, in certain
circumstances as described under "Certain Terms of Series A Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem upon a Tax Event
or Capital Treatment Event", within 90 days following the occurrence of a Tax
Event or Capital Treatment Event. A redemption of the Series A Subordinated
Debentures would cause a mandatory redemption of the Series A Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices expressed in percentages of the Liquidation Amount,
together with accumulated and unpaid
S-16
<PAGE> 17
Distributions to but excluding the Redemption Date. If redeemed during the
12-month period beginning March 15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
-------------------------------------------------------- ----------
<S> <C>
2007.................................................... 104.0680%
2008.................................................... 103.6612
2009.................................................... 103.2544
2010.................................................... 102.8476
2011.................................................... 102.4408
2012.................................................... 102.0340
2013.................................................... 101.6272
2014.................................................... 101.2204
2015.................................................... 100.8136
2016.................................................... 100.4068
</TABLE>
and at 100% on or after March 15, 2017.
The Redemption Price, in the case of a redemption following a Tax Event or
Capital Treatment Event as described under (ii) above, shall equal the aggregate
Liquidation Amount of such Series A Capital Securities together with accumulated
and unpaid Distributions to but excluding the Redemption Date.
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Corporation will have the right at any time to liquidate the Series A
Issuer and cause Series A Subordinated Debentures to be distributed to the
holders of the Series A Capital Securities in exchange therefor upon liquidation
of the Series A Issuer. The Corporation has committed to the Federal Reserve
that, so long as the Corporation (or any affiliate) is a holder of Series A
Common Securities, the Corporation will not exercise such right without having
received the prior approval of the Federal Reserve to do so, if such approval is
then required under applicable Federal Reserve capital guidelines or policies.
Under current United States Federal income tax law, a distribution of
Series A Subordinated Debentures in exchange for Series A Capital Securities
should not be a taxable event to holders of the Series A Capital Securities.
Should there be a change in law, a change in legal interpretation, a Tax Event
or other circumstances, however, the distribution of the Series A Subordinated
Debentures could be a taxable event to holders of the Series A Capital
Securities. See "Certain Federal Income Tax Consequences -- Distribution of
Series A Subordinated Debentures to Holders of Series A Capital Securities."
If the Corporation elects to liquidate the Series A Issuer and thereby
causes the Series A Subordinated Debentures to be distributed to holders of the
Series A Capital Securities in exchange therefor upon liquidation of the Series
A Issuer, the Corporation will continue to have the right to redeem the Series A
Subordinated Debentures in certain circumstances as described under "Certain
Terms of Series A Subordinated Debentures -- Redemption."
LIQUIDATION VALUE
The amount payable on the Series A Capital Securities in the event of any
liquidation of the Series A Issuer is $1,000 per Series A Capital Security plus
accumulated and unpaid Distributions, which may be in the form of a distribution
of a Like Amount in Series A Subordinated Debentures, subject to certain
exceptions. See "Description of Preferred Securities -- Liquidation Distribution
Upon Termination" in the accompanying Prospectus.
S-17
<PAGE> 18
REGISTRATION OF SERIES A CAPITAL SECURITIES
The Series A Capital Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the Series
A Capital Securities will be shown on, and transfers thereof will be effected
only through, records maintained by Participants in DTC (as defined in the
accompanying Prospectus). Except as described below and in the accompanying
Prospectus, Series A Capital Securities in certificated form will not be issued
in exchange for the global certificates. See "Book-Entry Issuance" in the
accompanying Prospectus.
A global security shall be exchangeable for Series A Capital Securities
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Series A Issuer that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time DTC ceases to be a clearing agency registered under
the Exchange Act, at a time when DTC is required to be so registered to act as
such depositary, (ii) the Series A Issuer in its sole discretion determines that
such global security shall be so exchangeable, or (iii) there shall have
occurred and be continuing an event of default under the Indenture with respect
to the Series A Subordinated Debentures. Any global security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as DTC shall direct. It is
expected that such instructions will be based upon directions received by DTC
from its Participants with respect to ownership of beneficial interests in such
global security. In the event that Series A Capital Securities are issued in
definitive form, such Series A Capital Securities will be in denominations of
$1,000 and integral multiples thereof and may be transferred or exchanged at the
offices described below.
Payments on Series A Capital Securities represented by a global security
will be made to DTC, as the depositary for the Series A Capital Securities. In
the event Series A Capital Securities are issued in certificated form, the
Liquidation Amount and Distributions will be payable, the transfer of the Series
A Capital Securities will be registrable, and Series A Capital Securities will
be exchangeable for Series A Capital Securities of other denominations of a like
aggregate Liquidation Amount, at the corporate trust office of the Property
Trustee in New York, New York, or at the offices of any paying agent or transfer
agent appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series A Capital Securities are issued in certificated form,
the record dates for payment of Distributions will be fifteen days prior to the
relevant Distribution payment date. For a description of DTC and the terms of
the depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance" in
the accompanying Prospectus.
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CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and provisions
of the Junior Subordinated Debentures set forth in the accompanying Prospectus
under the headings "Description of Junior Subordinated Debentures", to which
description reference is hereby made. The summary of certain terms and
provisions of the Series A Subordinated Debentures set forth below, which
describes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Indenture
to which reference is hereby made. The form of Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus Supplement and
accompanying Prospectus form a part.
Concurrently with the issuance of the Series A Capital Securities, the
Series A Issuer will invest the proceeds thereof, together with the
consideration paid by the Corporation for the Series A Common Securities, in the
Series A Subordinated Debentures issued by the Corporation. The Series A
Subordinated Debentures will bear interest at the annual rate of 8.136% of the
principal amount thereof, payable semi-annually in arrears on March 15 and
September 15 of each year (each, an "Interest Payment Date"), commencing
Setember 15, 1997, to the person in whose name each Series A Subordinated
Debenture is registered, subject to certain exceptions, at the close of business
on the Business Day next preceding such Interest Payment Date. It is anticipated
that, until the liquidation, if any, of the Series A Issuer, the Series A
Subordinated Debentures will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Series A Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Series A Subordinated Debentures is not a Business Day, then payment of
the interest payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of 8.136%
thereof, compounded semi-annually from the relevant Interest Payment Date. The
term "interest" as used herein shall include semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined below), as applicable.
The Series A Subordinated Debentures will be issued as a series of junior
subordinated deferrable interest debentures under the Indenture. The Series A
Subordinated Debentures will mature on March 15, 2027 (the "Stated Maturity").
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Debt of the Corporation.
See "Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. Substantially all of the Corporation's existing
indebtedness constitutes Senior Debt. Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Series A Capital Securities to
benefit indirectly from such distribution), is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the Series A
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of Series A
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Series A Subordinated Debentures. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Debt, whether
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under the Indenture or any existing or other indenture that the Corporation may
enter into in the future or otherwise. See "Description of Junior Subordinated
Debentures -- Subordination" in the accompanying Prospectus.
OPTION TO DEFER INTEREST PAYMENTS
So long as no event of default under the Indenture has occurred and is
continuing, the Corporation has the right under the Indenture at any time or
from time to time during the term of the Series A Subordinated Debentures to
defer payment of interest on the Series A Subordinated Debentures for a period
not exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Series A Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid on the
Subordinated Debentures (together with interest on such unpaid interest at the
annual rate of 8.136%, compounded semi-annually from the relevant Interest
Payment Date, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Series A Subordinated
Debentures (or holders of Series A Capital Securities while such series is
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation (including
other Junior Subordinated Debentures) that rank pari passu in all respects with
or junior in interest to the Series A Subordinated Debentures (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Corporation in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Corporation (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Corporation's capital stock (or any
capital stock of a subsidiary of the Corporation) for any class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock, (c) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest on the Series A
Subordinated Debentures, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the rate of 8.136% per annum, compounded semi-annually from
the relevant Interest Payment Date, to the extent permitted by applicable law),
the Corporation may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the date interest on the Series A Subordinated Debentures would have been
payable except for the election to begin such Extension Period,
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(ii) the date the Administrative Trustees are required to give notice to any
applicable stock exchange or automated quotation system on which the Series A
Capital Securities are then listed or quoted or to holders of Series A
Subordinated Debentures of the record date or (iii) the date such interest is
payable, but in any event not less than one Business Day prior to such record
date. The Debenture Trustee shall give notice of the Corporation's election to
begin a new Extension Period to the holders of the Series A Subordinated
Debentures. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period. See "Description of Junior Subordinated
Debentures -- Option to Defer Interest Payments" in the accompanying Prospectus.
ADDITIONAL SUMS
If the Series A Issuer is required to pay any additional taxes, duties or
other governmental charges as a result of a Tax Event, the Corporation will pay
as additional amounts on the Series A Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
the Series A Issuer shall not be reduced as a result of any such additional
taxes, duties or other governmental charges.
REDEMPTION
The Series A Subordinated Debentures are redeemable prior to maturity at
the option of the Corporation (i) on or after March 15, 2007, in whole at any
time or in part from time to time, or (ii) in whole but not in part at any time,
in certain circumstances as described under "-- Conditional Right to Shorten
Maturity Redeem upon a Tax Event or Capital Treatment Event", within 90 days
following the occurrence of a Tax Event or Capital Treatment Event. The
Corporation has committed to the Federal Reserve that it will not exercise its
right to redeem the Series A Subordinated Debentures prior to the Stated
Maturity without having received the prior approval of the Federal Reserve to do
so, if such consent is then required under applicable Federal Reserve capital
guidelines or policies. The proceeds of any such redemption will be used by the
Series A Issuer to redeem the Series A Securities.
The Redemption Price in the case of a redemption under (i) above shall
equal the following prices expressed in percentages of the principal amount,
together with accrued but unpaid interest to but excluding the Redemption Date.
If redeemed during the 12-month period beginning March 15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------------------------------ ----------
<S> <C>
2007.......................... 104.0680%
2008.......................... 103.6612
2009.......................... 103.2544
2010.......................... 102.8476
2011.......................... 102.4408
2012.......................... 102.0340
2013.......................... 101.6272
2014.......................... 101.2204
2015.......................... 100.8136
2016.......................... 100.4068
</TABLE>
and at 100% on or after March 15, 2017.
The Redemption Price, in the case of a redemption following a Tax Event or
Capital Treatment Event as described under (ii) above, shall equal 100% of the
principal amount of such Series A Subordinated Debentures together with accrued
and unpaid interest to but excluding the Redemption Date.
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<PAGE> 22
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A Capital
Securities -- Liquidation of Series A Issuer and Distribution of Series A
Subordinated Debentures to Holders", under certain circumstances involving the
termination of the Series A Issuer, Series A Subordinated Debentures may be
distributed to the holders of the Series A Capital Securities in exchange
therefor upon liquidation of the Series A Issuer after satisfaction of
liabilities to creditors of the Series A Issuer as provided by applicable law.
If distributed to holders of Series A Capital Securities, the Series A
Subordinated Debentures will initially be issued in the form of one or more
global securities and DTC, or any successor depositary for the Series A Capital
Securities, will act as depositary for the Series A Subordinated Debentures. It
is anticipated that the depositary arrangements for the Series A Subordinated
Debentures would be substantially identical to those in effect for the Series A
Capital Securities. If Series A Subordinated Debentures are distributed to the
holders of Series A Capital Securities in exchange therefor upon liquidation of
the Series A Issuer, the Corporation will use its best efforts to include the
Series A Subordinated Debentures on such stock exchanges or automated quotation
system, if any, on which the Series A Capital Securities are then listed or
quoted. There can be no assurance as to the market price of any Series A
Subordinated Debentures that may be distributed to the holders of Series A
Capital Securities.
CONDITIONAL RIGHT TO SHORTEN MATURITY OR REDEEM UPON A TAX EVENT OR CAPITAL
TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Corporation experienced in such matters, there would
in all cases, after effecting the termination of the Series A Issuer and the
distribution of the Series A Subordinated Debentures to the holders of the
Series A Capital Securities in exchange therefor upon liquidation of the Series
A Issuer, be more than an insubstantial risk that an Adverse Tax Consequence (as
defined in "Risk Factors--Tax Event or Capital Treatment Event--Exchange of
Series A Capital Securities for Series A Subordinated Debentures, Shortening of
Maturity of Series A Debentures or Redemption") would continue to exist, (ii) in
the reasonable determination of the Corporation, there would in all cases, after
effecting the termination of the Series A Issuer and the distribution of the
Series A Subordinated Debentures to the holders of the Series A Capital
Securities in exchange therefor upon liquidation of the Series A Issuer, be more
than an insubstantial risk that the Corporation will not be entitled to treat an
amount equal to the Liquidation Amount of the Series A Capital Securities as
"Tier 1 Capital" (or the equivalent thereof) or (iii) the Series A Subordinated
Debentures are not held by the Series A Issuer, then the Corporation shall have
the right (a) to shorten the Stated Maturity of the Series A Subordinated
Debentures to the minimum extent required, but in any event to a date not
earlier than March 15, 2012 (the action referred to in this clause (a) being
referred to herein as a "Maturity Advancement"), such that, in the opinion of
counsel to the Corporation experienced in such matters, after advancing the
Stated Maturity, interest paid on the Series A Subordinated Debentures will be
deductible for federal income tax purposes, or (b) if either (x) in the opinion
of counsel to the Corporation experienced in such matters, there would in all
cases, after effecting a Maturity Advancement, be more than an insubstantial
risk that an Adverse Tax Consequence would continue to exist or (y) in the
reasonable determination of the Corporation, there would in all cases, after
effecting a Maturity Advancement, be more than an insubstantial risk that the
Corporation will not be entitled to treat an amount equal to the Liquidation
Amount of the Series A Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Corporation, to redeem
the Series A Subordinated Debentures, in whole but not in part, at any time
within 90 days following the occurrence of the Tax Event or Capital Treatment
Event at a Redemption Price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the Redemption Date. See "Certain Terms
of Series A Capital Securities -- Liquidation of Series A Issuer and
Distribution of Series A Subordinated Debentures to Holders" and "-- Redemption"
and "Certain Terms of Series A Subordinated Debentures -- General" and
" -- Redemption".
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<PAGE> 23
Holders of Series A Capital Securities should consult their own tax
advisors regarding the tax consequences to them of a Maturity Advancement.
See "Certain Federal Tax Law Consequences -- Possible Tax Law Changes" for
a discussion of certain legislative proposals that, if adopted, could give risk
to a Tax Event, which may permit the Corporation to shorten the Stated Maturity
of the Series A Subordinated Debentures or cause a redemption of the Series A
Capital Securities prior to March 15, 2007.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial interests
in the Series A Subordinated Debentures will be shown on, and transfers thereof
will be effected only through, records maintained by Participants in DTC. Except
as described below and in the accompanying Prospectus, Series A Subordinated
Debentures in certificated form will not be issued in exchange for the global
certificates. See "Book-Entry Issuance" in the accompanying Prospectus.
A global security shall be exchangeable for Series A Subordinated
Debentures registered in the names of persons other than DTC or its nominee only
if (i) DTC notifies the Corporation that it is unwilling or unable to continue
as a depositary for such global security and no successor depositary shall have
been appointed, or if at any time DTC ceases to be a clearing agency registered
under the Exchange Act, at a time when DTC is required to be so registered to
act as such depositary, (ii) the Corporation in its sole discretion determines
that such global security shall be so exchangeable, or (iii) there shall have
occurred and be continuing an event of default under the Indenture with respect
to the Series A Subordinated Debentures. Any global security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as DTC shall direct. It is
expected that such instructions will be based upon directions received by DTC
from its Participants with respect to ownership of beneficial interests in such
global security. In the event that Series A Subordinated Debentures are issued
in definitive form, such Series A Subordinated Debentures will be in
denominations of $1,000 integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Series A Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Series A Subordinated
Debentures. In the event Series A Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Subordinated Debentures will be registrable, and Series A Subordinated
Debentures will be exchangeable for Series A Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate office of
the Debenture Trustee in New York, New York, or at the offices of any paying
agent or transfer agent appointed by the Corporation, provided that payment of
interest may be made at the option of the Corporation by check mailed to the
address of the persons entitled thereto or by wire transfer. In addition, if the
Series A Subordinated Debentures are issued in certificated form, the record
dates for payment of interest will be fifteen days prior to the date on which
such interest payment is scheduled to be made. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Book-Entry
Issuance" in the accompanying Prospectus.
CERTAIN TERMS OF SERIES A GUARANTEE
The Series A Guarantee guarantees to the holders of the Series A Capital
Securities the following payments, to the extent not paid by the Series A
Issuer: (i) any accumulated and unpaid Distributions required to be paid on the
Series A Capital Securities, to the extent that the Series A Issuer has funds on
hand available therefor at such time, (ii) the Redemption Price with respect to
any Series A Capital Securities called for redemption, to the extent that the
Series A Issuer has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution,
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winding-up or liquidation of the Series A Issuer (unless the Series A
Subordinated Debentures are distributed to holders of the Series A Capital
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment, to the extent that
the Series A Issuer has funds on hand available therefor at such time, and (b)
the amount of assets of the Series A Issuer remaining available for distribution
to holders of the Series A Capital Securities after payment of creditors of the
Series A Issuer as required by applicable law. The Series A Guarantee will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company will act as the Guarantee Trustee for the purposes of compliance with
the Trust Indenture Act and will hold the Series A Guarantee for the benefit of
the holders of the Series A Capital Securities. Wilmington Trust Company will
also act as Debenture Trustee for the Series A Subordinated Debentures and as
Property Trustee and Delaware Trustee.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect to the Series A Guarantee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Series A Guarantee.
Any holder of the Series A Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Series A
Guarantee without first instituting a legal proceeding against the Series A
Issuer, the Guarantee Trustee or any other person or entity. If the Corporation
were to default on its obligation to pay amounts payable under the Series A
Subordinated Debentures, the Series A Issuer would lack funds for the payment of
Distributions or amounts payable on redemption of the Series A Capital
Securities or otherwise, and, in such event, holders of the Series A Capital
Securities would not be able to rely upon the Series A Guarantee for payment of
such amounts. Instead, if any event of default under the Indenture shall have
occurred and be continuing and such event is attributable to the failure of the
Corporation to pay interest or premium, if any, on or principal of the Series A
Subordinated Debentures on the applicable Interest Payment Date, then a holder
of Series A Capital Securities may institute a Direct Action against the
Corporation pursuant to the terms of the Indenture for enforcement of payment to
such holder of the principal of or interest or premium, if any, on such Series A
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Series A Capital Securities of such holder. In
connection with such Direct Action, the Corporation will have a right to set-off
under the Indenture to the extent of any payment made by the Corporation to such
holder of Series A Securities in the Direct Action. Except as described herein,
holders of Series A Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Series A Subordinated Debentures or
assert directly any other rights in respect of the Series A Subordinated
Debentures. See "Description of Guarantees" in the accompanying Prospectus. The
Trust Agreement provides that each holder of Series A Capital Securities by
acceptance thereof agrees to the provisions of the Series A Guarantee, the
Expense Agreement and the Indenture.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA")(a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Series A Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code") prohibit Plans, as well as individual retirement
accounts and Keogh plans subject to Section 4975 of the Code (also "Plans"),
from engaging in certain transactions involving "plan assets" with persons who
are "parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") with respect to such Plan. A violation of these
"prohibited transaction"
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rules may result in an excise tax or other liabilities under ERISA and/or
Section 4975 of the Code for such persons, unless exemptive relief is available
under an applicable statutory or administrative exemption. Employee benefit
plans that are governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of ERISA) and foreign plans
(as described in Section 4(b)(4) of ERISA) are not subject to the requirements
of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Series A Issuer would be
deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if "plan assets" of the Plan were used to acquire an equity interest in
the Series A Issuer and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Series A Issuer would not be deemed to be "plan assets" of
investing Plans if, immediately after the most recent acquisition of any equity
interest in the Series A Issuer, less than 25% of the value of each class of
equity interests in the Series A Issuer were held by Plans, other employee
benefit plans not subject to ERISA or Section 4975 of the Code (such as
governmental, church and foreign plans), and entities holding assets deemed to
be "plan assets" of any Plan (collectively, "Benefit Plan Investors"), or if the
Series A Capital Securities were "publicly-offered securities" for purposes of
the Plan Assets Regulation. No assurance can be given that the value of the
Series A Capital Securities held by Benefit Plan Investors will be less than 25%
of the total value of such Series A Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. In
addition, the Series A Capital Securities will be deemed "publicly-offered
securities" for the purposes of the Plan Asset Regulations only if owned by 100
or more investors independent of the Series A Issuer and each other. No
assurance can be given that the Series A Capital Securities would be considered
to be "publicly-offered securities" under the Plan Assets Regulation. All of the
Series A Common Securities will be purchased and initially held by the
Corporation.
Certain transactions involving the Series A Issuer could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Series A Capital Securities were
acquired with "plan assets" of such Plan and the assets of the Series A Issuer
were deemed to be "plan assets" of Plans investing in the Series A Issuer. For
example, if the Corporation is a Party in Interest with respect to an investing
Plan (either directly or by reason of its ownership of the Bank or other
subsidiaries), extensions of credit between the Corporation and the Series A
Issuer (as represented by the Series A Subordinated Debentures and the
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available under
an applicable administrative exemption (see below). In addition, if the
Corporation were considered to be a fiduciary with respect to the Series A
Issuer as a result of certain powers it holds (such as the powers to remove and
replace the Property Trustee and the Administrative Trustees), certain
operations of the Series A Issuer, including the optional redemption or
acceleration of the Series A Subordinated Debentures, could be considered to be
prohibited transactions under Section 406(b) of ERISA and Section 4975(c)(1)(E)
of the Code. In order to avoid such prohibited transactions, each investing
plan, by purchasing the Series A Capital Securities, will be deemed to have
directed the Series A Issuer to invest in the Series A Subordinated Debentures
and to have appointed the Property Trustee.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Series A Capital
Securities if assets of the Series A Issuer were deemed to be "plan assets" of
Plans investing in the Series A Issuer as described above. Those class
exemptions are PTCE 96-23 (for certain transactions determined by in-house asset
managers),
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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 separate accounts), and PTCE 84-14 (for certain transactions determined
by independent qualified professional asset managers).
Because the Series A Capital Securities may be deemed to be equity
interests in the Series A Issuer for purposes of applying ERISA and Section 4975
of the Code, the Series A Capital Securities may not be purchased and should not
be held by any Plan, any entity whose underlying assets include "plan assets" by
reason of any plan's investment in the entity (a "Plan Asset Entity") or any
person investing "plan assets" of any Plan, unless such purchaser or holder is
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14 or another applicable exemption. Any purchaser or holder of the Series
A Capital Securities or any interest therein will be deemed to have represented
by its purchase and holding thereof that it either (a) is not a Plan or (b) is
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14 or another applicable exemption with respect to such purchase or
holding. If a purchaser of the Series A Capital Securities that is a Plan or a
Plan Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60,
91-38, 90-1, or 84-14, the Corporation, the Series A Issuer and the Property
Trustee may require a satisfactory opinion of counsel or other evidence with
respect to the availability of such exemption for such purchase and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Series A
Capital Securities on behalf of or with "plan assets" of any Plan consult with
their counsel regarding the potential consequences if the assets of the Series A
Issuer were deemed to be "plan assets" and the availability of exemptive relief
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income
tax consequences of the purchase, ownership and disposition of Series A Capital
Securities. This summary only addresses the tax consequences to a person that
acquires Series A Capital Securities on their original issue at their original
offering price and that is (i) an individual citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state thereof or the District of Columbia or (iii) an
estate or trust the income of which is subject to United States federal income
tax regardless of source (a "United States Person"). This summary does not
address all tax consequences that may be applicable to a United States Person
that is a beneficial owner of Series A Capital Securities, nor does it address
the tax consequences to (i) persons that are not United States Persons, (ii)
persons that may be subject to special treatment under United States federal
income tax law, such as banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt
organizations and dealers in securities or currencies, (iii) persons that will
hold Series A Capital Securities as part of a position in a "straddle" or as
part of a "hedging," "conversion" or other integrated investment transaction for
federal income tax purposes, (iv) persons whose functional currency is not the
United States dollar or (v) persons that do not hold Series A Capital Securities
as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, special tax counsel to the
Corporation and the Series A Issuer. This summary is based upon the Code,
Treasury Regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any
time. Such changes may be applied retroactively in a manner that could cause the
tax consequences to vary substantially from the consequences described below,
possibly adversely affecting a beneficial owner of Series A Capital Securities.
In particular, legislation has been proposed that could
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<PAGE> 27
adversely affect the Corporation's ability to deduct interest on the Series A
Subordinated Debentures, which may in turn permit the Corporation to cause a
redemption of the Series A Capital Securities. See "-- Possible Tax Law
Changes." The authorities on which this summary is based are subject to various
interpretations, and it is therefore possible that the federal income tax
treatment of the purchase, ownership and disposition of Series A Capital
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A CAPITAL SECURITIES, AS
WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE SERIES A SUBORDINATED DEBENTURES AND THE SERIES A ISSUER
Under current law and assuming compliance with the terms of the Trust
Agreement, the Series A Issuer will not be classified as an association taxable
as a corporation for United States federal income tax purposes. As a result,
each beneficial owner of Series A Capital Securities (a "Securityholder") will
be required to include in its gross income its pro rata share of the interest
income, including original issue discount, paid or accrued with respect to the
Series A Subordinated Debentures whether or not cash is actually distributed to
the Securityholders. See "-- Interest Income and Original Issue Discount." The
Series A Subordinated Debentures will be classified as indebtedness of the
Corporation for United States Federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a contingency that
stated interest will not be timely paid that is "remote" because of the terms of
the relevant debt instrument will be ignored in determining whether such debt
instrument is issued with original issue discount ("OID"). As a result of terms
and conditions of the Series A Subordinated Debentures that prohibit certain
payments with respect to the Corporation's capital stock and indebtedness if the
Corporation elects to extend interest payment periods, the Corporation believes
that the likelihood of its exercising its option to defer payments is remote.
See "Certain Terms of Series A Subordinated Debentures -- Option to Defer
Interest Payments." Based on the foregoing, the Corporation believes that the
Series A Subordinated Debentures will not be considered to be issued with OID at
the time of their original issuance and, accordingly, a Securityholder should
include in gross income such holder's allocable share of interest actually paid
on the Series A Subordinated Debentures. The following discussion assumes that
unless and until the Corporation exercises its option to defer interest on the
Series A Subordinated Debentures, the Series A Subordinated Debentures will not
be treated as issued with OID.
Under the Regulations, if the Corporation exercises its option to defer any
payment of interest, the Series A Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Series A Subordinated
Debentures would thereafter be treated as OID as long as the Series A
Subordinated Debentures remained outstanding. In such event, all of a
Securityholder's taxable interest income with respect to the Series A
Subordinated Debentures would be accounted for as OID on an economic-accrual
basis regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
Consequently, a Securityholder would be required to include in gross income OID
even though the Corporation would not make any actual cash payments during an
Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to the interpretation herein.
S-27
<PAGE> 28
Because income on the Series A Capital Securities will constitute interest
or OID, corporate Securityholders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Series A
Capital Securities.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A CAPITAL
SECURITIES
Under current law, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of Series
A Capital Securities -- Liquidation of Series A Issuer and Distribution of
Series A Subordinated Debentures to Holders" will be non-taxable and will result
in the Securityholder receiving directly its pro rata share of the Series A
Subordinated Debentures previously held indirectly through the Series A Issuer,
with a holding period and aggregate-tax basis equal to the holding period and
aggregate-tax basis such Securityholder had in its Series A Capital Securities
before such distribution. If, however, the liquidation of the Series A Issuer
were to occur because the Series A Issuer is subject to United States Federal
income tax with respect to income accrued or received on the Series A
Subordinated Debentures, the distribution of Series A Subordinated Debentures to
Securityholders by the Series A Issuer would be a taxable event to the Series A
Issuer and each Securityholder, and each Securityholder would recognize gain or
loss as if the Securityholder had exchanged its Series A Capital Securities for
the Series A Subordinated Debentures it received upon the liquidation of the
Series A Issuer. A Securityholder will include interest in income in respect of
Series A Subordinated Debentures received from the Series A Issuer in the manner
described above under "-- Interest Income and Original Issue Discount."
SALE OR REDEMPTION OF SERIES A CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Series A
Capital Securities will recognize gain or loss equal to the difference between
its adjusted-tax basis in the Series A Capital Securities and the amount
realized on the sale of such Series A Capital Securities. Assuming that the
Corporation does not exercise its option to defer payment of interest on the
Series A Subordinated Debentures, a Securityholder's adjusted tax basis in the
Series A Capital Securities generally will be its initial purchase price. If the
Series A Subordinated Debentures are deemed to be issued with OID, as a result
of the Corporation's deferral of any interest payment, a Securityholder's
adjusted tax basis in the Series A Capital Securities generally will be its
initial purchase price, increased by OID previously includible in such
Securityholder's gross income to the date of disposition and decreased by
Distributions or other payments received on the Series A Capital Securities
since and including the date of the first Extension Period. Such gain or loss
generally will be a capital gain or loss (except to the extent any amount
realized is treated as a payment of accrued interest with respect to such
Securityholder's pro rata share of the Series A Subordinated Debentures required
to be included in income) and generally will be a long-term capital gain or loss
if the Series A Capital Securities have been held for more than one year.
Should the Corporation exercise its option to defer any payment of interest
on the Series A Subordinated Debentures, the Series A Capital Securities may
trade at a price that does not accurately reflect the value of accrued but
unpaid interest with respect to the underlying Series A Subordinated Debentures.
In the event of such a deferral, a Securityholder who disposes of its Series A
Capital Securities between record dates for payments of distributions thereon
will be required to include in income as ordinary income accrued but unpaid
interest on the Series A Subordinated Debentures to the date of disposition and
to add such amount to its adjusted-tax basis in its Series A Capital Securities.
To the extent the selling price is less than the Securityholder's adjusted-tax
basis, such holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
S-28
<PAGE> 29
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid and OID accrued on the Series A Capital
Securities held of record by United States Persons (other than corporations and
other exempt Securityholders) will be reported to the IRS. "Backup" withholding
at a rate of 31% will apply to payments of interest to nonexempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury Regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Series A Capital Securities
to or through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Series A Capital Securities will be
reported to holders on Form 1099 and mailed to holders of the Series A Capital
Securities by January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the Budget Proposal was released. If enacted, the
Budget Proposal would generally deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 15 years
and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provision of the Budget Proposal is proposed
to be effective generally for instruments issued on or after the date of first
Congressional committee action. If a similar provision were to apply to the
Series A Subordinated Debentures, the Corporation would be unable to deduct
interest on the Series A Subordinated Debentures. Under current law, the
Corporation will be able to deduct interest on the Series A Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Series A Subordinated Debentures. Such a
change could give rise to a Tax Event, which in certain circumstances would
permit the Corporation to terminate the Series A Issuer and cause the Series A
Subordinated Debentures to be distributed to the holders of the Series A Capital
Securities in exchange therefor upon liquidation of the Series A Issuer, to
shorten the maturity of the Series A Subordinated Debentures to a date not
earlier than March 15, 2012 or to cause a redemption of the Series A Capital
Securities, as described more fully under "Certain Terms of Series A
Subordinated Debentures -- Conditional Right to Shorten Maturity or Redeem upon
a Tax Event or Capital Treatment Event" and "-- Redemption" and "Certain Terms
of Series A Capital Securities -- Redemption".
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Corporation and the Series A Issuer have agreed that the
Series A Issuer will sell to each of the Underwriters named below, and each of
such Underwriters has severally agreed to purchase from the Series A Issuer, the
respective number of Series A Capital Securities set forth opposite its name
below:
S-29
<PAGE> 30
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
CAPITAL
UNDERWRITER SECURITIES
-------------------------------------------------------------------------- ---------
<S> <C>
Goldman, Sachs & Co. ..................................................... 40,000
J.P. Morgan Securities Inc. .............................................. 40,000
Smith Barney Inc. ........................................................ 40,000
Donaldson, Lufkin & Jenrette Securities Corporation....................... 20,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ 20,000
Salomon Brothers Inc ..................................................... 20,000
UBS Securities LLC........................................................ 20,000
-------
Total........................................................... 200,000
=======
</TABLE>
Under the terms and conditions of the Underwriting Agreement and the
Pricing Agreement, the Underwriters are committed to take and pay for all the
Series A Capital Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Capital Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession of $6.00 per Series A Capital Security.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $2.50 per Series A Capital Security to certain brokers and dealers.
After the Series A Capital Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
In view of the fact that the proceeds from the sale of the Series A Capital
Securities will be used to purchase the Series A Subordinated Debentures issued
by the Corporation, the Underwriting Agreement provides that the Corporation
will pay as Underwriters' compensation for the Underwriters' arranging the
investment therein of such proceeds an amount of $10.00 per Series A Capital
Security for the accounts of the several Underwriters and will reimburse the
Underwriters for $60,000 of expenses.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Series A Capital Securities offered hereby as interests in
a direct participation program, the offering is being made in compliance with
Rule 2810 of the NASD's Conduct Rules. Offers and sales of Series A Capital
Securities will be made only to (i) "qualified institutional buyers", as defined
in Rule 144A under the Securities Act of 1933, as amended (the "Act"); (ii)
institutional "accredited investors", as defined in Rule 501(a)(1)-(3) of
Regulation D under the Act or (iii) individual investors for whom an investment
in non-convertible investment grade preferred securities is appropriate. The
Underwriters may not confirm sales to any accounts over which they exercise
discretionary authority without prior written approval of the transaction by the
customer.
The Corporation and the Series A Issuer have agreed that, during the period
beginning from the date of the Pricing Agreement and continuing to and including
the later of (i) the termination of trading restrictions on the Series A Capital
Securities, as determined by the Underwriters, and (ii) 30 days after the
closing date, they will not offer, sell, contract to sell or otherwise dispose
of any Series A Capital Securities, any other beneficial interests in the assets
of any Issuer, or any preferred securities or any other securities of any Issuer
or the Corporation which are substantially similar to the Series A Capital
Securities, including any guarantee of such securities, or any securities
convertible into or exchangeable for or representing the right to receive
preferred securities or any such substantially similar securities of either any
Issuer or the Corporation, without the prior written consent of the
Underwriters, except for the Series A Capital Securities offered in connection
with this offering.
S-30
<PAGE> 31
The Series A Capital Securities are a new issue of securities with no
established trading market. The Underwriters have advised the Corporation that
they intend to make a market in the Series A Capital Securities, but are not
obligated to do so and may discontinue market making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Series A Capital Securities.
During and after the offering, the Underwriters may purchase and sell the
Series A Capital Securities in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to broker-dealers in respect of the Series A Capital Securities sold in the
offering may be reclaimed by the Underwriters if such securities are repurchased
by the Underwriters in stabilizing or covering transactions. These activities
may stabilize, maintain or otherwise affect the market price of the Series A
Capital Securities, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
The Corporation and the Series A Issuer have agreed to indemnify the
several Underwriters against, or contribute to payments that the Underwriters
may be required to make in respect of, certain liabilities, including
liabilities under the Securities Act of 1933.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Corporation and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Series A
Capital Securities, the enforceability of the Trust Agreement and the formation
of the Series A Issuer will be passed upon by Richards, Layton & Finger, One
Rodney Square, Wilmington, Delaware 19801, special Delaware counsel to the
Corporation and the Series A Issuer. The validity of the Series A Guarantee and
the Series A Subordinated Debentures will be passed upon for the Corporation by
Paul L. Reynolds, Counsel, Fifth Third Bancorp, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, and for the Underwriters by Sullivan & Cromwell, 125
Broad Street, New York, New York 10004. Paul R. Reynolds will rely as to all
matters of New York law upon the opinion of Sullivan & Cromwell, and Sullivan &
Cromwell will rely as to all matters of Ohio law upon the opinion of Paul L.
Reynolds. Certain matters relating to United States federal income tax
considerations will be passed upon for the Corporation by Sullivan & Cromwell.
S-31
<PAGE> 32
$200,000,000
FIFTH THIRD BANCORP
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
FIFTH THIRD CAPITAL TRUST I
FIFTH THIRD CAPITAL TRUST II
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
FIFTH THIRD BANCORP
------------------------
Fifth Third Bancorp, an Ohio corporation (the "Corporation"), may from time
to time offer in one or more series or issuances its junior subordinated
deferrable interest debentures (the "Junior Subordinated Debentures"). The
Junior Subordinated Debentures will be unsecured and subordinate and junior in
right of payment to all Senior Debt (as defined in "Description of Junior
Subordinated Debentures -- Subordination") of the Corporation. If provided in an
accompanying Prospectus Supplement, the Corporation will have the right to defer
payments of interest on any series of Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from time to time
for up to such number of consecutive interest payment periods (which shall not
extend beyond the Stated Maturity (as defined herein) of the Junior Subordinated
Debentures) with respect to each deferral period as may be specified in such
Prospectus Supplement (each, an "Extension Period"). In such circumstances,
however, the Corporation would not be permitted, subject to certain exceptions
set forth herein, to declare or pay any dividends, distributions or other
payments with respect to, or repay, repurchase, redeem or otherwise acquire, the
Corporation's capital stock or debt securities that rank pari passu in all
respects with or junior to such series of Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Option to Defer Interest
Payments" and "-- Restrictions on Certain Payments".
Fifth Third Capital Trust I and Fifth Third Capital Trust II, each a
statutory business trust created under the laws of the State of Delaware (each,
an "Issuer," and collectively, the "Issuers"), may severally offer, from time to
time, preferred securities (the "Preferred Securities") representing preferred
beneficial interests in such Issuer. The Corporation will be the owner of the
common securities representing common ownership interests in such Issuer (the
"Common Securities" and, together with the Preferred Securities, the "Trust
Securities"). Holders of the Preferred Securities will be entitled to
(continued on next page)
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March 13, 1997.
<PAGE> 33
(continued from previous page)
receive preferential cumulative cash distributions ("Distributions")
accumulating from the date of original issuance and payable periodically as
provided in an accompanying Prospectus Supplement. Concurrently with the
issuance by an Issuer of its Preferred Securities, such Issuer will invest the
proceeds thereof and of any contributions received in respect of the Common
Securities in a corresponding series of the Corporation's Junior Subordinated
Debentures (the "Corresponding Junior Subordinated Debentures") with terms
corresponding to the terms of that Issuer's Preferred Securities (the "Related
Preferred Securities"). The Corresponding Junior Subordinated Debentures will be
the sole assets of each Issuer, and payments under the Corresponding Junior
Subordinated Debentures will be the only revenue of each Issuer. If provided in
an accompanying Prospectus Supplement, the Corporation may, upon receipt of
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") (if such approval is then required), redeem the Corresponding Junior
Subordinated Debentures (and cause the redemption of the Related Preferred
Securities) or may terminate each Issuer and cause the Corresponding Junior
Subordinated Debentures to be distributed to the holders of the Related
Preferred Securities in liquidation of their interests in such Issuer. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Termination".
If provided in an accompanying Prospectus Supplement, the Corporation will
have the right to defer payments of interest on any series of Corresponding
Junior Subordinated Debentures. If interest payments are so deferred,
Distributions on the Related Preferred Securities will also be deferred and the
Corporation will not be permitted, subject to certain exceptions set forth
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or debt securities that rank pari passu in all
respects with or junior to the Corresponding Junior Subordinated Debentures.
During an Extension Period, Distributions will continue to accumulate (and the
Related Preferred Securities will accumulate additional Distributions thereon at
the rate per annum set forth in the Prospectus Supplement). See "Description of
Preferred Securities -- Distributions".
Taken together, the Corporation's obligations under each series of Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the related
Expense Agreement and the related Guarantee (each, as defined herein), in the
aggregate, provide a full, irrevocable and unconditional guarantee of payments
of distributions and other amounts due on the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures, the Expense Agreements and the Guarantees -- Full and
Unconditional Guarantee". The payment of Distributions with respect to the
Preferred Securities of each Issuer and payments on liquidation or redemption
with respect to such Preferred Securities, in each case out of funds held by
such Issuer, are each irrevocably guaranteed by the Corporation to the extent
described herein (each, a "Guarantee"). See "Description of Guarantees". The
obligations of the Corporation under each Guarantee will be subordinate and
junior in right of payment to all Senior Debt of the Corporation.
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of which
this Prospectus forms a part shall not exceed $200,000,000. Certain specific
terms of the Junior Subordinated Debentures or Preferred Securities in respect
of which this Prospectus is being delivered will be described in an accompanying
Prospectus Supplement, including without limitation and where applicable and to
the extent not set forth herein, (a) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
Stated Maturity (including any provisions for the shortening or extension
thereof), interest payment dates, interest rate (which may be fixed or variable)
or method of calculating interest, if any, applicable Extension Period or
interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable,
2
<PAGE> 34
any terms of redemption, any sinking fund provisions, terms for any conversion
or exchange into other securities, initial offering or purchase price, methods
of distribution and any other special terms, and (b) in the case of Preferred
Securities, the identity of the Issuer, specific title, aggregate amount, stated
liquidation amount, number of securities, Distribution rate or method of
calculating such rate, Distribution payment dates, applicable Distribution
deferral terms, if any, place or places where Distributions will be payable, any
terms of redemption, exchange, initial offering or purchase price, methods of
distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States Federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution". The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Junior Subordinated Debentures or
Preferred Securities will be listed on any national securities exchange or
automated quotation system. If the Junior Subordinated Debentures or Preferred
Securities are not listed on any national securities exchange or automated
quotation system, there can be no assurance that there will be a secondary
market for the Junior Subordinated Debentures or Preferred Securities.
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
3
<PAGE> 35
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
The Corporation and the Issuers have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Corporation and the securities offered hereby, reference is made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein, which may be inspected at the public reference facilities of the
Commission at the addresses set forth above or through the Commission's home
page on the Internet. Statements made in this Prospectus concerning the contents
of any documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such document
filed as an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
The Corporation and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer is
a newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Corresponding Junior Subordinated
Debentures of the Corporation and issuing the Trust Securities. Furthermore,
taken together, the Corporation's obligations under each series of Corresponding
Junior Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement and the related Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Related Preferred Securities of an Issuer. See "The
Issuers", "Description of Preferred Securities", "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures" and
"Description of Guarantees". In addition, the Corporation does not expect that
any of the Issuers will be filing reports under the Exchange Act with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the year ended December
31, 1996, as filed with the Commission is incorporated into this Prospectus by
reference.
Each document or report filed by the Corporation pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
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herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to Fifth Third
Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, Attention: Paul L.
Reynolds, telephone number (513) 579-5300.
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THE CORPORATION
The Corporation is a multi-bank holding company headquartered in
Cincinnati, Ohio, with approximately $21 billion in total consolidated assets as
of December 31, 1996. The Corporation was organized in Ohio on October 7, 1974,
and on April 15, 1975 became the owner of all of the outstanding capital stock
of The Fifth Third Bank, an Ohio banking corporation (the "Bank").
At December 31, 1996, the Corporation also owned five other banks and one
savings bank in Ohio, two banks and two savings banks in Kentucky, one bank in
Indiana, and one bank in Florida, as well as various other non-bank
subsidiaries. The banks owned by the Corporation are referred to collectively
herein as the "Subsidiary Banks". At December 31, 1996, the Bank represented
more than 45% of the Corporation's assets, revenues and net income, although the
Corporation expects that the operations of the other subsidiaries will become
increasingly significant. The Bank will in the foreseeable future continue to be
the major source of the Corporation's assets, revenues and net income.
During January 1997, The Fifth Third Savings Bank of Western Kentucky, FSB
was merged into and with Fifth Third Bank of Kentucky, Inc., Fifth Third Savings
Bank of Northern Ohio, FSB was merged into and with Fifth Third Bank of
Northeastern Ohio and Fifth Third Savings Bank of Northern Kentucky, FSB was
merged into and with Fifth Third Bank of Northern Kentucky, Inc. At the same
time, the company was deregistered as a savings-and-loan holding company.
The Corporation's principal business strategy is to aggressively market its
four business lines in the three-state region of Ohio, Indiana and Kentucky.
These four business lines include commercial banking, retail banking, trust and
investment management and data processing services. As part of its business
strategy, the Corporation pursues a strong sales ethic, aggressive expense
control and diverse fee income-based revenue.
The Corporation offers a full line of commercial and retail banking
products and services. These products and services are offered through the
Corporation's banking subsidiaries and their offices.
The Corporation also provides, through its banking subsidiaries, full
service trust and investment services. The Corporation's banking subsidiaries
focus on trust and investment services for individuals, corporations and
not-for-profit organizations. Personal trust services include private banking,
tax and real estate services, trust services and services to private
foundations. Services to corporations and not-for-profit organizations include
employee benefits, corporate trust, stock transfers, securities custody, mutual
funds and foundations and endowments.
The Corporation is also in the data processing business through a
wholly-owned subsidiary of the Bank, Midwest Payment Systems, Inc. ("MPS"),
which provides merchant processing services and electronic funds transfer
("EFT") services for the Corporation and its bank subsidiaries as well as other
retail and financial institutions. MPS is a significant participant in the EFT
business and is a source of substantial fee income to the Corporation.
The principal executive office of the Corporation is located at 38 Fountain
Square Plaza, Cincinnati, Ohio 45263, and its telephone number is (513)
579-5300.
SUPERVISION AND REGULATION
THE CORPORATION
The Corporation, as a bank holding company, is subject to the restrictions
of the Bank Holding Company Act of 1956, as amended ("BHC Act"). BHC Act
provides that the acquisition of control of a bank is subject to the prior
approval of the Board of Governors of the Federal Reserve System. The
Corporation is required to obtain the prior approval of the Federal Reserve
Board before it can acquire more than 5% of the voting shares of another bank.
BHC Act does not permit the Federal Reserve to approve an acquisition by the
Corporation, or any of its subsidiaries, of any bank located
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in a state other than Ohio, unless the acquisition is specifically authorized by
the law of the state in which such bank is located.
On September 29, 1994, BHC Act was amended by The Interstate Banking and
Branch Efficiency Act of 1994 which authorizes interstate bank acquisitions
anywhere in the country effective one year after the date of enactment, and
interstate branching by acquisition and consolidation effective June 1, 1997, in
those states that have not opted out by that date. The impact of this amendment
on the Corporation cannot be measured at this time.
The Corporation's subsidiary state banks are primarily subject to the laws
of the state in which each is located, the Board of Governors of the Federal
Reserve System and/or the Federal Deposit Insurance Corporation. The subsidiary
bank which is organized under the laws of the United States is primarily subject
to regulation by the Comptroller of the Currency and the Federal Deposit
Insurance Corporation. Prior to January, 1997, the Corporation, as a savings and
loan holding company, and its savings and loan subsidiaries were subject to
regulation by the Office of Thrift Supervision.
The Corporation and its subsidiaries are subject to certain restrictions on
intercompany loans and investments. The Corporation and its subsidiaries are
also subject to certain restrictions with respect to engaging in the
underwriting and public sale and distribution of securities. In addition, the
Corporation and its subsidiaries are subject to examination at the discretion of
supervisory authorities.
The Bank Holding Company Act limits the activities which may be engaged in
by the Corporation and its subsidiaries to ownership of banks and those
activities which the Federal Reserve Board has deemed or may in the future find
to be so closely related to banking as to be a proper incident thereto.
The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA)
provides that a holding company's controlled insurance institutions are liable
for any loss incurred by the Federal Deposit Insurance Corporation in connection
with the default of, or any FDIC-assisted transaction involving, an affiliated
insured bank or savings association.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") covers a wide expanse of banking regulatory issues. FDICIA deals with
the recapitalization of the Bank Insurance Fund, with deposit insurance reform,
including requiring the FDIC to establish a risk-based premium assessment
system, and with a number of other regulatory and supervisory matters.
THE SUBSIDIARY BANKS
The principal source of income and funds for the Corporation are dividends
from its subsidiaries. During the year 1997, the amount of dividends that the
subsidiaries can pay to the Corporation without prior approval of regulatory
agencies is limited to their 1997 eligible net profits, as defined, and
$121,967,000, the adjusted retained 1996 and 1995 net income of the
subsidiaries.
THE ISSUERS
Each Issuer is a statutory business trust formed under Delaware law
pursuant to (i) a trust agreement executed by the Corporation, as Depositor of
the Issuer, and the Delaware Trustee (as defined herein) of such Issuer and (ii)
the filing of a certificate of trust with the Delaware Secretary of State. Each
trust agreement will be amended and restated in its entirety (each, as so
amended and restated, a "Trust Agreement") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each Trust Agreement will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). Each Issuer exists for the
exclusive purposes of (i) issuing and selling its Trust Securities, (ii) using
the
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proceeds from the sale of such Trust Securities to acquire a series of
Corresponding Junior Subordinated Debentures issued by the Corporation, and
(iii) engaging in only those other activities necessary or incidental thereto
(such as registering the transfer of the Trust Securities). Accordingly, the
Corresponding Junior Subordinated Debentures and the right to reimbursement of
expenses under the related Expense Agreement will be the sole assets of each
Issuer, and payments under the Corresponding Junior Subordinated Debentures and
the related Expense Agreement will be the sole revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the
Corporation. The Common Securities of an Issuer will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities of such
Issuer, except that upon the occurrence and continuance of an event of default
under a Trust Agreement resulting from an event of default under the Indenture,
the rights of the Corporation, as holder of the Common Securities, to payment in
respect of Distributions and payments upon liquidation or redemption will be
subordinated to the rights of the holders of the Preferred Securities of such
Issuer. See "Description of Preferred Securities -- Subordination of Common
Securities". The Corporation will acquire Common Securities in an aggregate
Liquidation Amount equal to not less than 3% of the total capital of each
Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the Corporation as holder of
the Common Securities. The trustees for each Issuer will be Wilmington Trust
Company, as Property Trustee (the "Property Trustee") and as Delaware Trustee
(the "Delaware Trustee"), and two individual trustees (the "Administrative
Trustees") who are employees or officers of or affiliated with the Corporation
(collectively, the "Issuer Trustees"). Wilmington Trust Company, as Property
Trustee, will act as sole indenture trustee under each Trust Agreement for
purposes of compliance with the Trust Indenture Act. Wilmington Trust Company
will also act as trustee under the Guarantees and the Indenture (each as defined
herein). See "Description of Guarantees" and "Description of Junior Subordinated
Debentures". The holder of the Common Securities of an Issuer, or the holders of
a majority in Liquidation Amount of the Related Preferred Securities if an event
of default under the Trust Agreement for such Issuer has occurred and is
continuing, will be entitled to appoint, remove or replace the Property Trustee
and/or the Delaware Trustee for such Issuer. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in the holder
of the Common Securities. The duties and obligations of each Issuer Trustee are
governed by the applicable Trust Agreement. The Corporation will pay all fees
and expenses related to each Issuer and the offering of the Preferred Securities
and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of each Issuer.
The principal executive office of each Issuer is 38 Fountain Square Plaza,
Cincinnati, Ohio 45263 and its telephone number is (513) 579-5300.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Corporation intends to use the proceeds from the sale of its Junior Subordinated
Debentures (including Corresponding Junior Subordinated Debentures issued to the
Issuers in connection with the investment by the Issuers of all of the proceeds
from the sale of Trust Securities) for general corporate purposes.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under a Junior Subordinated Indenture, as supplemented from time to time (as so
supplemented, the "Indenture"), between the Corporation and Wilmington Trust
Company, as trustee (the "Debenture Trustee"). This summary of certain terms and
provisions of the Junior Subordinated Debentures and the Indenture, which
summarizes the material provisions thereof, does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Indenture,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and to the Trust Indenture Act, to each of which
reference is hereby made. The Indenture is qualified under the Trust Indenture
Act. Whenever particular defined terms of the Indenture (as supplemented or
amended from time to time) are referred to herein or in a Prospectus Supplement,
such defined terms are incorporated herein or therein by reference.
GENERAL
Each series of Junior Subordinated Debentures will rank pari passu with all
other series of Junior Subordinated Debentures and will be unsecured and
subordinate and junior in right of payment to the extent and in the manner set
forth in the Indenture to all Senior Debt (as defined below) of the Corporation.
See "-- Subordination". The Corporation is a non-operating holding company and
almost all of the operating assets of the Corporation and its consolidated
subsidiaries are owned by such subsidiaries. The Corporation relies primarily on
dividends from such subsidiaries to meet its obligations. See "Certain
Regulatory Considerations -- Dividends". Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of the subsidiary, except
to the extent the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debentures should look only to
the assets of the Corporation for payments on the Junior Subordinated
Debentures. Except as otherwise provided in the applicable Prospectus
Supplement, the Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Debt, whether
under the Indenture, any other existing indenture or any other indenture that
the Corporation may enter into in the future or otherwise. See
"-- Subordination" and the Prospectus Supplement relating to any offering of
Preferred Securities or Junior Subordinated Debentures.
The Junior Subordinated Debentures will be issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Corporation's Board of Directors or a committee thereof.
The applicable Prospectus Supplement will describe the following terms of
the Junior Subordinated Debentures: (1) the title of the Junior Subordinated
Debentures; (2) any limit upon the aggregate principal amount of the Junior
Subordinated Debentures; (3) the date or dates on which the principal of the
Junior Subordinated Debentures is payable (the "Stated Maturity") or the method
of determination thereof; (4) the rate or rates, if any, or method of
calculating the rate or rates, if any, at which the Junior Subordinated
Debentures shall bear interest, the dates on which any such interest shall be
payable (the "Interest Payment Dates"), the right, if any, of the Corporation to
defer or extend an Interest Payment Date, and the record dates for any interest
payable on any Interest Payment Date or the method by which any of the foregoing
shall be determined; (5) the place or places where, subject to the terms of the
Indenture as described below under "-- Payment and Paying Agents", the principal
of and premium, if any, and interest on the Junior Subordinated Debentures will
be payable and where, subject to the terms of the Indenture as described below
under "-- Denominations, Registration and Transfer," the Junior Subordinated
Debentures may be presented for registration of transfer or exchange and the
place or places where notices and demands to or upon the Corporation in respect
of the Junior Subordinated Debentures
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and the Indentures may be made ("Place of Payment"); (6) any period or periods
within which or date or dates on which, the price or prices at which and the
terms and conditions upon which Junior Subordinated Debentures may be redeemed,
in whole or in part, at the option of the Corporation or a holder thereof; (7)
the obligation or the right, if any, of the Corporation or a holder thereof to
redeem, purchase or repay the Junior Subordinated Debentures and the period or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the other terms and conditions
upon which the Junior Subordinated Debentures shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (8) the
denominations in which any Junior Subordinated Debentures shall be issuable if
other than denominations of $25 and any integral multiple thereof; (9) if other
than in U.S. Dollars, the currency or currencies (including currency unit or
units) in which the principal of (and premium, if any) and interest and
Additional Interest, if any, on the Junior Subordinated Debentures shall be
payable, or in which the Junior Subordinated Debentures shall be denominated;
(10) any additions, modifications or deletions in the events of default under
the Indenture or covenants of the Corporation specified in the Indenture with
respect to the Junior Subordinated Debentures; (11) if other than the principal
amount thereof, the portion of the principal amount of Junior Subordinated
Debentures that shall be payable upon declaration of acceleration of the
maturity thereof; (12) any additions or changes to the Indenture with respect to
a series of Junior Subordinated Debentures as shall be necessary to permit or
facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debentures and the manner in which
such amounts will be determined; (14) the terms and conditions relating to the
issuance of a temporary Global Security representing all of the Junior
Subordinated Debentures of such series and the exchange of such temporary Global
Security for definitive Junior Subordinated Debentures of such series; (15)
subject to the terms described herein under "-- Global Junior Subordinated
Debentures", whether the Junior Subordinated Debentures of the series shall be
issued in whole or in part in the form of one or more Global Securities and, in
such case, the Depositary for such Global Securities, which Depositary shall be
a clearing agency registered under the Exchange Act; (16) the appointment of any
paying agent or agents; (17) the terms and conditions of any obligation or right
of the Corporation or a holder to convert or exchange the Junior Subordinated
Debentures into Preferred Securities; (18) the form of Trust Agreement,
Guarantee Agreement and Expense Agreement, if applicable; (19) the relative
degree, if any, to which such Junior Subordinated Debentures of the series shall
be senior to or be subordinated to other series of such Junior Subordinated
Debentures or other indebtedness of the Corporation in right of payment, whether
such other series of Junior Subordinated Debentures or other indebtedness are
outstanding or not; and (20) any other terms of the Junior Subordinated
Debentures not inconsistent with the provisions of the Indenture.
Junior Subordinated Debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States Federal
income tax consequences and special considerations applicable to any such Junior
Subordinated Debentures will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Junior Subordinated Debentures is
payable in one or more foreign currencies or currency units or if any Junior
Subordinated Debentures are denominated in one or more foreign currencies or
currency units or if the principal of, premium, if any, or interest, if any, on
any Junior Subordinated Debentures is payable in one or more foreign currencies
or currency units, the restrictions, elections, certain United States Federal
income tax consequences, specific terms and other information with respect to
such series of Junior Subordinated Debentures and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
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If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debentures,
special United States Federal income tax, accounting and other considerations
applicable thereto will be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. Junior
Subordinated Debentures of any series will be exchangeable for other Junior
Subordinated Debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same original issue
date and Stated Maturity and bearing the same interest rate.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the appropriate securities registrar or at the
office of any transfer agent designated by the Corporation for such purpose with
respect to any series of Junior Subordinated Debentures and referred to in the
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Indenture. If the applicable Prospectus Supplement refers to any transfer agents
(in addition to the securities registrar) initially designated by the
Corporation with respect to any series of Junior Subordinated Debentures, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
provided that the Corporation maintains a transfer agent in each place of
payment for such series. The Corporation may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of, or exchange
Junior Subordinated Debentures of any series during the period beginning at the
opening of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures of that series and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Junior Subordinated Debentures that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Prospectus Supplement relating to such series. Global Junior Subordinated
Debentures may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual Junior Subordinated Debentures represented thereby, a Global Junior
Subordinated Debenture may not be transferred except as a whole by the
Depositary for such Global Junior Subordinated Debenture to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Junior Subordinated Debentures will be described in the Prospectus Supplement
relating to such series. The Corporation anticipates that the following
provisions will generally apply to depositary arrangements.
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Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary ("Participants"). Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Junior Subordinated Debentures or by the Corporation if such Junior Subordinated
Debentures are offered and sold directly by the Corporation. Ownership of
beneficial interests in a Global Junior Subordinated Debenture will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Junior Subordinated Debenture
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable Depositary or its nominee (with
respect to interests of Participants) and the records of Participants (with
respect to interests of persons who hold through Participants). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Junior Subordinated
Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture, or
its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of the Corporation, the Debenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the Depositary for a series of Junior
Subordinated Debentures or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a permanent Global Junior
Subordinated Debenture representing any of such Junior Subordinated Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Junior Subordinated Debenture for such Junior Subordinated
Debentures as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Junior Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and the Corporation is
unable to locate a qualified successor, the Corporation will issue individual
Junior Subordinated Debentures of such series in exchange for the Global Junior
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Subordinated Debenture representing such series of Junior Subordinated
Debentures. In addition, the Corporation may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Junior Subordinated Debentures, determine not to have any
Junior Subordinated Debentures of such series represented by one or more Global
Junior Subordinated Debentures and, in such event, will issue certificated
Junior Subordinated Debentures of such series in exchange for the Global Junior
Subordinated Debenture or Securities representing such series of Junior
Subordinated Debentures. Further, if the Corporation so specifies with respect
to the Junior Subordinated Debentures of a series, an owner of a beneficial
interest in a Global Junior Subordinated Debenture representing Junior
Subordinated Debentures of such series may, on terms acceptable to the
Corporation, the Debenture Trustee and the Depositary for such Global Junior
Subordinated Debenture, receive certificated Junior Subordinated Debentures of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures. In any such instance, an owner of a beneficial interest
in a Global Junior Subordinated Debenture will be entitled to physical delivery
of certificated Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture equal in principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures of such series so issued
will be issued in denominations, unless otherwise specified by the Corporation,
of $1,000 and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures will be made at the office of the Debenture Trustee in the City of
Wilmington, Delaware or at the office of such paying agent or paying agents as
the Corporation may designate from time to time, except that at the option of
the Corporation payment of any interest may be made (i) except in the case of
Global Junior Subordinated Debentures, by check mailed to the address of the
Person entitled thereto as such address shall appear in the securities register
or (ii) by transfer to an account maintained by the person entitled thereto as
specified in the securities register, provided that proper transfer instructions
have been received by the Regular Record Date. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of any interest on Junior Subordinated
Debentures will be made to the person in whose name such Junior Subordinated
Debenture is registered at the close of business on the Regular Record Date for
such interest, except in the case of Defaulted Interest. The Corporation may at
any time designate additional paying agents or rescind the designation of any
paying agent; however, the Corporation will at all times be required to maintain
a paying agent in each place of payment for each series of Junior Subordinated
Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Corporation will
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debentures to defer payment of interest for up to such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the Stated
Maturity of such series of Junior Subordinated Debentures. Certain United States
Federal income tax consequences and special
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considerations applicable to any such Junior Subordinated Debentures will be
described in the applicable Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, Junior
Subordinated Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporation may, at its option, redeem the Junior Subordinated Debentures of any
series in whole at any time or in part from time to time. If the Junior
Subordinated Debentures of any series are so redeemable only on or after a
specified date or upon the satisfaction of additional conditions, the applicable
Prospectus Supplement will specify such date or describe such conditions. Junior
Subordinated Debentures in denominations larger than $25 may be redeemed in part
but only in integral multiples of $25. Except as otherwise specified in the
applicable Prospectus Supplement, the redemption price for any Junior
Subordinated Debenture so redeemed shall equal any accrued and unpaid interest
(including Additional Interest) thereon to the redemption date, plus 100% of the
principal amount thereof. The Corporation has committed to the Federal Reserve
that the Corporation will not exercise its right to redeem the Junior
Subordinated Debentures prior to the Stated Maturity without having received the
prior approval of the Federal Reserve to do so, if such approval is then
required under applicable Federal Reserve capital guidelines or policies.
Except as otherwise specified in the applicable Prospectus Supplement, if a
Tax Event (as defined below) in respect of the Issuer of any Related Preferred
Securities or a Capital Treatment Event (as defined below) in respect of such
Related Preferred Securities shall occur and be continuing, the Corporation may,
at its option, redeem such series of Corresponding Junior Subordinated
Debentures in whole (but not in part) at any time within 90 days following the
occurrence of such Tax Event or Capital Treatment Event, at a redemption price
equal to 100% of the principal amount of such Junior Subordinated Debentures
then outstanding plus accrued and unpaid interest to the date fixed for
redemption, except as otherwise specified in the applicable Prospectus
Supplement. The Corporation has committed to the Federal Reserve that the
Corporation will not exercise its right to redeem the Junior Subordinated
Debentures prior to the Stated Maturity without having received the prior
approval of the Federal Reserve to do so, if such approval is then required
under applicable Federal Reserve capital guidelines or policies.
"Tax Event" means the receipt by an Issuer of a series of Related Preferred
Securities of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of such Related Preferred Securities, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States Federal income tax with respect
to income received or accrued on the Corresponding Junior Subordinated
Debentures, (ii) interest payable by the Corporation on such Corresponding
Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion, will not be, deductible by the Corporation, in whole or in part, for
United States Federal income tax purposes, or (iii) such Issuer is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws,
rules or regulations, which amendment or
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change is effective or which pronouncement, action or decision is announced on
or after the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that the Corporation will not be entitled to treat an amount
equal to the aggregate Liquidation Amount of the Preferred Securities as "Tier 1
Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Corporation.
Notice of any redemption will be mailed at least 45 days but not more than
75 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Corporation
defaults in payment of the redemption price, on and after the redemption date
interest shall cease to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation will also covenant, as to each series of Junior
Subordinated Debentures, that it will not, and will not permit any subsidiary of
the Corporation to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Corporation's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Corporation (including other Junior Subordinated Debentures)
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Corporation in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Corporation (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of any exchange or conversion of any class or series of the
Corporation's capital stock (or any capital stock of a subsidiary of the
Corporation) for any class or series of the Corporation's capital stock or of
any class or series of the Corporation's indebtedness for any class or series of
the Corporation's capital stock, (c) the purchase of fractional interests in
shares of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there shall
have occurred any event of which the Corporation has actual knowledge that (a)
with the giving of notice or the lapse of time, or both, would constitute an
"Event of Default" under the Indenture with respect to the Junior Subordinated
Debentures of such series and (b) in respect of which the Corporation shall not
have taken reasonable steps to cure, (ii) if such Junior Subordinated Debentures
are held by an Issuer of a series of Related Preferred Securities, the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee relating to such Related Preferred Securities or (iii) the
Corporation shall have given notice of its selection of an Extension Period as
provided in the Indenture with respect to the Junior Subordinated Debentures of
such series and shall not have rescinded such notice, or such Extension Period,
or any extension thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of any series of Junior Subordinated Debentures,
amend, waive or supplement the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interest of
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the holders of any series of Junior Subordinated Debentures or, in the case of
Corresponding Junior Subordinated Debentures, the holders of the Related
Preferred Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of each outstanding series of Junior Subordinated Debentures
affected, to modify the Indenture in a manner affecting adversely the rights of
the holders of such series of the Junior Subordinated Debentures in any material
respect; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of any series of Junior Subordinated Debentures (except as
otherwise specified in the applicable Prospectus Supplement), or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or change the method of calculating the rate of interest
thereon, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures of any series, the holders of which are required to
consent to any such modification of the Indenture, provided that, in the case of
Corresponding Junior Subordinated Debentures, so long as any of the Related
Preferred Securities remain outstanding, (a) no such modification may be made
that adversely affects the holders of such Related Preferred Securities in any
material respect, and no termination of the Indenture may occur, and no waiver
of any event of default or compliance with any covenant under the Indenture may
be effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Related Preferred Securities
affected unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied and (b) where a consent under
the Indenture would require the consent of each holder of Corresponding Junior
Subordinated Debentures, no such consent will be given by the Property Trustee
without the prior consent of each holder of Related Preferred Securities.
In addition, the Corporation and the Debenture Trustee may execute, without
the consent of any holder of Junior Subordinated Debentures, any supplemental
Indenture for the purpose of creating any new series of Junior Subordinated
Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on such series of Junior
Subordinated Debentures, including any Additional Interest in respect
thereof, when due (subject to the deferral of any interest payment in the
case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debentures when due whether at maturity or upon
redemption; or
(iii) failure to observe or perform any other covenants contained in
the Indenture for 90 days after written notice to the Corporation from the
Debenture Trustee or the holders of at least 25% in aggregate outstanding
principal amount of such affected series of outstanding Junior Subordinated
Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures of each series affected have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of Junior Subordinated Debentures
of each series affected may declare the principal due and payable immediately
upon a Debenture Event of Default. In case a Debenture Event of Default shall
occur and be continuing as to
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a series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Subordinated
Debentures. In the case of Corresponding Junior Subordinated Debentures, should
the Debenture Trustee or the Property Trustee fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Related Preferred
Securities shall have such right. The Property Trustee may annul such
declaration and waive such default, provided all defaults have been cured and
all payment obligations have been made current. Should the Property Trustee fail
to annul such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Related Preferred Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of each
series of Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures of such series, waive any
default, except a default in the payment of principal or interest (including any
Additional Interest) (unless such default has been cured and a sum sufficient to
pay all matured installments of interest (including any Additional Interest) and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture of such series. In the
case of Corresponding Junior Subordinated Debentures, the holders of a majority
in aggregate Liquidation Amount of the Related Preferred Securities shall have
such right to the extent permissible under applicable law. The Corporation is
required to file annually with the Debenture Trustee a certificate as to whether
or not the Corporation is in compliance with all the conditions and covenants
applicable to it under the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Corporation to pay interest or principal on
such Corresponding Junior Subordinated Debentures on the date such interest or
principal is due and payable, a holder of Related Preferred Securities may
institute a legal proceeding directly against the Corporation for enforcement of
payment to such holder of the principal of or interest (including any Additional
Interest) on such Corresponding Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Related
Preferred Securities of such holder (a "Direct Action"). The Corporation may not
amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Preferred
Securities outstanding. If the right to bring a Direct Action is removed, the
applicable Issuer may become subject to the reporting obligations under the
Exchange Act. The Corporation shall have the right under the Indenture to
set-off any payment made to such holder of Preferred Securities by the
Corporation in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Corresponding Junior Subordinated Debentures
unless there shall have been an event of default under the Trust Agreement. See
"Description of Preferred Securities -- Events of Default; Notice".
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTION
The Indenture provides that the Corporation shall not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to any person, and no person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties and assets substantially as an entirety to the Corporation, unless
(i) in case the Corporation consolidates with or merges into another person or
conveys or transfers its properties
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and assets substantially as an entirety to any person, the successor is
organized under the laws of the United States or any state or the District of
Columbia, and such successor expressly assumes the Corporation's obligations on
the Junior Subordinated Debentures issued under the Indenture; (ii) immediately
after giving effect thereto, no Debenture Event of Default, and no event which,
after notice or lapse of time or both, would become a Debenture Event of
Default, shall have occurred and be continuing, and (iii) certain other
conditions as prescribed by the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Corporation deposits or causes
to be deposited with the Debenture Trustee funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation for the principal (and premium, if any) and interest
(including any Additional Interest) to the date of the deposit or to the Stated
Maturity, as the case may be, then the Indenture will cease to be of further
effect (except as to the Corporation's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and opinions
of counsel described therein), and the Corporation will be deemed to have
satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Junior Subordinated Debentures of another series or into Preferred
Securities of another series. The specific terms on which Junior Subordinated
Debentures of any series may be so converted or exchanged will be set forth in
the applicable Prospectus Supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of the Corporation, in which case the number of shares of Preferred
Securities or other securities to be received by the holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate in right of payment,
to the extent set forth in the Indenture, to all Senior Debt (as defined below)
of the Corporation. If the Corporation defaults in the payment of any principal,
premium, if any, or interest, if any, or any other amount payable on any Senior
Debt when the same becomes due and payable, whether at maturity or at a date
fixed for redemption or by declaration of acceleration or otherwise, then,
unless and until such default has been cured or waived or has ceased to exist or
all Senior Debt has been paid, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) may be made or agreed to be made on the
Junior Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Debt" means any obligation of the Corporation to
its creditors, whether now outstanding or subsequently incurred, other than any
obligation as to which, in the instrument creating or evidencing the obligation
or pursuant to which the obligation is outstanding, it is provided that such
obligation is not Senior Debt, but does not include trade accounts payable and
accrued liabilities arising in the ordinary course of business. Senior Debt
includes the Corporation's
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outstanding subordinated debt securities and any subordinated debt securities
issued in the future with substantially similar subordination terms, but does
not include the Junior Subordinated Debentures of any Series or any junior
subordinated debt securities issued in the future with subordination terms
substantially similar to those of the Junior Subordinated Debentures.
Substantially all of the existing indebtedness of the Corporation constitutes
Senior Debt.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Debt (including
any interest thereon accruing after the commencement of any such proceedings)
shall first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made on account of the Junior
Subordinated Debentures. In such event, any payment or distribution on account
of the Junior Subordinated Debentures, whether in cash, securities or other
property, that would otherwise (but for the subordination provisions) be payable
or deliverable in respect of the Junior Subordinated Debentures will be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt (including any
interest thereon accruing after the commencement of any such proceedings) has
been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Debt, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Corporation
ranking on a parity with the Junior Subordinated Debentures, will be entitled to
be paid from the remaining assets of the Corporation the amounts at the time due
and owing on the Junior Subordinated Debentures and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations of the
Corporation ranking junior to the Junior Subordinated Debentures. If any payment
or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior Subordinated Debentures in contravention of
any of the terms hereof and before all the Senior Debt has been paid in full,
such payment or distribution or security will be received in trust for the
benefit of, and must be paid over or delivered and transferred to, the holders
of the Senior Debt at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Debt remaining unpaid to the extent necessary to pay all such Senior Debt in
full. By reason of such subordination, in the event of the insolvency of the
Corporation, holders of Senior Debt may receive more, ratably, and holders of
the Junior Subordinated Debentures may receive less, ratably, than the other
creditors of the Corporation. Such subordination will not prevent the occurrence
of any Event of Default under the Indenture.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Debt that may be incurred by the Corporation. The Corporation
expects from time to time to incur additional indebtedness constituting Senior
Debt.
TRUST EXPENSES
Pursuant to the Expense Agreement for each series of Corresponding Junior
Subordinated Debentures, the Corporation will irrevocably and unconditionally
agree with each Issuer that holds Junior Subordinated Debentures that the
Corporation will pay to such Issuer, and reimburse such Issuer for, the full
amounts of any costs, expenses or liabilities of the Issuer, other than
obligations of the Issuer to pay to the holders of any Preferred Securities or
other similar interests in the Issuer the amounts due such holders pursuant to
the terms of the Preferred Securities or such other similar interests, as the
case may be. Such payment obligation will include any such costs, expenses or
liabilities of the Issuer that are required by applicable law to be satisfied in
connection with a termination of such Issuer.
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GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In that
event, concurrently with the issuance of each Issuer's Preferred Securities,
such Issuer will invest the proceeds thereof and the consideration paid by the
Corporation for the Common Securities of such Issuer in such series of
Corresponding Junior Subordinated Debentures issued by the Corporation to such
Issuer. Each series of Corresponding Junior Subordinated Debentures will be in
the principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures. Holders
of the Related Preferred Securities will have the rights in connection with
modifications to the Indenture or upon occurrence of Debenture Events of
Default, as described under "-- Modification of Indenture" and "-- Debenture
Events of Default", unless provided otherwise in the Prospectus Supplement for
such Related Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Tax Event or a Capital Treatment Event shall occur and be continuing, the
Corporation may, at its option, redeem the Corresponding Junior Subordinated
Debentures at any time within 90 days of the occurrence of such Tax Event or
Capital Treatment Event, in whole but not in part, subject to the provisions of
the Indenture and whether or not such Corresponding Junior Subordinated
Debentures are then otherwise redeemable at the option of the Corporation. The
redemption price for any Corresponding Junior Subordinated Debentures shall be
equal to 100% of the principal amount of such Corresponding Junior Subordinated
Debentures then outstanding plus accrued and unpaid interest to the date fixed
for redemption. For so long as the applicable Issuer is the holder of all the
outstanding Corresponding Junior Subordinated Debentures, the proceeds of any
such redemption will be used by the Issuer to redeem the corresponding Trust
Securities in accordance with their terms. The Corporation may not redeem a
series of Corresponding Junior Subordinated Debentures in part unless all
accrued and unpaid interest has been paid in full on all outstanding
Corresponding Junior Subordinated Debentures of such series for all interest
periods terminating on or prior to the Redemption Date. The Corporation has
committed to the Federal Reserve that the Corporation will not exercise its
right to redeem the Junior Subordinated Debentures prior to the Stated Maturity
without having received the prior approval of the Federal Reserve to do so, if
such approval is then required under applicable Federal Reserve capital
guidelines or policies.
The Corporation will covenant in the Indenture, as to each series of
Corresponding Junior Subordinated Debentures, that if and so long as (i) the
Issuer of the related series of Trust Securities is the holder of all such
Corresponding Junior Subordinated Debentures, (ii) a Tax Event in respect of
such Issuer has occurred and is continuing and (iii) the Corporation has
elected, and
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has not revoked such election, to pay Additional Sums (as defined under
"Description of Preferred Securities -- Redemption or Exchange") in respect of
such Trust Securities, the Corporation will pay to such Issuer such Additional
Sums. The Corporation will also covenant, as to each series of Corresponding
Junior Subordinated Debentures, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Issuer to which such Corresponding
Junior Subordinated Debentures have been issued, provided that certain
successors which are permitted pursuant to the Indenture may succeed to the
Corporation's ownership of the Common Securities, (ii) not to voluntarily
terminate, wind-up or liquidate any Issuer, except (a) in connection with a
distribution of Corresponding Junior Subordinated Debentures to the holders of
the Preferred Securities in exchange therefor upon liquidation of such Issuer or
(b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Trust Agreement, and (iii) to use its reasonable
efforts, consistent with the terms and provisions of the related Trust
Agreement, to cause such Issuer to be classified as a grantor trust and not as
an association taxable as a corporation for United States Federal income tax
purposes. The Corporation has committed to the Federal Reserve that the
Corporation will not exercise its right to redeem the Junior Subordinated
Debentures prior to the Stated Maturity without having received the prior
approval of the Federal Reserve to do so, if such approval is then required
under applicable Federal Reserve capital guidelines or policies.
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DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular Issuer will
represent preferred beneficial interests in the Issuer and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of such Issuer, as well as other benefits as described in the related
Trust Agreement. This summary of certain provisions of the Preferred Securities
and each Trust Agreement, which summarizes the material terms thereof, does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act, to which
reference is hereby made. Wherever particular defined terms of a Trust Agreement
(as amended or supplemented from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Each of the
Issuers is a legally separate entity and the assets of one are not available to
satisfy the obligations of any of the others.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under "-- Subordination
of Common Securities". Legal title to the Corresponding Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Related Preferred Securities and Common Securities. Each
Guarantee Agreement executed by the Corporation for the benefit of the holders
of an Issuer's Preferred Securities (the "Guarantee" for such Preferred
Securities) will be a guarantee on a subordinated basis with respect to such
Preferred Securities but will not guarantee payment of Distributions or amounts
payable on redemption or liquidation of such Preferred Securities when such
Issuer does not have funds on hand available to make such payments. See
"Description of Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance (unless otherwise specified in the
applicable Prospectus Supplement) and will be payable on such dates as specified
in the applicable Prospectus Supplement. In the event that any date on which
Distributions are payable on the Preferred Securities is not a Business Day (as
defined below), payment of the Distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect to any such delay) except that, if such Business Day is
in the next succeeding calendar year, payment of such Distribution shall be made
on the immediately preceding Business Day, in either case with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Debenture Trustee is closed for business.
Each Issuer's Preferred Securities represent preferred beneficial interests
in the applicable Issuer, and the Distributions on each Preferred Security will
be payable at a rate specified in the applicable Prospectus Supplement for such
Preferred Securities. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months unless otherwise
specified in the applicable Prospectus Supplement. Distributions to which
holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any such
additional Distributions unless otherwise stated.
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If provided in the applicable Prospectus Supplement, the Corporation has
the right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time or
from time to time on any series of the Corresponding Junior Subordinated
Debentures for up to such number of consecutive interest payment periods which
will be specified in such Prospectus Supplement relating to such series (each,
an "Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debentures. As a
consequence of any such deferral, Distributions on the Related Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Issuer of such Related
Preferred Securities during any such Extension Period. During any such Extension
Period, the Corporation may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to the Corresponding Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Corporation (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock).
The revenue of each Issuer available for distribution to holders of its
Related Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debentures in which the Issuer will invest the proceeds from
the issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If the
Corporation does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Issuer has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by the Corporation on a limited basis as set forth herein under
"Description of Guarantees".
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form, the
relevant record date for such Preferred Securities shall be the date at least 15
days prior to the relevant Distribution Date, as specified in the applicable
Prospectus Supplement.
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REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Related Preferred Securities and the
Common Securities, upon not less than 30 nor more than 60 days notice, at a
redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Trust Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related amount
of the premium, if any, paid by the Corporation upon the concurrent redemption
of such Corresponding Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures -- Redemption". If less than all of any series of
Corresponding Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Related Preferred Securities and the
Common Securities. The amount of premium, if any, paid by the Corporation upon
the redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Related Preferred Securities and the
Common Securities.
The Corporation will have the right to redeem any series of Corresponding
Junior Subordinated Debentures (i) on or after such date as may be specified in
the applicable Prospectus Supplement, in whole at any time or in part from time
to time, (ii) at any time, in whole (but not in part), upon the occurrence of a
Tax Event or Capital Treatment Event or (iii) as may be otherwise specified in
the applicable Prospectus Supplement. The Corporation has committed to the
Federal Reserve that the Corporation will not exercise its right to redeem the
Junior Subordinated Debentures prior to the Stated Maturity without having
received the prior approval of the Federal Reserve to do so, if such approval is
then required under applicable Federal Reserve capital guidelines or policies.
Distribution of Corresponding Junior Subordinated Debentures. The
Corporation has the right at any time to terminate any Issuer and, after
satisfaction of the liabilities of creditors of such Issuer as provided by
applicable law, cause the Corresponding Junior Subordinated Debentures in
respect of the Related Preferred Securities and Common Securities issued by such
Issuer to be distributed to the holders of such Related Preferred Securities and
Common Securities in liquidation of the Issuer. The Corporation has committed to
the Federal Reserve that, so long as the Corporation (or any affiliate) is a
holder of Common Securities of an Issuer, the Corporation will not so terminate
such Issuer without having received the prior approval of the Federal Reserve to
do so, if such approval is then required under applicable Federal Reserve
capital guidelines or policies.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Related Preferred Securities
(i) such series of Related Preferred Securities will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of such
series of Related Preferred Securities, will receive a registered global
certificate or certificates representing the Corresponding Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing such series of Related Preferred Securities not held by DTC or its
nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such series of Related Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
series of Related Preferred Securities until such certificates are presented to
the Property Trustee or its agent for transfer or reissuance.
Any distribution of Corresponding Junior Subordinated Debentures to holders
of Related Preferred Securities shall be made to the applicable recordholders
thereof as they appear on the register for such Related Preferred Securities on
the relevant record date, which shall be one Business Day prior to the
liquidation date; provided, however, that in the event that any Related
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Preferred Securities are not in book-entry form, the relevant record date shall
be a date at least 15 days prior to the liquidation date, as specified in the
applicable Prospectus Supplement.
There can be no assurance as to the market prices for the Related Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Related Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Related Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debentures that the investor may receive on dissolution and
liquidation of an Issuer, may trade at a discount to the price that the investor
paid to purchase the Related Preferred Securities offered hereby.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of a series of Related Preferred Securities and
Common Securities shall occur and be continuing, the Corporation has the right
to redeem the Corresponding Junior Subordinated Debentures in whole (but not in
part) and thereby cause a mandatory redemption of such Related Preferred
Securities and Common Securities in whole (but not in part) at the Redemption
Price within 90 days following the occurrence of such Tax Event or Capital
Treatment Event. In the event a Tax Event or Capital Treatment Event in respect
of a series of Related Preferred Securities and Common Securities has occurred
and is continuing and the Corporation does not elect to redeem the Corresponding
Junior Subordinated Debentures and thereby cause a mandatory redemption of such
Related Preferred Securities or to liquidate the related Issuer and cause the
Corresponding Junior Subordinated Debentures to be distributed to holders of
such Related Preferred Securities and Common Securities in exchange therefor
upon liquidation of the Issuer as described above, such Related Preferred
Securities will remain outstanding and Additional Sums (as defined below) may be
payable on the Corresponding Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by an Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which such Issuer has become subject as a result of a Tax Event.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws,
rules or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of issuance
of the Preferred Securities of an Issuer, there is more than an insubstantial
risk that the Corporation will not be entitled to treat an amount equal to the
aggregate Liquidation Amount of such Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of the capital adequacy guidelines
of the Federal Reserve, as then in effect and applicable to the Corporation.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to the principal amount of Corresponding Junior
Subordinated Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Corresponding
Junior Subordinated Debentures to holders of any series of Trust Securities in
connection with a dissolution or liquidation of the related Issuer,
Corresponding Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Trust Securities in respect of which such
distribution is made.
"Liquidation Amount" means the stated amount per Trust Security of $1,000
(or such other stated amount as is set forth in the applicable Prospectus
Supplement).
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"Tax Event" with respect to an Issuer of a series of Related Preferred
Securities means the receipt by such Issuer of an opinion of counsel experienced
in such matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of such Related Preferred
Securities, there is more than an insubstantial risk that (i) such Issuer is, or
will be within 90 days of the date of such opinion, subject to United States
Federal income tax with respect to income received or accrued on the
Corresponding Junior Subordinated Debentures, (ii) interest payable by the
Corporation on such Corresponding Junior Subordinated Debentures is not, or
within 90 days of the date of such opinion, will not be, deductible by the
Corporation, in whole or in part, for United States Federal income tax purposes,
or (iii) such Issuer is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
Possible Tax Law Changes. On February 6, 1997, the revenue portion of
President Clinton's 1997 budget (the "Budget Proposal") was released. If
enacted, the Budget Proposal would generally deny interest deductions for
interest on an instrument issued by a corporation that has a maximum term of
more than 15 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above described provision of the Budget Proposal
is proposed to be effective generally for instruments issued on or after the
date of first Congressional committee action. If a similar provision were to
apply to the Junior Subordinated Debentures, the Corporation would be unable to
deduct interest on the Junior Subordinated Debentures. Under current law, the
Corporation will be able to deduct interest on the Junior Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Junior Subordinated Debentures. Such a
change could give rise to a Tax Event, which may permit the Corporation to cause
a redemption of the Preferred Securities, as described more fully under
"Description of Junior Subordinated Debentures -- Redemptions".
REDEMPTION PROCEDURES
Related Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Corresponding Junior Subordinated Debentures.
Redemptions of the Preferred Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the related
Issuer has funds on hand available for the payment of such Redemption Price. See
also "-- Subordination of Common Securities".
If the Property Trustee gives a notice of redemption in respect of
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price and
will give DTC irrevocable instructions and authority to pay the Redemption Price
to the holders of such Preferred Securities. See "Book-Entry Issuance". If such
Preferred Securities are no longer in book-entry form, the Property Trustee, to
the extent funds are available, will irrevocably deposit with the paying agent
for such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice
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of redemption shall have been given and funds deposited as required, then upon
the date of such deposit, all rights of the holders of such Preferred Securities
so called for redemption will cease, except the right of the holders of such
Preferred Securities to receive the Redemption Price and any Distribution
payable in respect of the Preferred Securities on or prior to the Redemption
Date, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer or by the Corporation pursuant to the Guarantee as described under
"Description of Guarantees", Distributions on such Preferred Securities will
continue to accrue at the then applicable rate from the Redemption Date
originally established by the Issuer for such Preferred Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the Redemption
Price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Related Preferred Securities shall
be made to the applicable recordholders thereof as they appear on the register
for such Related Preferred Securities on the relevant record date, which shall
be one Business Day prior to the Redemption Date; provided, however, that in the
event that any Preferred Securities are not in book-entry form, the relevant
record date shall be a date at least 15 days prior to the Redemption Date, as
specified in the applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities issued
by an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $1,000 or an
integral multiple of $1,000 in excess thereof, unless a different amount is
specified in the applicable Prospectus Supplement) of the Liquidation Amount of
Preferred Securities of a denomination larger than $1,000 (or such other
denomination as is specified in the applicable Prospectus Supplement). The
Property Trustee shall promptly notify the Securities registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address. Unless the Corporation defaults in payment
of the Redemption Price on the Corresponding Junior Subordinated Debentures, on
and after the Redemption Date interest will cease to accrue on such
Corresponding Junior Subordinated Debentures or portions thereof (and
Distributions will cease to accrue on the Related Preferred Securities or
portions thereof) called for redemption.
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SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the liquidation amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date, Redemption Date
or liquidation date a Debenture Event of Default shall have occurred and be
continuing as a result of any failure by the Corporation to pay any amounts in
respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in respect
of, any of the Issuer's Common Securities, and no other payment on account of
the redemption, liquidation or other acquisition of such Common Securities,
shall be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the Issuer's outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or in the case of payment
of the Redemption Price the full amount of such Redemption Price on all of the
Issuer's outstanding Preferred Securities then called for redemption, or in the
case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all Outstanding Preferred Securities, shall have
been made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Issuer's Preferred Securities then due and payable.
In the case of any event of default under the applicable Trust Agreement
resulting from a Debenture Event of Default, the Corporation as holder of such
Issuer's Common Securities will be deemed to have waived any right to act with
respect to any such Event of Default under the applicable Trust Agreement until
the effect of all such Events of Default with respect to such Preferred
Securities have been cured, waived or otherwise eliminated. Until any such
Events of Default under the applicable Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of such Preferred
Securities and not on behalf of the Corporation as holder of the Issuer's Common
Securities, and only the holders of such Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Corporation, as
Depositor, has given written direction to the Property Trustee to terminate such
Issuer; (iii) redemption of all of the Issuer's Preferred Securities as
described under "-- Redemption or Exchange"; and (iv) the entry of an order for
the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Trust Securities in exchange therefor a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Administrative Trustees not to be practical, in which event
such holders will be entitled to receive out of the assets of the Issuer
available for distribution to holders, after satisfaction of liabilities to
creditors of such Issuer as provided by applicable law, an amount equal to, in
the case of holders of Preferred Securities, the aggregate of the Liquidation
Amount plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If such Liquidation
Distribution can be paid only in part because such Issuer has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by such Issuer on its Preferred Securities shall be
paid on a pro rata basis. The holder(s) of such Issuer's Common Securities will
be entitled to receive distributions upon any such liquidation pro rata with the
holders of its Preferred Securities, except that if a Debenture Event of Default
has occurred and is
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continuing as a result of any failure by the Corporation to pay any amounts in
respect of the Junior Subordinated Debentures when due, the Preferred Securities
shall have a priority over the Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Issuer in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Issuer in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Preferred Securities of the applicable Issuer, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under such
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Corporation to
appoint a successor Property Trustee within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Corporation, as Depositor,
unless such Event of Default shall have been cured or waived. The Corporation,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities as
described above. See "-- Liquidation Distribution Upon Termination." The
existence of an Event of Default does not entitle the holders of Preferred
Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
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appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Corporation, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Debenture
Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust Agreement,
provided such person shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. An Issuer may, at the request of the Corporation, with the
consent of the Administrative Trustees and without the consent of the holders of
the Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (a) expressly assumes all of the
obligations of such Issuer with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities in
priority with respect to distributions and payments upon liquidation, redemption
and otherwise, (ii) the Corporation expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of the Corresponding Junior Subordinated Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities to be downgraded by any nationally
recognized statistical rating organization which assigns ratings to the
Preferred Securities, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose identical to that of the Issuer, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Corporation has received an opinion from independent counsel to the Issuer
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such
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merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and (viii) the Corporation or any permitted successor
or assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, an Issuer shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer or the successor entity to be classified as an
association taxable as a corporation or as other than a grantor trust for United
States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of such Trust Agreement to such extent as shall be
necessary to ensure that the Issuer will be classified for United States Federal
income tax purposes as a grantor trust or as other than an association taxable
as a corporation at all times that any Trust Securities are outstanding or to
ensure that the Issuer will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of either clause (i) or clause (ii), such action shall not adversely affect in
any material respect the interests of any holder of Preferred Securities, and
any amendments of such Trust Agreement shall become effective when notice
thereof is given to the holders of Trust Securities. Each Trust Agreement may be
amended by the Issuer Trustees and the Corporation with (i) the consent of
holders representing not less than a majority (based upon Liquidation Amounts)
of the outstanding Trust Securities, and (ii) receipt by the Issuer Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
cause the Issuer to be taxable as a corporation or affect the Issuer's status as
a grantor trust for United States Federal income tax purposes or the Issuer's
exemption from status as an "investment company" under the Investment Company
Act, provided that without the consent of each holder of Trust Securities, such
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or
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such Corresponding Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Corresponding Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the corresponding Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities
except by subsequent vote of the holders of the Preferred Securities. The
Property Trustee shall notify each holder of Preferred Securities of any notice
of default with respect to the Corresponding Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall obtain an opinion of counsel experienced in such matters to the effect
that the Issuer will not be classified as an association taxable as a
corporation for United States Federal income tax purposes on account of such
action and such action would not cause the Issuer to be classified as other than
a grantor trust for United States Federal income tax purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Administrative Trustees, or at the written request of
the Administrative Trustees the Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of Preferred Securities in the manner set
forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the Depositary identified in the Prospectus Supplement relating
to such series. Unless otherwise indicated in the applicable Prospectus
Supplement, the Depositary will be DTC. Global Preferred Securities may be
issued only in fully registered form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual
Preferred Securities represented thereby, a Global Preferred Security may not be
transferred except as a whole by the Depositary for such Global Preferred
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Corporation anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants. Such accounts shall be designated by
the dealers, underwriters or agents with respect to such Preferred Securities or
by the Corporation if such Preferred Securities are offered and sold directly by
the Corporation. Ownership of beneficial interests in a Global Preferred
Security will be limited to Participants or persons that may hold
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interests through Participants. Ownership of beneficial interests in such Global
Preferred Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the related Trust Agreement. Except as provided below, owners of
beneficial interests in a Global Preferred Security will not be entitled to have
any of the individual Preferred Securities of the series represented by such
Global Preferred Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Preferred Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the related Trust Agreement.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Corporation, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Corporation expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
premium or Distributions, including any payment of Redemption Price, in respect
of a Global Preferred Security representing any of such Preferred Securities
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of such Global Preferred Security for such Preferred
Securities as shown on the records of such Depositary or its nominee. The
Corporation also expects that payments by Participants to owners of beneficial
interests in such Global Preferred Security held through such Participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name." Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Issuer within 90 days, or if there shall have occurred and be
continuing a Debenture Event of Default under the Indenture with respect to the
Corresponding Junior Subordinated Debentures, the Issuer will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Issuer may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by one
or more Global Preferred Securities and, in such event, will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. Further, if the
Issuer so specifies with respect to the Preferred Securities of a series, an
owner of a beneficial interest in a Global Preferred Security representing
Preferred Securities of such series may, on terms acceptable to the Issuer, the
Property Trustee and the Depositary for such Global Preferred Security, receive
individual Preferred Securities of such series in exchange for such beneficial
interests, subject to
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any limitations described in the Prospectus Supplement relating to such
Preferred Securities. In any such instance, an owner of a beneficial interest in
a Global Preferred Security will be entitled to physical delivery of individual
Preferred Securities of the series represented by such Global Preferred Security
equal in principal amount to such beneficial interest and to have such Preferred
Securities registered in its name. Individual Preferred Securities of such
series so issued will be issued in denominations, unless otherwise specified by
the Issuer, and integral multiples thereof that are the same as the
denominations and multiples in which the Preferred Securities are issued.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Corporation. In the event that the Property Trustee shall no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be registered
the transfer of their Preferred Securities after such Preferred Securities have
been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Property Trustee is under no obligation to exercise any of the powers vested in
it by the applicable Trust Agreement at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
applicable Trust Agreement or is unsure of the application of any provision of
the applicable Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Corporation and if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Issuer Trustees are authorized and directed to conduct the affairs of
and to operate the Issuers in such a way that no Issuer will be deemed to be an
"investment company" required to be registered under the Investment Company Act
or classified as an association taxable as a
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corporation or as other than a grantor trust for United States Federal income
tax purposes and so that the Corresponding Junior Subordinated Debentures will
be treated as indebtedness of the Corporation for United States Federal income
tax purposes. In this connection, the Corporation and the Issuer Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of each Issuer or each Trust Agreement, that the
Corporation and the Issuer Trustees determine in their discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the related
Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
certificates will be issued for the Preferred Securities of each Issuer and the
Junior Subordinated Debentures, representing in the aggregate the total number
of such Issuer's Preferred Securities or aggregate principal balance of Junior
Subordinated Debentures, respectively, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security and each Junior Subordinated Debenture ("Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities or Junior Subordinated Debentures.
Transfers of ownership interests in the Preferred Securities or Junior
Subordinated Debentures are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for the Preferred Securities of such Issuer or Junior
Subordinated Debentures is discontinued.
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DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
or Junior Subordinated Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
an Issuer's Preferred Securities or the Junior Subordinated Debentures are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities or Junior Subordinated Debentures. Under its usual
procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts such Preferred Securities or Junior Subordinated Debentures are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debentures will be made by the relevant Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the Issuer thereof or the
Corporation, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the responsibility
of the relevant Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated Debentures
at any time by giving reasonable notice to the relevant Trustee and the
Corporation. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Corporation, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Corporation believe to
be accurate, but the Issuers and the Corporation assume no responsibility for
the accuracy thereof. Neither the Issuers nor the Corporation has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
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DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Corporation concurrently
with the issuance by each Issuer of its Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities. Wilmington Trust
Company will act as indenture trustee ("Guarantee Trustee") under each Guarantee
for the purposes of compliance with the Trust Indenture Act and each Guarantee
will be qualified as an indenture under the Trust Indenture Act. This summary of
certain provisions of the Guarantees, which summarizes the material terms
thereof, does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of each Guarantee, including the
definitions therein of certain terms, and the Trust Indenture Act, to each of
which reference is hereby made. The form of the Guarantee has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Reference in this summary to Preferred Securities means that Issuer's Preferred
Securities to which a Guarantee relates. The Guarantee Trustee will hold each
Guarantee for the benefit of the holders of the related Issuer's Preferred
Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that such Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the related
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that such Issuer has funds on hand available therefor
at such time, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption, to the extent that such Issuer has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of such Issuer (unless the Corresponding
Junior Subordinated Debentures are distributed to holders of such Preferred
Securities in exchange therefor), the lesser of (a) the Liquidation Distribution
and (b) the amount of assets of such Issuer remaining available for distribution
to holders of Preferred Securities after satisfaction of liabilities to
creditors of such Issuer as required by applicable law. The Corporation's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Corporation to the holders of the applicable Preferred
Securities or by causing the Issuer to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Preferred Securities, but will apply
only to the extent that such related Issuer has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Corporation does not make interest payments on the Corresponding
Junior Subordinated Debentures held by the Issuer, the Issuer will not be able
to pay Distributions on the Related Preferred Securities and will not have funds
legally available therefor. Each Guarantee will rank subordinate and junior in
right of payment to all Senior Debt of the Corporation. See "-- Status of the
Guarantees". Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantees will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and claimants should look only to the assets of the
Corporation for payments thereunder. See "The Corporation." Except as otherwise
provided in the applicable Prospectus Supplement, the Guarantees do not limit
the incurrence or issuance of other secured or unsecured debt of the
Corporation, including Senior Debt, whether under the Indenture, any other
existing indenture or any other indenture that the Corporation may enter into in
the future
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or otherwise. See the applicable Prospectus Supplement relating to any offering
of Preferred Securities.
The Corporation has, through the applicable Guarantee, the applicable Trust
Agreement, the applicable series of Corresponding Junior Subordinated
Debentures, the Indenture and the applicable Expense Agreement, taken together,
fully, irrevocably and unconditionally guaranteed all of the Issuer's
obligations under the Related Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the Issuer's obligations under the Related Preferred Securities. See
"Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures, the Expense Agreements and the Guarantees."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior Debt of
the Corporation in the same manner as Junior Subordinated Debentures.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Corporation. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the Related Preferred
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the Corresponding
Junior Subordinated Debentures. None of the Guarantees places a limitation on
the amount of additional Senior Debt that may be incurred by the Corporation.
The Corporation expects from time to time to incur additional indebtedness
constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no vote
will be required), no Guarantee may be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Preferred Securities. The manner of obtaining any such approval will
be as set forth under "Description of Preferred Securities -- Voting Rights;
Amendment of Each Trust Agreement." All guarantees and agreements contained in
each Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Corporation to perform any of its payment obligations thereunder or to perform
any non-payment obligations if such non-payment default remains unremedied for
30 days. The holders of not less than a majority in aggregate Liquidation Amount
of the related Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of such Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Preferred Securities may, to the extent permissible under
applicable law, institute a legal proceeding directly against the Corporation to
enforce its rights under such Guarantee without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other person or
entity.
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<PAGE> 70
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of any Guarantee, undertakes to
perform only such duties as are specifically set forth in each Guarantee and,
after default with respect to any Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Corresponding Junior Subordinated Debentures to the holders
of the Related Preferred Securities in exchange therefor. Each Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the related Preferred Securities must restore payment of any
sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Corporation under
each Trust Agreement (the "Expense Agreement"), the Corporation will irrevocably
and unconditionally guarantee to each Person or entity to whom the Issuer
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Issuer, other than obligations of the Issuer to pay to the
holders of any Preferred Securities or other similar interests in the Issuer of
the amounts due such holders pursuant to the terms of the Preferred Securities
or such other similar interests, as the case may be. The Expense Agreement will
be enforceable by third parties.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING
JUNIOR SUBORDINATED DEBENTURES, THE EXPENSE AGREEMENTS
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Corporation as and to the
extent set forth under "Description of Guarantees." Taken together, the
Corporation's obligations under each series of Corresponding Junior Subordinated
Debentures, the Indenture, the related Trust Agreement, the related Expense
Agreement, and the related Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and other
amounts due on the Related Preferred Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a
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<PAGE> 71
full, irrevocable and unconditional guarantee of the Issuer's obligations under
the Related Preferred Securities. If and to the extent that the Corporation does
not make payments on any series of Corresponding Junior Subordinated Debentures,
such Issuer will not pay Distributions or other amounts due on its Related
Preferred Securities. The Guarantees do not cover payment of Distributions when
the related Issuer does not have sufficient funds to pay such Distributions. In
such event, the remedy of a holder of a series of Related Preferred Securities
is to institute a legal proceeding directly against the Corporation pursuant to
the terms of the Indenture for enforcement of payment of amounts of such
Distributions to such holder. The obligations of the Corporation under each
Guarantee are subordinate and junior in right of payment to all Senior Debt of
the Corporation.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distributions and other payments due on the Related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to the
sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on each series of Corresponding Junior Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the Related Preferred Securities; (iii) the Corporation shall pay for all and
any costs, expenses and liabilities of such Issuer except the Issuer's
obligations to holders of its Preferred Securities under such Preferred
Securities; and (iv) each Trust Agreement provides that the Issuer will not
engage in any activity that is not consistent with the limited purposes of such
Issuer.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Corporation has theretofore made, or is concurrently
on the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may, to the extent permissible under
applicable law, institute a legal proceeding directly against the Corporation to
enforce its rights under the related Guarantee without first instituting a legal
proceeding against the Guarantee Trustee, the related Issuer or any other person
or entity.
A default or event of default under any Senior Debt of the Corporation
would not constitute a default or Debenture Event of Default under the
Indenture. However, in the event of payment defaults under, or acceleration of,
Senior Debt of the Corporation, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Junior Subordinated
Debentures until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Junior Subordinated Debentures would constitute a Debenture Event of
Default under the Indenture.
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and each Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a holder
of a Preferred Security and a holder of a Junior Subordinated Debenture is that
a holder of a Junior Subordinated Debenture is entitled to receive from the
Corporation the principal amount of and interest accrued on Junior Subordinated
Debentures held, while a holder of Preferred Securities is entitled to receive
Distributions from such Issuer (or from the Corporation under the
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<PAGE> 72
applicable Guarantee) if and to the extent such Issuer has funds available for
the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the Company, the holders of the Related
Preferred Securities will be entitled to receive, out of the assets held by such
Issuer, the Liquidation Distribution in cash. See "Description of Preferred
Securities -- Liquidation Distribution Upon Termination." Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the Corresponding Junior Subordinated Debentures, would be a
subordinated creditor of the Corporation, subordinated in right of payment to
all Senior Debt as set forth in the Indenture, but entitled to receive payment
in full of principal and interest, before any stockholders of the Corporation
receive payments or distributions. Since the Corporation is the guarantor under
each Guarantee and has agreed to pay for all costs, expenses and liabilities of
each Issuer (other than the Issuer's obligations to the holders of its Preferred
Securities), the positions of a holder of such Preferred Securities and a holder
of such Corresponding Junior Subordinated Debentures relative to other creditors
and to stockholders of the Corporation in the event of liquidation or bankruptcy
of the Corporation are expected to be substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from time
to time. The Corporation and each Issuer may sell its Junior Subordinated
Debentures or Preferred Securities as soon as practicable after effectiveness of
the Registration Statement of which this Prospectus forms a part. The names of
any underwriters or dealers involved in the sale of the Junior Subordinated
Debentures or Preferred Securities in respect of which this Prospectus is
delivered, the amount or number of Junior Subordinated Debentures and Preferred
Securities to be purchased by any such underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In connection with the sale of
Preferred Securities, underwriters may be deemed to have received compensation
from the Corporation and/or the applicable Issuer in the form of underwriting
discounts or commissions and may also receive commissions. Underwriters may sell
Junior Subordinated Debentures or Preferred Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters.
Any underwriting compensation paid by the Corporation and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in an accompanying Prospectus Supplement. Underwriters and dealers
participating in the distribution of Junior Subordinated Debentures or Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such Junior
Subordinated Debentures or Preferred Securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters and dealers
may be entitled, under agreement with the Corporation and the applicable Issuer,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by the
Corporation for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set
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<PAGE> 73
forth in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Corporation and/or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities are
sold for public offering and sale may make a market in such Junior Subordinated
Debentures and Preferred Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. Such
Junior Subordinated Debentures or Preferred Securities may or may not be listed
on a national securities exchange or the Nasdaq National Market. No assurance
can be given as to the liquidity of or the existence of trading markets for any
Junior Subordinated Debentures or Preferred Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
matters of Delaware law relating to the validity of the Preferred Securities,
the enforceability of the Trust Agreements and the formation of the Issuers will
be passed upon by Richards, Layton & Finger, special Delaware counsel to the
Corporation and the Issuers. Unless otherwise indicated in the applicable
Prospectus Supplement, the validity of the Guarantees and the Junior
Subordinated Debentures will be passed upon for the Corporation by Paul L.
Reynolds, Counsel, Fifth Third Bancorp, and for the Underwriters by Sullivan &
Cromwell. Paul L. Reynolds will rely as to all matters of New York law on the
opinion of Sullivan & Cromwell, and Sullivan & Cromwell will rely as to all
matters of Ohio law upon the opinion of Paul L. Reynolds. Certain matters
relating to United States Federal income tax considerations will be passed upon
for the Corporation by Sullivan & Cromwell, as special tax counsel.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PROSPECTUS SUPPLEMENT ----
<S> <C>
Risk Factors......................... S-5
Fifth Third Capital Trust I.......... S-10
The Corporation...................... S-11
Selected Consolidated Financial Data
of Fifth Third Bancorp............. S-12
Use of Proceeds...................... S-13
Capitalization....................... S-14
Accounting Treatment................. S-15
Certain Terms of Series A
Capital Securities................. S-15
Certain Terms of Series A
Subordinated Debentures............ S-19
Certain Terms of Series A
Guarantee.......................... S-23
ERISA Considerations................. S-24
Certain Federal Income Tax
Consequences....................... S-26
Underwriting......................... S-29
Validity of Securities............... S-31
PROSPECTUS
Available Information................ 4
Incorporation of Certain Documents by
Reference.......................... 4
The Corporation...................... 6
Supervision and Regulation........... 6
The Issuers.......................... 7
Use of Proceeds...................... 8
Description of Junior Subordinated
Debentures......................... 9
Description of Preferred
Securities......................... 22
Book-Entry Issuance.................. 35
Description of Guarantees............ 37
Relationship Among the Preferred
Securities, the Corresponding
Junior Subordinated Debentures, the
Expense Agreements and the
Guarantees......................... 39
Plan of Distribution................. 41
Validity of Securities............... 42
Experts.............................. 42
</TABLE>
======================================================
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$200,000,000
FIFTH THIRD
CAPITAL TRUST I
8.136% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
FIFTH THIRD BANCORP
------------------
PROSPECTUS SUPPLEMENT
------------------
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UBS SECURITIES
======================================================
